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Mobile to the rescue in Korea’s 2014-15 ad spending: Cheil

Korea advertising spending in 2015 is expected to grow 3.2 per cent, reaching USD 9.4 billion, according to a recently released advertising outlook by Cheil Worldwide. The country’s 2014 ad spending increased merely by 0.6 per cent to USD 9.1 billion for two big reasons. First, the Sewol Ferry disaster took a major blow to marketing activities, and second, mobile ad growth led to the first-ever decline of landline internet ad.

The 2014 Korean ad spending analysed by Cheil Worldwide is KRW 9,648 billion (USD 9.1 billion), 0.6 per cent up from last year. Despite big sporting events such as the Sochi Winter Olympics, FIFA World Cup and the Incheon Asian Game, the ad market did not see much of growth as companies reduced marketing budget due to the Sewol Ferry disaster; Koreans lost interests in the FIFA World Cup as Team Korea was eliminated in the first round, and private consumption was reduced due to the increased household debts.

All these elements increased uncertainty, prompting businesses to follow conservative marketing strategy. A closer look shows:

Internet and mobile: The landline internet ad market shrank by 6.8 per cent to KRW 1,867 billion (USD 1.8 billion), recording the first-ever negative growth. The search ad spending dropped by 7 per cent to KRW 1,229 billion (USD 1.2 billion), and display ad spending fell by 6.4 per cent to KRW 638 billion (USD 605 million). The negative growth of landline internet ad market is due the stellar growth of mobile ad market, fueled by widespread usage of smart phones. The mobile ad market saw a whopping growth of 82.4 per cent to KRW 839 billion (USD 796 million).

Broadcast and print: The terrestrial TV ad spending fell by 8 per cent to KRW 1,682 billion (USD 1.6 billion). Despite large scale global sporting events, the Sewol disaster took a major blow. Continued drop in the viewership of the terrestrial TV, supported by the growth of IPTV, also contributed to the ad spent drop. IPTV continued to attract viewers and as more Koreans tuned to VOD, the IPTV ad market increased by as much as 67 per cent. Both newspaper and magazine ad markets shrank, by 3.3 per cent and 5.9 per cent respectively.

OOH: The on-going popularity of the Korea Professional Baseball and large retailers has contributed to out of home (OOH) growth. The digitisation of OOH was another growth factor, leading to 4.6 per cent growth of the OOH ad market. In particular, the booming domestic movie industry led the robust growth of cinema ad, up 3.3 per cent on last year reaching KRW 176 billion (USD 167million), the highest ever.

The 2015 Korean ad spending outlook
In January 2015, the Bank of Korea (the country’s central bank), announced that it forecasts the country’s economy growth at 3.4 per cent in 2015. The low growth is not unlike last year, but the situation will be better for the domestic market due to the recent plunge in global oil prices.

The ad market has rosy outlook too, with the most noticeable growth stemming from terrestrial TV and mobile ads. The terrestrial TV ad market (which was plunged last year due to the social shocks such as the Sewol ferry disaster) is expected to grow by 3.4 per cent to KRW 1,740 billion (USD 1.7 billion). Mobile ad market is going to see more than 20 per cent growth to overpass KRW 1 trillion (USD 949 million).

Shubhi Tandon

Shubhi Tandon is the Assistant Editor at Digital Market Asia. Fascinated by the evolving digital media industry, she has focussed on tracking developments in the Asia Pacific market since 2014.