Korea's Internet advertising market trebled to US$27 million
in 1999 compared with the year before, and this triple digit growth rate
is expected to continue this year.
The rosy outlook reflects the fact that large numbers of Koreans are
taking up the cyberspace challenge - according to Korea's Ministry of
Information and Communications, the total number of Internet users in
the country has broken through the 10 million barrier.
The mushrooming Internet business, however, has spawned a flurry of
mergers and acquisitions activity, which will serve to fuel the Internet
ad business, since even more advertising to promote new entities will be
needed, industry analysts said.
But unlike in other countries where M&As occur among big players, in
Korea the big are eating up the small, a market analyst from Daewoo
Securities told MEDIA.
This, the analyst said, was underlined by the fact that the Samsung
Group had recently set up a US$270 million fund to buy into ISP
companies.
At the same time, strategic alliances among cable and terrestrial TV
channels, ISPs, newspapers and even ad agencies are not uncommon, since
they are aiming to capture a large share of a fast-growing market.
Thrunet is the most active in this area.
The mergers and acquisitions mania sweeping Korea was triggered by the
merging of online service provider Nowcom with Thrunet, which possesses
the knowhow to deliver ultra, high-speed interconnectivity through cable
networks.
The merger gives Thrunet a major foothold in the Internet market against
such competitors as Hanaro Telecom and Dreamline.
Meanwhile, Dacom, Korea's second-largest telecom service provider has
become a part of the LG Group, which has resulted in the merger between
Dacom and LG Internet's Channel i.
Dacom runs Chollian - the country's largest online service with 2.2
million subscribers - while Channel i has 3.1 million subscribers.
However, despite the merger, the two brands will be kept separate in
order to prevent confusion among consumers.
But the M&A activities are not restricted to just media and ISP
companies; banks and even advertising agencies are getting in on the act
because the information business is becoming increasingly lucrative.
For instance, Yahoo Korea and Lycos Korea are currently in merger talks
with Citizen's National Bank and Pyongwha Bank respectively.
In addition, Cheil Communications, one of Korea's largest ad agencies,
has formed a pact with ISP company, Hankyong.com, an affiliate of Korea
Economic Daily.
Both sides will promote business-to-business links in the field of
ebusiness among small enterprises and other internet-based companies
under the strategic alliance agreement.
They will also strengthen the alliance through joint marketing,
investment and consulting.
