{"id":296599,"date":"2020-06-04T04:00:00","date_gmt":"2020-06-04T04:00:00","guid":{"rendered":"https:\/\/integralads.com\/insider\/emerging-platforms-xiaodu-china-smart-speaker\/"},"modified":"2024-11-16T12:03:50","modified_gmt":"2024-11-16T12:03:50","slug":"emerging-platforms-xiaodu-china-smart-speaker","status":"publish","type":"post","link":"https:\/\/integralads.com\/apac\/insider\/emerging-platforms-xiaodu-china-smart-speaker\/","title":{"rendered":"Emerging platforms: Xiaodu is riding China’s smart speaker rise"},"content":{"rendered":"
\"xiaodu-baidu\"
This image is taken from the original article by The Drum<\/a>. IAS holds no copyright over this image.<\/em><\/figcaption><\/figure>\n

Baidu-owned smart speaker brand Xiaodu is a brand on the rise. Its success can be linked to a surge in households using smart speakers and a major shift in consumer habits towards voice in China.<\/p>\n

One of the most popular smart speaker brands in China, along with Alibaba and Xiaomi, Baidu started selling its smart speakers using its proprietary operating system, DuerOS, in 2017 and introduced the brand name Xiaodu a year later.<\/p>\n

China shipped 52 million smart speakers in 2019, which is 41% of all the smart speakers bought globally that year. Xiaodu\u2019s sales have grown 384% since 2018, taking a market share of 13.9%. It ranked number three globally after Amazon and Google with 29.9% and 19.1% market share respectively, making it number one in China.<\/p>\n

Xiaodu then overtook Google in the second quarter of 2019 and ranked number two in the number of units shipped, despite being only available within China.<\/p>\n

Anthony Baker, executive technology director for Asia Pacific at R\/GA explains that since Baidu focuses heavily on search and maps within the Chinese market, its range of speakers provides similar functionality and usage to Google Home.<\/p>\n

However, he points out Baidu has been clever in building Xiaodu\u2019s speakers around DuerOS. \u201cBy creating an open platform business that allows third parties to embed voice services in pretty much any appliance, Baidu is following a platform strategy that is closer to Amazon\u2019s Alexa voice service,\u201d he says.<\/p>\n

According to Integral Ad Science (IAS), Xiaodu grew at such a fast rate because its share of the market started at a very low base for China. In addition, Integral Ad Science (IAS) points out global brands Google and Amazon do not have a foothold in the market yet because their supporting ecosystems, such as Google Search and Amazon\u2019s e-commerce platform, lack presence in China. Furthermore, Baidu has heavily subsidised sales through large discounts on smart speakers, leading to quick adoption because of the brand\u2018s affordability.<\/p>\n

According to Jing Kun, Baidu\u2019s vice president of Smart Living, their smart speaker device is \u201creally sticky, as it is used 20 to 30 times a day for around two hours in total\u201c.<\/p>\n

She cites a US Consumer Adoption Report from Voicebot, which found less than half (47.4%) of smart speaker owners in the United States use their devices once a day; the remainder uses their devices either monthly (26.1%) or \u201cnever or rarely\u201d (26.5%).<\/p>\n

She adds: \u201cThey have stopped offering steep discounts but they are offering a free one-year subscription to Baidu\u2019s OTT platform iQiyi when purchasing the smart speakers, to drive up OTT usage.”<\/p>\n

(Read about: The future of Over-The-Top (OTT))<\/p>\n

Who uses Xiaodu?<\/strong><\/p>\n

While Xiaodu\u2019s range of smart speaker devices is aimed at a wide range of users, its biggest users are families with children and senior people, which make up around 50% to 60% of the total users according to Ron Lee, the technical director at MediaMonks in Shanghai.<\/p>\n

\u201cTo enhance user engagement, Xiaodu keeps adding new functions for users to explore and has been providing content like music and audio for free,\u201d he explains.<\/p>\n

\u201cXiaodu is also partnering with online educational institutes to offer more for early childhood education.\u201d<\/p>\n

In recognition of its user base, Xiaodu has a build-in smart display with a Children\u2019s Mode that will block certain content and limit screen time, a video calling function for children to call their parents at work, and facial recognition features that dovetail with child safety settings.<\/p>\n

\u201cIts range of devices targets families, professionals looking to get things done, wellness enthusiasts, gamers and youngsters,\u201d explains Baker.<\/p>\n

\u201cBy enabling services that fit into people\u2019s daily routines, and having a wide coverage and unified platform, it helps customers to seamlessly continuously use the platform.\u201d<\/p>\n

How does Xiaodu work for advertisers?<\/strong>
\nWhile most interactions on voice devices are based around short commands and utilitarian responses, there is a possibility for content providers to engage with customers through relevant, curated and personalized content.<\/p>\n

