Google expands ad market presence in Korea

February 20, 2014

By Choi Kyong-ae

Google stands to further benefit from Korea’s display-ad market as local smartphone users face bigger exposure to ads on mobile devices, industry sources said Thursday.

The global search engine’s display-ad revenue in Korea more than doubled to almost 100 billion won ($93 million) last year from about 40 billion won a year earlier, a source familiar with industry trends told The Korea Times by telephone, asking not to be identified.

The source further explained that “Google operates the Google Display Network (GDN), a new growth engine, to help corporate clients find the right spot out of countless websites for their advertisements.”

Revenue from GDN operations is increasingly backed by Google’s YouTube platform and robust demand for ads on the widely-viewed platform, he said. “For example, Psy’s mega hit Gangnam Style already surpassed 1.9 billion views on YouTube as of today (Thursday).”

Google, which owns the YouTube platform and carries display, or banner ads for corporate clients on it, is one of the biggest beneficiaries of the booming mobile business, according to multiple industry experts.

When contacted by The Korea Times, Google declined to comment.

As nine out of 10 smartphones in Korea are run on Google’s open-source Android operating system, the U.S. company is “expected to have a growing share in the domestic online ads market,” Shin Won-su, director of the Korea Onlinead Association (KOA), said by phone.

Korea’s online advertisement market grew 16 percent to 2.46 trillion won in 2013 from 2.11 trillion won a year earlier. Online ads accounted for 25 percent of the overall advertisement market valued at 9.79 trillion won in 2013, according to KOA data.

Under the online-ad category, the display-ad market posted a growth of 7 percent last year, a sharp gain from the previous year, at 644 billion won. In 2012, it experienced very marginal changes from the previous year’s 603.5 billion won.

Google took up 16 percent of the country’s total display-ad revenue last year, as Naver, the country’s biggest search engine company, saw its display-ad sales fall 7 percent to 324 billion won.

“Google is also winning others in mobile-ad sales on a stronger mobile momentum across the world,” Shin said. Google has definitely contributed to the country’s growing mobile-ad market in the past four years, he added.

The mobile-ad market is projected to reach 652 billion won this year, jumping from the 73.6 billion won it generated in 2011, according to KOA data. Google likely earned 43 billion won in mobile-ad sales last year, according to the source.

However, Google lags far behind in the Korean search-engine market dominated by Naver. Seven out of 10 search-engine users choose Naver over other engines including Google and Daum.