I feel that Korea doesn't get enough street cred. In all the industry mags, blogs, and sites I read, Korea is not included, or at best, has a few high-level postings on what's going on in that market. PSY's viral YouTube video last year, Gangnam style, put Korea more in the center stage, but not so much across the digital media and advertising communities. It's quite sad, given how switched on that market is from a digital perspective and the tremendous growth we've seen across some key channels online. Let's take a look at some of this growth.
First from a macro level, South Korea is seeing GDP growth of around 3.6 percent in 2012 and pegged for 4 percent+ growth for 2013 according to the World Bank. This is huge compared to Japan's paltry -0.7, but just a third of China at 9.3 percent. Still, 3.6 percent is quite solid considering the global economic climate these days. Population growth is on the rise, currently hovering at 49 million. Of this population, 82.5 percent are online (#1 globally), 93.7 percent of households have broadband (#2 globally), and 85.5 percent have mobile phones of which 47 percent are smartphones and growing.
Continuing on the macro theme, Korea is also progressive with setting up numerous free-trade agreements with the U.S., Japan, China, Singapore, the EU, and other major economies to stimulate growth and encourage trade. The massive FTA with the EU came into full force in July 2011. Also, from a regulatory standpoint we are seeing changes. The pharmaceutical industry, for example, is set to relax a bit more in 2013 with potentially starting to sell OTC drugs online and in-store. And finally, in terms of new leadership, in December, South Korea elected its first woman president, on the platform for further economic revival and continued stimulus.
When we hone in on just the media scene, we saw a lot of strong growth and interesting shifts as we closed 2012.
Shifting Media Behavior
A few key shifts we are seeing in Korea is less consumption of traditional TV across the broader population, coupled with more mobile usage, a swing toward younger people (kids) going online more, and a general increase in the time people are spending online, be it researching, socializing, or gaming. According to eMarketer, the top three media platforms consumed in Korea last year, in order of dominance is mobile, TV, and the Internet. Smartphone user numbers grew 152 percent between 2010 and 2011, and almost 35 percent last year. Within this, we are seeing older age groups flocking to smartphones, with ages 45 and above being the fastest growing segment. When we talk about Internet habits, product researching still reigns as the top activity, followed by checking news and events, and networking. In terms of youth, amazingly, 66 percent of children aged three to five used the web at least twice last year, according to The Korea Internet and Security Agency (KISA). However, even with online being so massive in Korea, the most affluent of people are still consuming magazines and newspapers. Basically, the very young and very old are becoming more savvy and switched on, and the content they consume more of is increasingly across mobile and online platforms.
Ad Spending Trends
South Korea's ad sector saw a 9.6 percent increase in 2011 across all media and was looking to hit similar levels in 2012. Spend in digital is the second biggest channel behind TV and should be reaching around $2.6 billion in 2012 and set to grow 30 percent by 2016. Mobile spending is going mad as well, showing 60 percent spend growth between 2010 and 2011 and looking like double-digit growth through to 2016. This includes mobile display, search, and video. When advertisers were surveyed on what channel they plan to invest more in in 2013, mobile and social came out on top, according to the KG group. And outside of all these hard facts, when we speak with our Korean clients, the general sentiment is that we will see a continued shift toward investment in digital, with social and mobile being the fastest growing, and with more businesses getting into e-commerce while brick-and-mortar is slowing.
Continued Mobile Growth
Similar to Japan, South Korea is seen as a global hub of mobile innovation, both in terms of manufacturing with Samsung and in general usage and adoption among the people. Most of us have probably seen the famous activation from Tesco (see here) where it put up a mobile shopping space in the subway, allowing you to buy the product off your smartphone and have it delivered to your home. In 2009, smartphone penetration was only hovering around 1 percent, but it is forecasted to hit 70 percent+ next year. This has also led to mobile data traffic nearly doubling from 4,339 terabytes in 2010 to 7,458 in 2011.
The Year of Facebook
According to a survey conducted by KPR & Associates, more than half of organizations surveyed in Korea who were already active on social media increased their budget in 2012, with only 5 percent decreasing. Within the same survey, 90 percent said their top choice of platforms was Facebook, followed by Twitter at 77.5 percent and Naver blogs coming in third. In 2012, the three top reasons why companies in Korea use social media were improving customer communications, improving brand image, and enhancing brand awareness. The number of Facebook users in Korea grew dramatically last year growing around 80 percent to its current standing of 10+ million, or around 25 percent of the online population. In February, Facebook surpassed the reach of local competitor Cyworld, which has always been dominant in the market. Also, because Facebook is still relatively new in Korea, advertisers have benefited from cost efficiencies with CPCs averaging $0.28 and CPMs averaging $0.07. In addition, around 80 percent of Facebook's traffic in Korea is coming from mobile devices, so if you're going to start running ads, make sure you target the mobile device.
This Thing Called Kakao Talk
Kakao Talk, a local mobile messaging platform that allows texting, calls, group chatting, and other multi-media features hit a milestone last year achieving over 66 million users, more than South Korea's population. The typical Kakao user sends an average of 149 messages a day, up from 41 in 2011. And in November, it announced that in 2013 it will launch Kakao Page, which is an online music and electronic book shop where artists, writers, and musicians can sell and market their songs, videos, and e-books to Kakao Talk users. It's also a huge opportunity for advertisers who can create Kakao themes that users can download and use as well as other ad features.
As you can see, I am very bullish on Korea and see a lot of continued growth coming out of that market as well as some interesting and creative thinking. I also see that Korea will start exporting more of its greatness to the world, and has already started with the internationalization of Naver and Kakao Talk launching in Japan.
Arrows image on home page via Shutterstock.
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Andy Radovic is a strategic digital marketer with 12+ years experience working in the digital media space across a variety of agencies, spanning stints in the U.S., Japan, Korea, and now Singapore. Currently working for Maxus Asia Pacific, part of the GroupM network, the world’s largest media investment management organization, and media communications and planning arm of parent company WPP. At Maxus, Andy leads regional digital duties for Asia Pacific with a focus on building out the Maxus digital product offering across Asia Pacific focusing on search, social, mobile, digital analytics and e-commerce. Prior to Maxus, Andy headed up digital for GroupM in Japan and Korea. Before GroupM, he has worked for a variety of startups in Asia and the U.S. across the technology and digital media categories and is a frequent contributor to ClickZ.asia, iMediaConnection, and RevenueToday.
March 19, 2014