FEATURES: Korea adex rebounds amid 'Net fever - A buoyant domestic economy and dotcom spending drove adspend up in Q1

<p>During 1999, the advertising market in Korea was a notable </p><p>beneficiary of economic revival and renewed consumer confidence. </p><p><BR><BR> </p><p>A sustained economic recovery from Q2 onwards resulted in a sharp </p><p>increase in advertising spending, returning the media market back to </p><p>1997 levels. </p><p><BR><BR> </p><p>In Q1 this year, the pace was no less hectic as a buoyant domestic </p><p>economy and a heavy dose of Internet fever drove advertising </p><p>expenditures even higher. </p><p><BR><BR> </p><p>Over the last year or so, foreign-owned advertising agencies have begun </p><p>infiltrating the top agency rankings, although the large in-house </p><p>agencies belonging to groups such as Samsung, LG and Lotte remained the </p><p>dominant force. </p><p><BR><BR> </p><p>Alone among the top five agencies Hyundai's Diamond Ad is now </p><p>foreign-owned - by Cordiant - although it's too early to determine what </p><p>actual difference this will make. </p><p><BR><BR> </p><p>More significantly the realignment of SK Telecoms' advertising over the </p><p>last couple of years has had a dramatic effect on the fortunes of two </p><p>previously small foreign agencies: TBWA and Lee DDB. </p><p><BR><BR> </p><p>TBWA was ranked seventh in last year's official agency ranking whilst </p><p>the new joint venture Lee DDB came in at No.17. </p><p><BR><BR> </p><p>Nearly half of the top 20 agencies now have an overseas connection, </p><p>ranging from affiliation (for example, Sangam/Grey) to full ownership </p><p>(McCann-Erickson, TBWA). </p><p><BR><BR> </p><p>That said, the number of foreigners working in the Korean ad agency </p><p>sector remains very low - less than 10, most of them account handlers or </p><p>business managers. </p><p><BR><BR> </p><p>There's no sign of any of the major media independents setting up shop </p><p>in Korea just yet. </p><p><BR><BR> </p><p>Among the existing players, McCann is branding its media service these </p><p>days as Universal McCann and a Starcom team handles the local P&G media </p><p>AOR assignment in conjunction with Dentsu-backed Phoenix. </p><p><BR><BR> </p><p>Neither Carat or Zenith seem likely to launch into Korea in the </p><p>immediate future. </p><p><BR><BR> </p><p>As ever, lack of effective de-regulation in broadcast media remains a </p><p>significant obstacle to change in Korean advertising. </p><p><BR><BR> </p><p>Nowhere is the current market status, complete with all its </p><p>frustrations, better characterised than on TV. </p><p><BR><BR> </p><p>A recent long-discussed initiative by Kobaco to start airing commercials </p><p>in-programme was recently derailed by a combination of newspaper </p><p>lobbying and "popular opinion" as represented by local civic groups. </p><p><BR><BR> </p><p>Terrestrial TV airtime, which was severely undersold from 1996 until Q4 </p><p>last year, is now experiencing the opposite problem. </p><p><BR><BR> </p><p>As demand for airtime exceeds supply by anything up to 20 per cent, </p><p>Kobaco - the state sponsored sales agent for MBC, SBS and KBS2 - is </p><p>struggling to implement its new GS (Global Standard) sales system. This </p><p>is the first such change since KOBACO's establishment in 1981. Attempts </p><p>over the last few years to re-structure commercial television in Korea </p><p>have come up against a set of familiar obstacles: politics, bureaucracy, </p><p>civic groups and trade unions. </p><p><BR><BR> </p><p>Everyone seems to have strong views on why things shouldn't change, but </p><p>this innate conservatism is increasingly at odds with the commercial </p><p>reality. </p><p><BR><BR> </p><p>Sadly, more commercial TV stations and a free market in airtime still </p><p>seem a distant prospect. </p><p><BR><BR> </p><p>Advertisers in the world's tenth largest advertising market will </p><p>continue to suffer the frustrations of "relationship-based" airtime </p><p>sales (Kobaco) coupled with equally arcane censorship rules. </p><p><BR><BR> </p><p>The American Chamber of Commerce in Korea recently published its annual </p><p>Trade Issues publication, which becomes the basis for lobbying </p><p>politicians and government officials in Washington DC to include certain </p><p>topics in pending bilateral talks between Korea and the US. </p><p><BR><BR> </p><p>The section on advertising identifies three main areas of concern and </p><p>these corresponding recommendations: </p><p><BR><BR> </p><p>TV advertising recommendation </p><p><BR><BR> </p><p>- That Kobaco test in-programme advertising, continue to create more </p><p>flexible TV airtime packages, eliminate the conditional selling of radio </p><p>airtime and adopt 30 seconds as the standard commercial timelength on TV </p><p>station ratecards. </p><p><BR><BR> </p><p>Broadcast advertising censorship recommendation </p><p><BR><BR> </p><p>- Move to a system of industry self-regulation, which has occurred </p><p>successfully in many other countries; for example, the Advertising </p><p>Standards Association (ASA) in the UK. </p><p><BR><BR> </p><p>Establish a transparent, independently funded and internationally </p><p>accepted ASA Korea administered by a professional staff. </p><p><BR><BR> </p><p>As an interim measure, prior to disbanding KBC's censorship role, </p><p>conduct censorship reviews at the storyboard rather than finished film </p><p>stage. </p><p><BR><BR> </p><p>Print advertising recommendation </p><p><BR><BR> </p><p>- Encourage wider participation among magazines and newspapers in ABC </p><p>Korea. </p><p><BR><BR> </p><p>Lastly, some good news. </p><p><BR><BR> </p><p>Dotcom advertising arrived in Korea last year with a vengeance. Brand </p><p>new advertising categories such as online shopping and portals </p><p>appeared. </p><p><BR><BR> </p><p>The biggest jolt, however, came from online share trading and securities </p><p>investment. </p><p><BR><BR> </p><p>The "Buy Korea" fund set up by Hyundai was the biggest-spending ad </p><p>campaign in 1999. </p><p><BR><BR> </p><p>Generally the bigger advertising campaigns are now focused on some </p><p>aspect of technology relating to either Internet or mobile telecoms. </p><p><BR><BR> </p><p>How long this will last is anyone's guess, but despite many </p><p>dysfunctional aspects of the Korean marketplace, speed to market and </p><p>rate of adoption for hi-tech products and services is mightily </p><p>impressive. </p><p><BR><BR> </p><p>Mobile phone penetration is now in excess of 55 per cent, while March's </p><p>latest internet user count exceeds 14 million. </p><p><BR><BR> </p><p>And WAP is coming. Watch this space (or your handphone ...). </p><p><BR><BR> </p>