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Ad spend in Korea up 16.5% to $7.5 bn in 2010

MUMBAI: Korea‘s total ad spending has jumped 16.5 per cent to close 2010 with $7.5 billion, up from $7.1 million posted in the earlier year.


The reasons behind this record ad spending can be found in the recovery of the overall ad market that commenced in the second half of 2009, improved consumer sentiment as a result of the government‘s stimulus policy, and surging expenses on advertisement marketing of companies who made the most of large-scale sporting events as part of their marketing strategy, such as the Vancouver Winter Olympics, the 2010 FIFA World Cup South Africa and the Guangzhou Asian Games.


"All these positive factors have led to the overall growth of every medium," Cheil Worldwide said.
 
Ads on the Internet jumped 24.5 per cent, the highest across all media vehicles. Cable TV ads surged 23.8 per cent while outdoor ads shot up by 19.9 per cent, driving the total ad outlays to rise.


Looking at the actual amount of money executed for ads through each type of media, $1.7 billion was spent on TV, $880 million on newspapers, $1.3 billion on the Internet, followed by cable TV and outdoor.


TV and Newspaper: International sporting events in 2010 such as the Vancouver Winter Olympics and Fifa World Cup South Africa including hosting of the G20 Seoul Summit had positive impacts on terrestrial TV ads.
 
In addition, broadcasting regulations have eased, allowing among other things indirect/virtual ads on TV programmes and the benefits from long-term advertising have diversified, pushing up demand for ads. The ad expenses on terrestrial TV amounted to $1.6 billion, up by 15.5 per cent from the 2009 levels.


Newspaper ads also shot up, thanks mainly to large events, the government‘s aggressive PR efforts for international events, massive ad campaigns by key sectors such as finance, home appliances, ICT, auto including major large corporations.
Newspaper ads amounted to $880 million, up by 9.5 per cent from the 2009 levels, with all types of newspapers - financial, sports, free, local newspapers as well as national dailies.


Cable TV: As programmes made by terrestrial TV stations‘ house program providers such as MBN, YTN, MNET, etc. (Korean channels providing content) and investments made by large programme providers in developing content turned out successful the resulting programs such as highly popular Superstar K - Season II and Rollercoaster helped boost demand for commercials.


Spending on Cable TV ads totaled $862 million, a jump by 23.8 per cent from 2009, and recording the second highest growth rate following the Internet.


Internet: Online advertising recorded the highest growth rate among other media with ad expenditure of $489 million, up by 24.5 per cent from the 2009 levels. The Internet is ranked third in ad expenditure with an 18.3 per cent representation of the entire ad market, following terrestrial TV at 22.8 per cent and newspapers at 19.5 per cent. With the growing importance of online search in ad marketing, search-based ads constituted 67.5 per cent of all online ad spending.


Outdoor advertising: In 2010, highway billboards were allowed again. 3D advertising emerged, 3D-related cinema ads grew and ads on public transportations such as trains and buses increased, all of which pushed up outdoor advertising with a year-on-year growth rate of 19.9 per cent at $710 million.


By sector: The top six sectors with largest ad spending were finance, insurance, and securities; computer and ICT; food and beverage; services; cosmetics and personal hygiene; and fashion.


These six sectors accounted for 53.9 per cent of the entire spending. Sectors where ad outlays declined from the 2009 levels include construction, building materials, real estate, the government and public sector, and the distribution sector, with 24.3 per cent, 7.1 per cent, 4.6 per cent declines recorded respectively.


2011 Outlook on ad expenditure: Economic research institutes forecast a 4 per cent growth for 2011, higher than 2010, though it seems difficult to expect as steep a growth rate as last year as the advertising market growth rate is correlated to economic growth.
 
However, 2011 will witness some positive factors playing out in the advertising market, such as government-driven easing of ad regulations to vitalise the media industry, and market conditions conducive to free competition as a result of introduction of general programming channels and private media representations.


This year sales-promotion style marketing activities are expected to be more frequently used as consumer sentiment will stay contracted and unstable partly due to fewer large-scale sporting events, slowing down of the Chinese economy, tightening by European governments and rising international oil prices.


An analysis of economic growth outlook and survey of advertisers suggests that the overall size of advertising market in 2011 will reach $7.6 billion with an expected growth rate of a minimum of 1.5 per cent to a maximum of 3.5 per cent.


By medium, ad expenditure through four major media (TV, newspaper, magazine, radio) will arrive at $3.7 - $3.8 billion, a similar level as in 2010.


In the meantime, fiercer competition is forecast amongst media as general programming channels will operate in earnest from the third quarter of 2011 and as a result, part of ad demand will move from less competitive media into cable TVs including general programming networks. Outdoor advertising will see increase, thanks to the boom in digital signage commercials of variety led by billboard ads along the highways, cinema commercials, and ads in shopping malls.


The three all-time largest advertisers - financial firms, ICT companies, and car makers - will spend a great deal of money on ads.
 

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