SEOUL, SOUTH KOREA – Cheil Worldwide reported that South Korea’s ad spending recorded 2.3% growth in 2019 to reach 11.97 trillion won in 2019 compared to the year before.
Despite the overall slowdown of the economy, the digital ad market, which includes mobile and PC, continued its positive growth. Last year, the digital ad market grew 15% year-over-year, surpassing 5 trillion won for the first time in history. This record came just a year after it surpassed 4 trillion won. Its share of the total ad market also increased to 42.2% from 2018’s 37.5%.
The introduction of 5G technology fueled the continued high growth of the digital ad market, which allowed for the transmission of high-quality data in a short period of time, leading to an explosive increase in video ads. Ads incorporating cutting edge technologies such as artificial intelligence, AR, and VR also have had a huge influence.
Meanwhile, broadcast ad market consisting of terrestrial TV, cable TV, total TV programming, and radio recorded negative growth, and its market share has been decreasing for the past three consecutive years (2018’s 33.9% à 2019’s 30.8%), widening the gap between the broadcast and digital ad market.
□ Digital ad market
Last year, mobile ad spending recorded the highest growth rate (17.2%) among all platforms, totaling 3.28 trillion won. This is the first time a single platform surpassed 3 trillion won since Cheil Worldwide started recording total ad spending in 1977.
Search-based ads recorded 9.8% increase year-over-year to reach 1.71 trillion won due to release of various ad products such as shopping search ads. Display ads centered on video ads benefited from increased 5G network coverage, leading to a 26.5% increase to 1.56 trillion won.
PC ad spending, which had been recording a negative growth rate since 2014 due to the shift to mobile, recorded a growth of 11.2% and 1.77 trillion won. Thanks to a continuous influx of advertisers from shopping sectors such as e-commerce, search-based and display ads also managed to rebound, recording a 7.9% and 16.6% growth respectively.
□ Broadcast and print ad market
The overall broadcast ad market, including TV and radio, decreased 7% compared to the previous year to 3.69 trillion won.
Terrestrial TV ad spending in particular showed the biggest drop (15.3%↓) among all platforms, recording a total of 1.19 trillion won. This is analyzed to be a result of the lack of favorable events, such as the Olympics and the World Cup, combined with the slowdown of the domestic economy and the introduction of in-program advertising being canceled. Cable TV and total TV programming ad spending recorded 1.94 trillion won, a 2.1% drop compared to the previous year. With a competitive edge in their contents, these two sectors had been showing growth in the last two years. On the other hand, IPTV showed a growth of 6.7% due to the increase of the number of subscribed households and increase in sales of real-time advertising products.
In the print ad market, newspaper ad spending recorded 1.39 trillion won, a 2.1% drop compared to the previous year. The magazine ad market recorded 283.2 billion won, an 8.1% drop from the previous year as even major magazines were discontinued.
□ OOH (Out of Home) ad market
Last year, the OOH ad market recorded 1.03 trillion won, similar to the previous year. What stands out in the OOH ad market is the rebound in billboard ad spending, which had been in decline for the past several years. Billboard ad spending increased 10.1% compared to the previous year due to influences such as the introduction of electronic displays incorporating digital technology in areas designated as Free Outdoor Advertising Zones, and the trend in large-scale advertisement media. On the other hand, transportation and cinema ad spending, which had been leading the growth of the OOH ad market, respectively dropped 4.5% and 3.2%.
[Forecasts for South Korea’s total ad spending in 2020]
Despite the global recession and the slowdown of the domestic economic growth, the South Korea’s ad market is projected to grow 5.5% year-over-year and record 12.62 trillion won due to the Tokyo Olympics and the general election.
In particular, the digital ad market is expected to lead the growth of the domestic ad market due to introduction of various ad products incorporating high-end digital technology. In particular, mobile ad spending alone is expected to record two-digit growth and account for nearly 30% of the entire advertisement market.
In addition to the Olympics and the general election, the increase in broadcast ad spending due to the novel coronavirus’ effects is expected to result in the broadcast ad market turning positive. The OOH ad market is also expected to record a higher growth compared to the previous year thanks to the introduction of new digital outdoor media and the digital transformation of traditional billboards.
Meanwhile, this year for the first time in history, the digital ad market size is expected to surpass the size of the traditional ad market, which includes broadcast and print.
