Belt tightening holds Korean ad spend growth at 2.2% in 2013, but mobile rockets by 119%

Advertising spend in Korea grew by just 2.2 per cent last year, a report from one of the country’s biggest ad agencies has shown.

Spend in most traditional media such as terrestrial TV and newspapers dropped, with only advertising in men’s fashion magazines showing significant growth.

Digital media spend grew substantially, however, with mobile ad spend rocketing by 119 per cent.

The rate of growth in 2013 was completely flat, with a 2.2 per cent lift also seen between 2012 and 2013.

Korea’s ad industry now stands at US$8.99 billion, according to Cheil Worldwide.

“Such a slight increase is mainly due to companies’ conservative approach to advertising spending as private consumption has significantly floundered due to the prolonged recession and growing household debt,” the agency noted.

However, Korea’s ad industry is expected to grow by 3.8 per cent this year, as economic conditions are predicted to improve and major sporting events such as the FIFA World Cup boost spend.

The full report from Cheil Worldwide:

Broadcasting Media

TV advertising spending continued to fall in 2013 as TV viewing rates have declined due to the expansion of the N screen service. Terrestrial TV advertising spending in 2013 fell by 5.4% year on year. Thus, the share of terrestrial TV in total ad spending shrank to 19.1% from 20.6%. Meanwhile, advertising spending on IPTV and satellite TV surged thanks to increasing subscribers. As of December 2013, the number of IPTV subscribers exceeded 8.61 million, and ad expenditures hit 38 billion KRW which is up by 61.7% against the previous year.

Satellite subscribers also surpassed 4.18 million, which may not be as high as IPTV, and ad spending rose by 16.2% against the previous year. It can be concluded that advertising spending on terrestrial TV has been widely distributed to a wide array of broadcasting media. Ad expenditures on DMB, which struggles to compete with mobile HD broadcasting and VOD services, significantly fell in 2013, showing a negative growth of 26.3%. It is the highest inverse growth among all media.

Print Media

Ad expenditures on newspapers and magazines recorded a negative growth of 6.6% and 8.4%, respectively. In case of newspapers, the fall of free newspapers is prominent due to the mobile internet. Only economic newspapers slightly grew against the previous year. Such a result seems to be due to consumers’ growing interest in economy amid the recession. It is also the same for magazines. Despite an overall decline in spending on magazines, economic magazines slightly rose. In addition, male fashion magazines maintained a 3.8% growth even in 2013, following the constant growth since 2010. The growth in 2013 is not equivalent to the growth of 10.3% in 2012, but male fashion magazines seem to play a breakthrough role in the magazine market in spite of the floundering magazine market.

Internet Media

The Internet which posted itself as the first media outstripping advertising spending on terrestrial TV in 2012 continued its momentum in 2013. But, its growth slightly slowed down in 2013 which is up by 2.5% against the previous year. It appears that a part of expenditures on the Internet shifted to the mobile media. By the type of the Internet media, search and display advertising posted 1.3 trillion KRW and 682 billion KRW, respectively.

Search advertising still represents a high share, but the ratio of display advertising spending has constantly expanded from 32.5% in 2010, 33.0% in 2011, 33.7% in 2012 to 34.0% in 2013.

Mobile Media

The mobile media which drew the biggest attention when estimating ad spending in 2013 continued an overwhelming growth in 2013. Mobile spending recorded 60 billion KRW in 2011 when it was first estimated but surged to 210 billion KRW in 2012 and 460 billion KRW in 2013. The growth rate was a staggering 119%.

It is no doubt because companies beefed up the budget for mobile as consumers’ use of the mobile media increased with the huge penetration of smartphones and the expansion of the high speed free Internet service.

Total Advertising Spending Forecast for 2014

The Bank of Korea has forecasted the country’s economic growth rate for 2014 and 2015 to be 3.8% and 4.0%, respectively, with improving domestic consumption and investment and constant export momentum. It is good news to the advertising market which is highly correlated with economic growth. In addition, large scale sport events such as the Sochi Olympics, the Brazil World Cup and the Incheon Asian Games are lined up throughout 2014; they are expected to greatly bolster the growth of advertising. As a result, the domestic advertising market for this year is forecast to grow by 3.8% against 2013.


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