buzzscape: korean mobile advertising landscape 2.0 (english)

Korean Mobile Ad Industry Report:Looking back at 2015 and forecasting 2016

Joshua Ohsu KwonChief Strategy Officer @ Buzzvil

Mobile Marketing Conference 2016

BUZZScape 2015 (2.0): Korean Mobile Advertising Landscape


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Ad Network

Publishers / O&O

ADVERTISERS

USERS

Copyright © Buzzvil Co., Ltd. All Rights Reserved.

Search Agency

Full ServiceAd Agency

DigitalAgency

MediaRep.

Analytics

Retargeting SSPAd Exchange

Search – O&O / RTB

Social game platform App store Carriers

Updated on Feb 16, 2016

Display Native

DSP/ATD/FMP

Korean Mobile Advertising BUZZScape by

For more information, please contact [email protected]

Display

Incentivized Video

Incentivized Video

DMP

Incentivized-video

RTB-enabled

Open to exchange

Native-Video

PUBLISHERS

Etc

Lock screen


2Key Changes:The Korean Mobile Ad Marketin 2015

It’s worth noting growth of some key inventory categories such as social media, content curation service, lock screen service, MCN (Multi-Channel Network), etc.

Publishers / O&O

Display NativeIncentivized Video

Open to exchange

Native-Video

Lock screen

• Beyond incent media, evolving to ‘first screen native ad inventory’ (Expanding to Display category)

• On top of lock screen apps such as Honeyscreen and Cashslide, big players like 11st and OKCashbagentered and expanded the market.

Lock Screen Social Media Content Curation MCN

• #1 category holding massive inventories

• Facebook-inspired in-feed native advertising(UI Native) becomes the new norm, and is applied to Instagram, Kakaostory, etc.

• Native ad unit on messenger services are also prominent

• Content curation media such as Pikicast, VONVON, Huffington Post, etc.

• Providing content-type native ad (UX Native) inventories to connect advertisers and consumers more naturally

• Video content creator’s network such as Sandbox Network, Treasure Hunter, CJ E&M, etc.

• Promoting products by video format as content-type native ad (UX Native)

• More focused on content production than owning media.

I D D V VN N


1. Growth of Premium Publishers and ‘Native-fied’ Ad Units

These native ad inventories can be categorized into two: UI Native and UX Native. It could deliver better ROI for both advertisers and publishers but it is not easy to be compatible with existing ad exchange ecosystem.

1. Growth of Premium Publishers and ‘Native-fied’ Ad Units (Cont’d)

Lock Screen In-feed Content MCN-Video Type

UI Native UX Native

• Definition: Ad that has the same look and feel as user interface of service

• Pros: i) Less displeasure for users, ii) better advertising performance

• Cons: i) Not perfectly compatible with existing ad ecosystem in terms of image asset and tracking

• Definition: Ad that has the same look, feel, and usage as user experience of service

• Pros: i) Content is ad, very persuasive.• Cons: i) Tailored creative for each publisher is required: not scalable ii) Potentially causing negative response from users due to ambiguity between content and ad


MCNs grow and so do the UX Native ads created by them. MCNs produce and promote videos featuring gameplay, cosmetics, and so on.



Growth of MCN and UX Native video ads

Publishers / O&O Native-Video

Sandbox Network- ‘Spooky Runner’ Case

06/27 06/28 06/29 06/30 07/01 07/02 07/03 07/04 07/05 07/06 07/07 07/08

260K250K

• Influencers: 2 YouTube creators with over 750K subscribers (도티, 잠뜰)

• Campaign Strategy: Posted videos in which the creators are playing ‘Spooky Runner’ on YouTube (playtime: 15 mins)

• Result: (a) 200K video play, 100K downloads in a week (b) 10% of users who installed made Google Play review and average star rating was 4.8(c) More UGC posted on YouTube by users (WoM)

YouTube PlayDownload

Content curation services such as Pikicast also provide native advertising services for advertisers. Editors with a certain segment of fan demographic are matched for brands based on advertisers’ target audience.



Native Ads Case Study on Content Curation Service

Publishers / O&O

Pikicast – Honeyscreen Case

- 253K content reads and 15K registrations from the post within 2 days- The cohort retention was also higher than average about 5 – 10%

[Native Advertising Campaignof Honeyscreen on Pikicast ]

253KPageview

15KRegistration

Native

Content ConceptPlanning

Content Production

Content ReviewPost

[ Content Production and Campaign Execution Process ]

[ Campaign Performance & Result ]

Advertiser & Pikicast Pikicast

AdvertiserPikicast

While Facebook and Instagram are not connected to ad exchanges on mobile yet, KakaoStory also holds onto its closed-platform strategy. It’s unclear when these premium inventories will be plugged into ad exchanges.

2. Publisher Still Is The Bottleneck of Ad Exchange Ecosystem


Fixed Price Real-Time Bidding

Ad Exchange

Ad API

Closed

Ad Platform Strategy of Premium Publishers • Twitter has recently announced that they will sell

their inventories through ad exchanges including Google• Pros: Easy/efficient sales of inventories• Cons: i) Bad user experience, ii) less control over ads

• FB and Instagram are not plugged into ad exchanges on mobile channel. Instead, they open its ad API to selected partners (aka FMP) and allow them to buy and optimize systematically.

