Naver's CFO gives weak outlook, hints at more monetization tools in ad biz

[Photo by MK DB]

Google has performed weaker against 18-month ago and the outlook for Naver is no better, according to the chief financial officer of the Korean internet giant.

The warning has been raised for slowdown in digital ad market, and Korea’s household platform company is bracing up for similar challenge, said Naver’s CFO Kim Namsun at the Goldman Sachs TechNet Conference Asia Pacific held recently.

Naver will keep on creating new advertising solutions and products to achieve double-digit growth in its core search engine business.

Kim’s comment comes after U.S. Snap CEO Evan Spiegel warned of slowing growth across the digital ad industry. Social media companies in the United States are already having a rough year amid the cutback in digital ad spending caused by many factors including the war in Ukraine, rising borrowing costs, and reduced traffic, and this is expected to affect Naver and other Korean big tech firms that heavily rely on digital advertising.

Naver’s CFO Kim Namsun

But Naver is different from other global big tech companies as it was confirmed that there is no significant correlation between Naver's search ad business and the pandemic, according to Kim. Naver saw sales growth in 2021 largely driven by improvement and optimization in its ad solutions, not by pandemic-caused market dynamics, he stressed, albeit overall commerce sales were led by increased consumer demand in the Covid.

However, a breakthrough is needed for Naver’s platform business due to stagnated sales.

Platform sales accounted for 88.2 percent of Naver’s first-quarter revenue, and the chunk of the sales came from search and display business. Analysts say the slowdown in the ad and commerce market is to be blamed for Naver’s sluggish sales in the first quarter. The company’s search platform sales stood at 843.2 billion won ($681 million) in the quarter, the lowest growth rate against the previous year among its five major business areas.

“We have to create new ad products and solutions in line with new emerging formats,” Kim said, hinting that Naver will make more monetization opportunities in the ad field.

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