Google makes fast inroads in Korean digital ad market at the expense of domestic players
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According to NHN Data, the average traffic from Google Ads’ search engine advertising (SEA) reached a record high of 28.5 percent last month. Traffic refers to the number of visitors that arrive at a website through an ad.
Google Ads has seen its share of 15.6 percent of 2018 surpass 20 percent in 2020 and reach 25.4 percent. The ratio is expected to top 30 percent by the end of the year.
Its advance came at the expense of local players.
Naver commanded 72 percent in 2018 and 73.9 percent in 2019. Its share sank to 69.1 percent in 2020 and further to 66.1 percent last month. Kakao’s market share of 8.2 percent in 2018 peaked at 9.1 percent in 2019 to fall to 5.1 percent last year and 4.6 percent last month.
“Although the ad market as a whole is growing, it seems as though Google has overtaken Naver’s market share,” said Kim Jin-woo, an analyst at Daol Financial Group. If there are incentives, Naver and Kakao’s market share will continue to fall, he added.
Daol Financial has adjusted estimates of Naver and Kakao’s earnings from search engine ads downwards from 20 to 30 percent to 10 percent.
Naver is currently operating various search engine ads such as website search ads, brand search ads, click choice ads, place ads, and display ads. It is also releasing new types of search engine ads but its overall market share continues to plunge.
Kakao offers ads such as keyword ads and brand searches and new types of ads are currently in the works. Kakao is also planning to combine Daum portal ads and Kakao ads starting this month to create a synergistic effect.
Shares of Naver closed up 3.40 percent to 243,000 won ($186.71) and Kakao up 5.73 percent to 72,000 won on Tuesday.
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