Favorable advertising income… “Naver and Kakao to release record-high sales”
Jin Hyun Jin | 2jinhj@ | 2018-01-24 10:58:15
Naver and Kakao, the two leading Korean portals, are expected to receive a positive report card in the fourth quarter of last year thanks to the high demand season. Based on this, it is estimated that it achieved the highest sales last year. However, with the success of Google`s YouTube in the video advertising market, the domestic portal`s growth footprint is getting narrower, and there are restrictions and reverse discrimination that cannot guarantee the future.
According to the securities industry on March 23, Naver and Kakao recorded solid sales growth in the fourth quarter of last year on the back of sales of advertising and content.
Naver`s fourth-quarter sales and net profit are estimated at KRW 1.22 trillion and KRW 310 billion, respectively. This is more than the third quarter of last year. Thanks to this, Naver is expected to surpass KRW 4 trillion in annual sales again in 2016. Naver cumulative sales for the third quarter of last year are W3.412 trillion. Analysts believe that Naver`s main revenue source, advertising, will drive earnings. However, it is also expected that there will be an increase in marketing costs related to artificial intelligence (AI) speakers and Naver Pay-TV.
"It is estimated that advertising and business platforms will increase by 13.1% and 3.9% compared to the previous quarter, respectively, to reach KRW 129.2 billion and KRW 570 billion, respectively, due to seasonal effect of advertisement market," said Chung Ho-yoon.
Kakao is estimated to have posted sales of about KRW 520 billion and an operating profit of about W50bn in 4Q08. Cacao`s cumulative sales by the third quarter of last year will reach KRW 1.427 trillion, paying attention to whether it can exceed annual sales of 2 trillion won. The sales of cacao are led by advertising and content. In 4Q11, growth is expected to be 20%, driven mainly by the high seasonality of ads and KakaoTalk`s business ad model. The stable growth of the content platform, including Loen Entertainment, which operates music service Melon, is expected to grow more than 10% over 2016, contributing to the solid performance of Kakao.
In the industry, two domestic portal companies, Naver and Cacao, are steadily growing. However, in the long term, it is likely that they will be pushed to YouTube in the advertising market. The market for voice search through AI speakers has already been opened, and in the middle of the teenage years, video search dominates, and the video market leadership is shifting to YouTube.
According to last year`s market share of digital video advertising market in Korea, which was recently released by digital marketing specialist company mezzomedia, YouTube accounted for 38.4% of its advertising expenditure of 165.6 billion won, and Facebook accounted for 30.8% of 132.9 billion won. On the other hand, Naver and Daum`s portal accounted for 19.5% of the combined total last year, down 3.9% from 23.4% in 2016. Naver`s market share last year was 11.4%, at 48.4 billion won, followed by 8.3% at 35.8 billion won. It has already exceeded 70% of the video advertising market for overseas internet service providers.
An expert of an Internet service company said, "In the global market, we are already dominating the advertising market in Korea, and the industry is in a crisis situation. Domestic portals are frustrated because they have to cope with various regulations."
By Jin Hyun Jin 2jinhj@
[ copyright ⓒ The Digitaltimes ]
According to the securities industry on March 23, Naver and Kakao recorded solid sales growth in the fourth quarter of last year on the back of sales of advertising and content.
Naver`s fourth-quarter sales and net profit are estimated at KRW 1.22 trillion and KRW 310 billion, respectively. This is more than the third quarter of last year. Thanks to this, Naver is expected to surpass KRW 4 trillion in annual sales again in 2016. Naver cumulative sales for the third quarter of last year are W3.412 trillion. Analysts believe that Naver`s main revenue source, advertising, will drive earnings. However, it is also expected that there will be an increase in marketing costs related to artificial intelligence (AI) speakers and Naver Pay-TV.
"It is estimated that advertising and business platforms will increase by 13.1% and 3.9% compared to the previous quarter, respectively, to reach KRW 129.2 billion and KRW 570 billion, respectively, due to seasonal effect of advertisement market," said Chung Ho-yoon.
Kakao is estimated to have posted sales of about KRW 520 billion and an operating profit of about W50bn in 4Q08. Cacao`s cumulative sales by the third quarter of last year will reach KRW 1.427 trillion, paying attention to whether it can exceed annual sales of 2 trillion won. The sales of cacao are led by advertising and content. In 4Q11, growth is expected to be 20%, driven mainly by the high seasonality of ads and KakaoTalk`s business ad model. The stable growth of the content platform, including Loen Entertainment, which operates music service Melon, is expected to grow more than 10% over 2016, contributing to the solid performance of Kakao.
In the industry, two domestic portal companies, Naver and Cacao, are steadily growing. However, in the long term, it is likely that they will be pushed to YouTube in the advertising market. The market for voice search through AI speakers has already been opened, and in the middle of the teenage years, video search dominates, and the video market leadership is shifting to YouTube.
According to last year`s market share of digital video advertising market in Korea, which was recently released by digital marketing specialist company mezzomedia, YouTube accounted for 38.4% of its advertising expenditure of 165.6 billion won, and Facebook accounted for 30.8% of 132.9 billion won. On the other hand, Naver and Daum`s portal accounted for 19.5% of the combined total last year, down 3.9% from 23.4% in 2016. Naver`s market share last year was 11.4%, at 48.4 billion won, followed by 8.3% at 35.8 billion won. It has already exceeded 70% of the video advertising market for overseas internet service providers.
An expert of an Internet service company said, "In the global market, we are already dominating the advertising market in Korea, and the industry is in a crisis situation. Domestic portals are frustrated because they have to cope with various regulations."
By Jin Hyun Jin 2jinhj@