• Pros: i) Consolidated media buying process for advertiser, ii) easier to compare/optimize several channels, iii) publisher having more control over campaigns to be displayed.

• Cons: i) Impossible to adopt this strategy if smaller players, ii) extra development resource of demand partner is required

• KakaoStoryoperates closed-RTB platform that is not connected to any 3rd party.

• Pros: Best for user experience• Cons: i) Worse in terms of monetization for publisher (eCPM and fill rate) ii) not easy/inconvenient to buy and optimize for advertiser

Publishers / O&O Display

Facebook and Twitter introduced their auto-play video advertising products displayed on newsfeed, and incentivized video advertising networks such as AdColony and Vungle aggressively opened Korean offices.

3. The Mobile Video Advertising Market is Growing Rapidly


Publishers / O&O Video

Auto-Play Mobile Video Ads on Facebook and Twitter

• Both Facebook and Twitter introduced the auto-playable video ads product and extended the volume of mobile advertising inventories significantly.

• 65% of video view on Facebook is played on mobile: MAU who has watched video on Facebook in Korea is approximately 10 millions.

VideoAd Network

Expansion into the Korean Market of Incent-Video Ad Networks

(Source: Facebook Korea Interview, April 2015)

Opened the KR branch in 2015

Announced the aggressive expansion into Korea in 2015

Set up the KR operation in 2015

• Three incent-video advertising networks set up their Korean operation in 2015 and started to expand aggressively.

• Growing very fast due to the fact that advertisers have no risk for efficiency as the networks mostly charge for installs, not video play.

>

Users are rewardedafter watching a promoted video

Redirected toGoogle Play download page

Korean video platforms are at war for higher market share. It is noteworthy that Naver TVCast is catching up quiterapidly thanks to the exclusive contract with SMR, and Facebook grows the fastest with its in-feed auto-play video.

3. The Mobile Video Advertising Market is Growing Rapidly


Publishers / O&O Video

Video Platform War in Korea

(Source: DMC Media, June 2015)

40.3%

14.1%12.8%

6.2%

5.7%

20.9%

+83% QoQ

+41% QoQ

+35% QoQVideo Traffic

Market ShareJune 2015

“The video platform market is getting fragmented due to the fast following of Naver and Facebook in the market”

- Naver has been growing fast thanks to its owned media power as #1 portal and premium contents provided by SMR

- The volume of absolute traffic has grown steadily despitethe tragedy with SMR

- Auto-video play and distribution through user’s sharing activities makes Facebook the fastest growing mobile video media in the world.


3Forecastingthe Korean Mobile Ad Marketin 2016

Forecasting the market in 2016 with 3 keywords


Keywords of 2016

Programmatic Video Native

It will be interesting to see whether a) KakaoStory opens its Ad API, or b) Naver Band or Naver’s mobile inventories adopt at least closed-RTB system in its ad platform.

Programmatic: Steady Growth But Not Fast Enough Due To Bottleneck


P V N

a) KakaoStory : Opening Ad API?

• KakaoStory may be opening its Ad API to source more advertising campaigns by connecting to DSPs directly in customized way (following Facebook’s strategy)

• However, advancement of the platform should be preceded.

Fixed Price Real-Time Bidding

• As programmatic concept has been distributed a lot among marketers and publishers recent years, Closed-RTB will be heavily adopted by more and more publishers, transforming from fixed price/reservation type ad unit.

A

Bb) Naver Band and Naver Mobile : Closed-RTB?

• Thinking about Naver’s traditional ad sales strategy so far, it won’t be easy for them to make it biddable. However, there is still chance that they will adopt closed-RTB for some of the 2nd tier inventories, other than timeboard on its main page, including Band.

Ad Exchange

Ad API

Closed

Ad Platform Strategy of Premium Publishers (Social Media)

Growth in mobile video traffic will lead the increase in mobile video ad inventories, while managing them from several different channels such as social media and Naver will be far more complicated.

Video: How To Manage Several Different Video Ad Channels Effectively?


• On the other hand, mobile video advertising channels are becoming more and more diverse, increasing the value of mobile video DSP to consolidate management of video campaigns.

(Source: Mezzo Media Report, 1st half of 2015)

Growth in Mobile Video Traffic

P V N

• Mobile video traffic growth will continue to grow fast thanks to many factors such as mobile network infra development, cheaper/unlimited data plan, mobile-friendly video service, more attractive contents produced by MCNs.

If KakaoStory introduces its video ad product, there will be even larger inflow of mobile video advertising inventories.

More Video Ad Inventory OpportunityOn Social Media

Increased Needs in Consolidating Management of Mobile Video Ads

Increased users and followers of content curation services and MCNs will lead the market expansion of native advertising, as well as increase the importance of creative production.

Native: Will Grow With Content Curation Service and MCNs


• Content curation services and MCNs will drive native advertising’s growth, producing more diverse success cases, and possibly becoming one of the must-have advertising channels.

• As the role of content creatives become more important, publishers and agencies producing quality content will excel at their business.

P V N

[ Editorial ] [ MCN ] [ Pikicast –Content Curation]

Thank [email protected]

Joshua Ohsu KwonChief Strategy Officer @ Buzzvil
