We are experimenting with a chatbot type ad product for SMEs and brand. We believe this will not only help drive effective conversion, but also allow us to eventually transform from a CPC model to a CPS model. And at the same time, our capabilities – our capabilities will help our advertisers to better operate their business on Baidu. Our ongoing effort to revamp the ad platform have already shown positive results, and we will continue leveraging generative AI and to assist advertiser team achieving durable ROI growth on Baidu. In terms of empowering our customers with Gen AI, as Doug just mentioned, customer needs are different now. Some customers still prefer to train their own model, but the GPU export restrictions will put a break on that.
It will eventually become clear that training LLM from scratch is very difficult, especially when trying to achieve emergent abilities. So we will turn to advanced LLMs available on the market like ERNIE for devising applications. As customers become more advanced in using LLM to create applications and more AI native applications powered by ERNIE become more widely used. We should be able to see continuous revenue growth through model inferencing. Over the long-term, inferencing should become a major source of revenue forward. Meanwhile, we will also help customers to fine-tune our existing model offerings to suit their customized needs in each scenario because our models are better, faster and more cost effective. So in summary, Gen AI and LLM will bring us massive business opportunities.
We have already made good progress in commercialization so far, and this is just the beginning of a promising future. Thank you.
Operator: The next question comes from Gary Yu with Morgan Stanley. Please go ahead.
Gary Yu: Hi, thank you, management for the opportunity to ask questions. Can management share the latest advertiser feedback on the AI-powered ad system upgrade, and how do you think about the level of revenue boost to the core adds in 2024 as it gets rolled out to more even all advertisers? Thank you.
Robin Li: Yes, we are very happy with the rapid AI transformation of our ad system and thrilled by the positive feedback from our advertisers. Overall, I think advertisers appreciate our efforts to help them improve their ROIs on our platform. Also they are fond of our new features, which help them to be more productive. As I mentioned in the prepared remarks, we’ve put a lot of effort into using Gen AI and our aims to reinvent our app system over the past few quarters. Now we have an integrated advertiser-facing marketing platform. Advertisers can use it to generate creative advertising materials. These materials have proved to deliver higher conversion rates than materials created by humans. And our platform also allows advertisers to engage in natural language by interacting with advertisers in multiple rounds of conversation, our upgraded platform is able to better understand their intentions.
This allows us to create campaign strategies that deliver higher ROI. Moreover, it significantly reduces the time that ad managers need to spend creating campaigns, because even an experienced ad manager have to spend hours developing an advertising strategy. And now with an AI copilot, the process only takes like a few minutes. As of today, we have a few thousand of advertisers already migrated to our new platform. While this number is relatively small compared to our 0.5 million advertiser base, it is certainly growing very fast. In addition, we continue to use AI to improve our bidding system and ad targeting capabilities. Such initiatives happened at the back end of the system, so advertisers may not directly perceive them, but they have observed improvements in their ad conversion and ROI.
So, on average advertisers using these capabilities probably achieved a high-single digit increase in conversions in Q3. All of our efforts should eventually attract advertisers to allocate more of their advertising budgets on Baidu. As I previously mentioned, online marketing revenue related to our upgraded ad platform has been growing rapidly and already became meaningful. And this is just the beginning, as I have said, we are experimenting with AI chatbot and chatbot could act as a replacement for landing page in the future. This is particularly useful in verticals where users typically research and engage in a long decision process before purchasing. Imagine searching for a training program and being directed to a bot instead of a web page, with our AI chatbots, users can quickly learn about brand-specific information, product details and other stuff.
Although, I think that multi-round conversation is also very engaging. And for advertisers, it helps them to stay connected with potential customers and guide them at key decision-making points, leading to better conversion and even direct sales. We believe AI chatbot could work well with Gen AI powered new search and bring us more opportunities. I mentioned earlier that the incremental revenue from these kind of initiatives are expected to reach the level of hundreds of millions of RMB this current quarter, Q4, and this is certainly growing very fast. The trend should continue and further strengthen in the year of 2024. Thank you.
Operator: The next question comes from Wei Xiong with UBS. Please go ahead.
Wei Xiong: Good evening management and thank you for taking my question. I wanted to follow-up on your cloud business. So, could management share more color on how to think about the industry competitive landscape in China cloud market, especially among the Internet cloud vendors and as well as when competing with the telcos and also with the development in generative AI and the large language model, how do we assess our competitive advantage against peers? Do we expect the competition to intensify next year as other companies try to make efforts and catch up with us? Thank you.
