You probably know that the Korean search market is quite different from other countries. Google dominates 70 percent of the searches worldwide but 70 percent of Koreans search through Naver, not Google. However, before Naver separated from Overture Korea, Overture (Yahoo Korea) actually dominated paid search market with a powerful network. See the partners from the Overture Korea site:
Overture Korea Search Network; Source: Overture Korea
Overture Korea had provided CPC advertising platform solutions through most of the major portals including news and major sites in September 2002. We can’t deny Overture Korea’s effort on growing the market size in Korea, but it already monopolized search market as much as 80 percent in 2009 and it naturally brought a negative influence with increasing CPC, click fraud, and extreme competitions. In the end, it leads to a serious credibility problem on CPC advertising in Korea.
Below are current search engine results pages in three major portal sites in Korea. Before separating from Overture, Naver’s top five results listed the same as Overture’s ads area like Daum and Nate. In the case with Daum, they had a partnership with Google, both organic and paid search results, until 2009, but they now use organic search from Bing and contracted with Overture for top five paid listings.
Current Paid Search Platform in Korea
Time to say Goodbye to Overture in Korea?
When Naver announced to replace the top of the paid ads to its subsidiary NBP (NHN Business Platform) from Overture Korea, there was mixed reaction to the prospect of paid search market. But, after one year, the result seems to be Naver’s win. Below is the last monthly change in advertising medium in Korea.
Source: Nielsen KoreanClick co., Ltd.
Even though there was a spike in Overture Korea last December, it was caused by seasonal trends and some advertisers believe it looked like to split budget to avoid extensive CPC in Naver. Naver kept on securing new advertisers steadily based on search market share of 70 percent.
The period of a contract between Daum and Overture Korea is less than one year.
Indeed, Daum and Nate (SK Communication) already made a MOU to fight against Naver’s dominance in the market April 2011. Through this partnership, they will join efforts in marketing for their own paid search platform and jointly operate the advertising system to enhance their competitiveness. Currently, their top five results listing are occupied by Overture paid listing and their own ads listing is below Overture.
Spring and Autumn Warring States Period in Mobile Search
According to Korea Onlinead Association and Cheil Worldwide, the Korean search market is still increasing yearly but growth rate has slowed down since 2009. The real economy is expected to slow down further in 2012, and the online market will also most likely contract further.
However, from the perspective of the domestic mobile search market, it has good expectations as growth engines of all portal and search engines. According to eTrade Korea, NHN expected its mobile search ads to increase more than 30 billion won in 2011 and it will at least double this year. The Daum CFO predicts the mobile ads market to grow within 150 billion won in 2012. Daum is also looking for new opportunities in mobile markets with leads in voice search, SNS, and Adam (mobile ads platform).
So when considering all these movements and situations, we know that it is derived from mobile search. The local search market (desktop) is already saturated and Overture platform was not flexible for mobile search. On the contrary to this, smartphone is rapidly spreading to public in Korea and it was enough to intimidate local portal sites as Apple and Google already have established platforms like iAd and AdMob.
The funniest thing is Naver and Daum teamed up to file a complaint with the Fair Trade Commission against Google for mobile search in 2011. Because the Android mobile phone is equipped with Google as a default search engine, it is not easy to change other local search engine for users and they think that it is unfair competition in mobile. The chart, below, shows their assumption is not wrong and that Google possesses a strong market share in mobile search after Naver.
We don’t generally think of paid search as a great channel for personalisation, but increasingly, it's becoming one.
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