2014 was an interesting year for the digital advertising industry in Korea. Just by looking at the numbers we can see that there is a steady growth in ad spending, and that it will definitely continue on in the upcoming years. According to Statista.com, Korean advertisers’ spending will likely break the 10-billion-dollar barrier in 2015, making the local market the 7th largest in the world. And yes, just by looking at your smart TV, smart phone, or smart watch, you can tell that, when compared to a few years back, Korean advertising has gotten undeniably flashier and wittier – more sophisticated and less banal.
The quality of advertising content has gone up significantly: better ideas, better execution, better formats, with one or two celebrity endorsements thrown into the mix here and there for good measure. Our minds were blown away by the amazing viral campaign for North Face Korea that broke the internet last year. Our jaws dropped at the finesse of the latest Hyundai and Kia TV ads, their sophisticated visuals and their not-so-cheesy one-liners. We were bombarded by the countless mobile game ads, but, to our own surprise, they were interesting enough so that we did not immediately Google-search for better ad-blocks for our web browsers. In 2014 many creative directors at major ad agencies realised that they do not really need “earworm” jingles and silly dance routines to captivate their viewers. It can be said that 2014 marked the Korean advertising’s transition from a pimply teenager into a fine young lad. Or gal, perhaps.
A lot of this was possible thanks to a few behind-the-scenes driving forces. One of them was the unprecedented adoption rate of next-gen mobile devices and LTE internet across the peninsula. The time Koreans spend on their ultra-fast phones and tablets forced advertisers to rethink their strategies and caused a paradigm shift in audience targeting – suddenly the mobile users are the most sought-after ad viewers. With the merger of Daum and Kakao, it is quite clear where the advertising market’s focus will be in 2015. Or maybe the booming UHD IPTV ad networks will steal the show? We shall wait and see, but what is certain is that ads will be even more personal, interactive and ubiquitous.
Another major force leading the market’s transformation was the increase in the adoption of sophisticated advertising technologies. While Korea is still behind the West, in 2014 we saw strides made in the adoption of DSPs (demand-side platforms) and DMPs (data management platforms) by major agencies, ad networks, media reps and publishers. There is a growing need for smart technologies that would help optimise campaigns, analyse data, increase ROIs and better utilise the outstanding inventory. The presence of the major programmatic platforms in Korea has grown significantly in 2014, with multi-million dollar deals around the corner. And although, domestically, the open ad exchange ecosystem and RTB are still at an early stage, the competition in programmatic is fierce in anticipation of significant systemic changes to come. After all, DaumKakao are already running tests to launch their own open ad exchanges, and Naver (the largest domestic portal and publisher), while still stuck in “the old ways”, must follow suit eventually.
These changes alone pose tremendous opportunities for entrepreneurs who possess a technological edge: a new decision-making, machine-learning algorithm, a smart media platform, a piece of software that saves time and money for advertisers, or perhaps something else completely, which is new and game-changing. The highly innovative environment being created in Korea by the government and various research institutions, multi-billion dollar brands (e.g. Samsung, LG etc.), savvy investors and booming startup incubators, as well as other stakeholders, is definitely the place to be for digital media and ad tech companies in 2015.
One thing to keep in mind is that the Korean business world is a vast, interconnected place where everybody knows everybody, rarely letting outsiders in. The Korean market plays by its own peculiar set of rules, and it is sometimes tremendously hard to break your way into it. Companies planning to enter the Korean digital advertising market in 2015 must take this into consideration in their market entry strategies. Sometimes, despite having a game-changing business model, the one thing you lack is that someone who is already on the inside. Oftentimes that someone can really make a difference.