A Baidu spokesperson tells The Drum that Xiaodu uses AI to serve ads that can reach home users and deliver brand information through the use of audiovisual interaction or point-to-touch interaction of mobile advertising.<\/p>\n

The AI makes use of voice, image, gesture, eye contact, touch screen, and biometric recognition to create ads like interactive questions and answer advertisements which provoke audiences to interact, in turn pushing up brand engagement.<\/p>\n

At the same time, Xiaodu can be used as a platform that can directly realize the post-e-commerce link conversion, a feature that has led it to work with Haier, KFC, Pizza Hut, and Clinique. It is also working with Wyeth and Synbiotics in the milk powder industry in the form of customized brand skills to help advertisers reach consumers.<\/p>\n

Rather than focusing on direct advertisements, Baker says brands can work with the platform either by pulling customers through content or by further investing in the platform.<\/p>\n

They can also leverage the voice speaker services to create brand functions like skincare or beauty assistants, wellness coaches or entertainment hubs.<\/p>\n

\u201cIt is no secret that content access and delivery behaviors are rapidly shifting to on-demand and intelligently personalized services,\u201d he explains.<\/p>\n

\u201cAs with other voice services in the west, the key insight for advertisers is to avoid direct or intrusive advertisements and focus on relevant content delivery, which then drives customers to engage with the brand. By being clever and tapping into customers\u2018 content needs, brands and advertisers are more likely to succeed in converting customers.\u201d<\/p>\n

Integral Ad Science (IAS) agrees that understanding content needs is key and recommends advertisers target Xiaodu’s principal market, families with kids. Furthermore, Integral Ad Science (IAS) notes, brands should be creative with ad formats, so that their content blends into the audio content that is being consumed.<\/p>\n

Comparing the environment to mobile search, she notes that a voice search returns only the most accurate answers, rather than a list of potential results. To avoid compromising the utility of its search functions, Xiaodu does not offer effective monetisation methods, though if paid search is opened up to brands it could invite arguments over the integrity of\u00a0voice search results.<\/p>\n

At the moment, Baidu PPC is Baidu’s main pay-per-click advertising system on its platform in which advertisers bid on a list of keywords in order to display their clickable ads in Baidu’s search results.<\/p>\n

\u201cAdvertising mainly happens on search and OTT, which Baidu is leading in China. Baidu has a deep understanding of consumer behavior from the data they collect through these services, so they are able to offer a lot of different targeting options,\u201d adds Integral Ad Science (IAS).<\/p>\n

The future of Xiaodu<\/strong>
\nWith Xiaodu\u2019s range of speakers, Baidu is actually following a platform strategy, where the monetization comes not from the device itself, but from the services built for the DuerOS open platform.<\/p>\n

Much like Amazon\u2019s Kindle, the company does not really need to make profits from hardware since they will be able to grow the underlying platform.<\/p>\n

Given Baidu\u2019s strong market position in search, maps and other expanding platforms, Baker predicts the company is likely to keep expanding its range of branded speakers as well as promoting DoerOS with third-party providers.<\/p>\n

\u201cAs more providers adopt the platform, more users will benefit from the voice service integration not only on their smart speakers, but also on smartphone apps, cars and transport, home, and even the city,\u201d he explains.<\/p>\n

\u201cWith its rapid growth, the platform is likely to catch up with Amazon\u2019s Alexa devices. The challenge will be to break out of China\u2019s borders and gain traction in other markets.\u201d<\/p>\n

While the penetration of its hardware in China deepens and the platform\u2018s attractiveness to advertisers grows, Baidu is focused on developing the technological capabilities of the system further.
\nPersonalised, seamless services could become a serious aspiration of its consumer base, enabled through voice command purchasing and ordering. Baidu is also set to begin integrating the system with its autonomous car platform, potentially integrating its Xiaodu personality into the cars.<\/p>\n

In the meantime, Xiaodu is expanding the developer ecosystem and working with more premium content partners like Bytedance’s Douyin (TikTok), Kuaishou and children’s education brands to build a richer content service platform.<\/p>\n

With the Covid-19 driving consumers towards technology dependency, Xiaodu has a chance to become the central node in its users’ lives.<\/p>\n","protected":false},"excerpt":{"rendered":"

Baidu-owned smart speaker brand Xiaodu is a brand on the rise. Its success can be linked to a surge in households using smart speakers and a major shift in consumer habits towards voice in China. One of the most popular…<\/p>\n","protected":false},"author":1,"featured_media":296600,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[218],"tags":[102],"class_list":["post-296599","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights-apac","tag-ai"],"acf":[],"yoast_head":"\nEmerging platforms: Xiaodu is riding China's smart speaker rise - Integral Ad Science<\/title>\n<meta name=\"description\" content=\"Xiaodu overtook Google in the second quarter of 2019 and ranked number two in the number of units shipped, despite being only available within China. 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