KOREA: Online ads haul in $1 billion

Online advertising market expected to grow 15.2 percent in 2007

Korea Herald
Monday, February 5, 2007

By Hwang Si-young

The domestic market for online advertising is estimated to be worth 977.8 billion won ($1.03 billion) this year, according to a recent survey conducted by the nation's largest online marketer Overture Korea and Cheil Communications Inc.

The survey said this year's online ad market will grow 15.2 percent to 977.8 billion won, from last year's 849 billion won. Search-based ads will account for about 60 percent or 613.5 billion won, which represents a 21.5 percent growth compared to last year's 504.9 billion won.

The survey said the search-based ad market will enjoy popularity this year, due to the expansion of "keyword-targeted text ads," "cross-media marketing" and the sophistication of search-based ads.

Keyword-targeted text ads are being triggered by users' specific search requests. It means one does not have to see the ad unless one is searching for information on that specific topic. Because there are no flash, irrelevant banners competing for attention, the text ads are read carefully by users. A search engine can earn up to 1,000 won for one click of an ad.

Cross-media marketing is a kind of integrated advertising package. For instance, a product is promoted both by on internet and on TV.

A mere example of a telecom operator's new brand, dubbed "P," shows the impact of this converged strategy, the report said.

When P was solely advertised on TV, its brand recognition rate stood at 36.7 percent, but when that was coupled with the internet, the rate went up to 57 percent.

The report also said this year will see the emergence of new types of ads -- ads using video clips and tag-based ads.

Overture Korea plans to introduce new ad models that can be aligned with Web communities or blogs, as well as tag-based ads and moving clips ads this year.

"The nation's 1,000 top advertisers feel, to achieve greater marketing effect, they'd better rely on search-based ads. The practical use of the search-based ads increased threefold last year, compared to the previous year," said an official at Overture Korea.

The domestic market for online ads has grown by 48 percent on average during 2001-2006. The 48 percent figure is about 10 times bigger than the 4.6 percent annual increase rate of the ad market including traditional and online ads.

Online sales hit record

By Kim Yoon-mi

Total e-commerce sales in Korea hit a record-high 13.45 trillion won ($14.29 billion) last year, up 26.1 percent from the previous year, the National Statistical Office said yesterday.

E-commerce businesses have been increasing since 2001 and the size of the transactions more than quadrupled from 3.3 trillion won in 2001 to 13.45 trillion won in 2006.

By item, online trading in clothes and fashion were most active with 17. 6 percent of all transactions followed by travel and reservation services with 15 percent and home appliances and electronics with 14.9 percent.

In particular, clothes and fashion products saw the largest sales volume with 788 billion won, which is a 49.8 percent increase from a year earlier, according to the NSO.

Products for children and infants saw the biggest jump in terms of sales growth, up 60 percent from the previous year, posting a total of 245 billion won in sales.

According to the NSO, the number of online shopping malls in Korea went up to 4,531 last year from 4,355 in 2005.

In December alone, total online shopping transactions reached 1.3 trillion won, which is a 14.9 percent increase year-on-year and 4.1 percent up from the previous month.

The amount of the December transactions also hit a record, according to the NSO.

"The transaction surge in December was mainly due to increase in travel and reservation services, book orders, and more purchases of computers, often active during winter vacations," said the NSO in a statement.

The NSO conducted a survey of 4,531 online businesses operating business-to-consumer (B2C) cyber shopping malls from Dec. 5 to 22.

Date Posted: 2/5/2007