Using Baidu index to nowcast mobile phone sales in China

Most of the official data are released with a lag period, which increases the difficulties for decision makers assessing the situation. To solve the problem of data lag, we used real-time Baidu Index to nowcast the Chinese consumer behavior of buying the best-selling smartphone, Huawei Mate 7. We introduced keywords like “Mate 7” and “Huawei” in Baidu Index search queries to examine whether the introduction of real-time data can improve the efficiency of benchmark model. Overall, our finding is that the introduction of Baidu Index, both in-sample and out-of-sample, can improve the prediction accuracy of the model significantly. The extended model provided a 55.2% outperformance relative to benchmark one. This can not only make up for official data release lag, but also help firms gain near-real-time insight into the consumer demand trends and reduce inventory costs. The findings suggest that firms can improve marketing performance by use of search engine promotion campaign.