Google, which has been relatively slow in expanding its market presence in South Korea, is now fast catching up to local rivals in display Ad sales (one segment of online advertising), according to industry sources. This news will be a surprise to many who have been watching Google's advance in Korea with skepticism, as reported by beSUCCESS only a month ago.
This news will also fall sweetly on the ears of Amazon who are planning a major launch into Korea, the third largest e-commerce market in Asia, and one of the most established in the world. Amazon will launch later this year, and are likely to face very stiff competition in an environment that is dominated by several large local players including G-Market, Coupang, T-Mon, as wel as a plethora of local players who have effectively carved out niches across a broad range of vertical markets.
According to the sources who have access to internal data, Google achieved $93.8 million in revenue from online display Ads in South Korea last year. This figure is dramatically higher than the $38M posted a year earlier.
Google's robust performance raised alarm in the South Korean portal market which local players have long dominated.
Currently Google still commands only 10% of the local portal market, but is clearly on track now to threaten the two dominant local players Daum and Naver.
Display Ad revenue for Naver Corp., the top industry player (70% market share) edged down 7% over the year and ended 2013 with $300M and Daum Communications Corp., the second largest domestic portal, also remained sluggish edging up a mere 0.4% on the previous year at under $300M.
Over the year the size of South Korea's online display Ad market grew 7%, to $600M.
"Google's improved performance came as Psy's 'Gangnam Style' received huge attention on YouTube," a market watcher said, with the South Korean rapper's 2012 global hit song having garnered over 1.9 billion views, and counting.
The combined size of South Korea's total online advert market came to $2.2Bn in 2013, up 16% on 2012. Of this total, search ads accounted for 54%, trailed by display ads at 26% and mobile ads at 19%, according to the Korea Onlinead Association.