Mobile Advertising Market

Google, Facebook, and Twitter are making aggressive inroads into the local market.
Google, Facebook, and Twitter are making aggressive inroads into the local market.

 

The world’s leading technology companies Google, Facebook, and Twitter have an eye on the Korean mobile advertisement market. 

In response, local Internet companies are introducing a variety of ad products, but it is not easy for them to compete with those large IT corporations. The difficulty is largely due to local companies’ alleged unfair business deals centered on Naver that have come under the investigation of the Korea Fair Trade Commission.

According to industry sources on December 12, Korea’s mobile market has been so rapidly growing that its smartphone penetration rate is 79.5%, ranking first in the world. With the mobile market growing, the size of its mobile ad market has also increased nearly six times, from 76.1 billion won (US$72.3 million) in 2011 to an estimated 416.9 billion won (US$396.1 million) this year. 

In tandem with strong market growth, the influence of mobile advertising is growing as well. According to media representative MezzoMedia, the effectiveness of mobile ads is 65, provided that those of TV ads are 100. In addition, a report on the daily use of mobile phones, PCs, and TVs released by the Nielsen Company in June shows that on average, Koreans spend more time in activities with their mobile phones (203 minutes) than PCs (86), or TVs (180). 

Google’s domination of the mobile ad market in Korea and other countries has been accelerating. The company comprises 55.97% of the global market worth US$11.335 billion (11.9267 trillion won). Google is making great inroads into the Korean market by enhancing its service. 

Facebook and Twitter are also making full-scale expansion into the local market. In particular, Facebook, which established its Korean branch in 2011, is planning to expand its reach to Korea in line with the appointment of a new president.

Facebook has seen its profits from ads soar. Its sales amounted to US$2 billion in Q3 2013, a 60% year-on-year gain. Advertising constitutes 49% of total sales. Recently, the firm launched its new mobile ad product that shows the function of the app prior to installation by inserting a video in the ad for the app installation. The social media company is providing a video ad service that shows members 15 second or less clips on both smartphones and the Web, and operating an ad platform called Facebook Exchange (FBX) on a trial basis. 

Twitter’s move is also worth noticing. In November, the company officially introduced various ad products composed of Promoted Tweets, Promoted Trends, and Promoted Accounts. It began to offer those ad products in partnership with six advertising sales agencies, including Nasmedia, Mable, MezzoMedia, Wisebirds, 24/7 Real Media, and Incross. An official at an advertising sales agency said, “Twitter has kicked into high gear through its visits to advertising sales agencies, starting in the week of its release of new ad products.”

An industry source pointed out, “This year has witnessed numerous mobile ad products by overseas companies such as Google, Facebook, and Twitter, as well as local ones using social networking services (SNS) like KakaoTalk and Line.” The source added, “I think that a new form of advertising that combines SNS and mobile ads will increase next year, owing to diversified methods for mobile adds. As a result, intense market competition is expected.”

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