Super app Kakao looks to international markets as advertising slows

Kakao, the South Korean internet company, is planning to expand internationally as advertising spend in its domestic market slows after a series of steeply declining profits for the firm with big plans for its K-Pop agency interests.

Why the story matters

One of Asia’s ‘super apps’, KakaoTalk is incredibly popular in its native South Korea, where over 90% of the country’s 51.7m population use the app. But with such success come growing pains: a slowing economy has dulled advertising sales growth, a situation that echoes the fortunes of various other ‘super apps’ across the continent.

The strategy, according to a report in Nikkei Asia, will be to deploy the company’s significant interests in the K-Pop business to power its next phase of growth internationally.

The story

• Kakao’s overall performance remains strong, with 12% revenue growth in the most recently reported quarter.
• Advertising remains the company’s largest individual source of group revenue at 29% of the overall business.
• Music is now catching up at 23% of the business; the segment is growing much faster, however, at around 130%, according to Nikkei.

Beyond Korea

The company’s strategy for ongoing growth now turns to increasing international revenues, taking it from 10% of overall revenues in 2022 to a target of 30% by 2025.

Music will be critical, fuelled by the acquisition of a 39.9% controlling stake in the K-pop talent agency SM Entertainment in March. It will see the company begin to wield a roster of artists including NCT 127, EXO, BoA and Girls’ Generation.

K-Pop’s international fandom is critical to the plan, as it suggests a way of bringing on board new platform users from around the world by streaming concerts and exclusive content through Kakao's platform services.

Sourced from Nikkei Asia, Reuters, CNN, WARC