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

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

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