Tech

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

Baidu just dropped a mixed bag of numbers. And shareholders cheered.

While sales for the fourth quarter beat estimates, earnings per American depositary share missed by a penny and the company forecast revenue this quarter that will fall short of analyst projections. That's before we even get into the slew of transaction volumes, payment accounts and user numbers that the Chinese Internet search company also reports.

Ironically, for a company that prides itself on its deep-learning and artificial intelligence --- which at its core merely means ``lots of numbers and lots of number-crunching'' -- Baidu does a poor job of giving depth to the data. While the figures it did report were enough to drive shares higher in extended trading, there are more important ones that aren't disclosed.

Baidu does provide mobile monthly active users, a nice big figure that looks important but that doesn't mean much on its own. If Apple provided a metric called Monthly Shoppers Who Walked Into Our Stores, analysts would dutifully plug it into their spreadsheets but then scratch their heads wondering what to do with it.

User numbers matter to the extent that they measure general reach and interest in the product, which in Baidu's case means search and maps. But they hark back to the days of desktop PCs when banners at the top of Web pages were the primary form of advertising. Back then, user numbers helped inform advertisers how many eyeballs may have seen their pitch. They also helped show a company's owners, aka shareholders, that management was doing its job .

What those numbers don't tell investors is what the users are doing when they arrive, and how long they stay.

Looking at Comscore data for Baidu against rivals such as Tencent using a metric it calls global unique visitors, it's clear that Baidu attracts the most eyeballs. But take a look at a more useful measure, global usage minutes, and Tencent is ahead. Further parsing those numbers and an even more telling figure is revealed, average minutes per user.

This is the figure that Baidu doesn't disclose, and which it should.

Not Enough Attention
Baidu is closing the gap on user time with Tencent but still trails
Source: Comscore, Bloomberg

The data show that Baidu lags in keeping users' attention. Tencent, which owns WeChat, has a firm grasp on customers' time. Before large-screen smartphones took off, desktop was the place where consumers spent most of their time online, and that was good for search. Mobile Internet and the appification of the Internet -- which makes content quicker and easier to access -- combined with the advent of chat apps has turned the tables on usage patterns.

Now, instead of using the Internet to search for information, users are logging on to communicate with friends, catch up on gossip or, most often, kill time. Instead of actively searching for where to eat or which movies are good, users are having more of that information delivered directly via friends.

Baidu has managed to close the gap with Tencent with its late move into mobile search and maps, making its marquee products easier to use. Its rollout of transactional products such as home delivery, restaurant bookings and ticket sales are helping make the Baidu ecosystem more sticky, just as founder and Chairman Robin Li planned.

Sales Slowdown
Baidu posted its slowest revenue growth in at least nine years
Source: Bloomberg data

This bump isn't coming a moment too soon. Among the few operational numbers Baidu discloses is revenue per online marketing customer. Although overall marketing sales jumped 32 percent last year, that was entirely driven by a rise in the number of advertising clients. Though impressive, the increase is a quantitative rather than qualitative jump. In fact, the amount paid per advertiser grew just 1.9 percent, the slowest in at least eight years.

The Eyes Have It
Baidu's growth in advertising spending per customer hit a low last year
Source: Baidu annual financial press releases

Increasing minutes per user is the key to sustainable growth, because advertisers want to be where Internet users are actually spending their time. Where Baidu is concerned, this is the number to which investors should pay attention.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Matthew Brooker at mbrooker1@bloomberg.net