Despite the global recession and the slowdown of the domestic economic growth, South Korea’s ad market is projected to grow 5.5% year-over-year and record 12.62 trillion won (US$10.6bn).

South Korea’s ad spending recorded 2.3% growth in 2019 to reach 11.97 trillion won (US$10bn) in 2019 compared to the year before, according to a new report by Cheil Worldwide.

The agency noted that projected growth this year can be attributed to the Tokyo Olympics kicking off in July and South Korean legislative election slated to take place in April.

In addition, the increase in broadcast ad spending due to the novel coronavirus’ effects is expected to result in the broadcast ad market turning positive. The OOH ad market is also expected to record a higher growth compared to the previous year thanks to the introduction of new digital outdoor media and the digital transformation of traditional billboards.

Meanwhile, this year the digital ad market size is expected to surpass the size of the combined ad markets of broadcast and print for the first time. Mobile ad spending alone is expected to record two-digit growth and account for nearly 30% of the entire advertisement market.

The report stated that introduction of 5G technology fuelled the continued high growth of the digital ad market, which allowed for the transmission of high-quality data in a short period of time, leading to an explosive increase in video ads. Ads incorporating cutting edge technologies such as artificial intelligence, AR, and VR have also had a huge influence.

Digital ad market

Despite the overall slowdown of the economy, the digital ad market, which includes mobile and PC, continued its growth. Last year, the digital ad market grew 15% year-over-year, surpassing 5 trillion won (US$4.2bn) for the first time in history. This record came just a year after it surpassed 4 trillion won (Us$3.36bn). Its share of the total ad market also increased to 42.2% from 2018’s 37.5%.

  • Mobile ad spending recorded the highest growth rate (17.2%) among all platforms, totalling 3.28 trillion won (US$2.75bn). This is the first time a single platform surpassed 3 trillion won (US$2.5bn) since Cheil Worldwide started recording total ad spending in 1977.
  • Search-based ads recorded 9.8% increase year-over-year to reach 1.71 trillion won (US$1.4bn) due to release of various ad products such as shopping search ads.
  • Display ads centred on video ads benefited from increased 5G network coverage, leading to a 26.5% increase to 1.56 trillion won (US$1.3bn).
  • PC ad spending, which had been recording a negative growth rate since 2014 due to the shift to mobile, recorded a growth of 11.2% and 1.77 trillion won (US$1.48bn).

Thanks to a continuous influx of advertisers from shopping sectors such as e-commerce, search-based and display ads also managed to rebound, recording a 7.9% and 16.6% growth respectively.

Broadcast and print ad market

Meanwhile, broadcast ad market consisting of terrestrial TV, cable TV, total TV programming, and radio recorded negative growth, and its market share has been decreasing for the past three consecutive years (2018’s 33.9%  2019’s 30.8%), widening the gap between the broadcast and digital ad market.

  • The overall broadcast ad market, including TV and radio, decreased 7% compared to the previous year to 3.69 trillion won (US$3bn).
  • Terrestrial TV ad spending showed the biggest drop (-15.3%) among all platforms, recording a total of 1.19 trillion won (US$999mn). This is analysed to be a result of the lack of favourable events, such as the Olympics and the World Cup, combined with the slowdown of the domestic economy and the introduction of in-program advertising being cancelled.
  • Cable TV and total TV programming ad spending recorded 1.94 trillion won (US$1.6bn), a 2.1% drop compared to the previous year. With a competitive edge in their contents, these two sectors had been showing growth in the last two years.
  • On the other hand, IPTV showed a growth of 6.7% due to the increase of the number of subscribed households and increase in sales of real-time advertising products.
  • In the print ad market, newspaper ad spending recorded 1.39 trillion won (US$1.16bn), a 2.1% drop compared to the previous year.
  • The magazine ad market recorded 283.2 billion won (US$237mn), an 8.1% drop from the previous year as even major magazines were discontinued.

OOH (Out of Home) ad market

Last year, the OOH ad market recorded 1.03 trillion won (US$865mn), similar to the previous year. What stands out in the OOH ad market is the rebound in billboard ad spending, which had been in decline for the past several years.

  • Billboard ad spending increased 10.1% compared to the previous year due to influences such as the introduction of electronic displays incorporating digital technology in areas designated as Free Outdoor Advertising Zones, and the trend in large-scale advertisement media.
  • Transportation and cinema ad spending, which had been leading the growth of the OOH ad market, respectively dropped 4.5% and 3.2%. 

Sourced from Cheil Worldwide