BUZZVIL BLOG

[Market & Industry] BUZZScape: Korean Mobile Advertising Landscape 2.0, LUMAScape-inspired

It’s been over a year since I published the very first Korean mobile advertising industry landscape, BUZZScape, inspired by LUMAScape. (Yes, we got featured by the CEO of LUMA Partners!)

LUMAscape-like ecosystem maps now exist for Europe, Brazil, China, Japan, SE Asia and Korea, not to mention other industries. Love it!

— Terence Kawaja (@tkawaja) 2014년 8월 5일

 

Just as smartphones are quickly changing the world, the mobile advertising industry has changed significantly in the past year. With BUZZScape 2.0, I tried to highlight major changes in the market and clarify the definition of each category. [caption id=“attachment_5288” align=“alignnone” width=“2000”] [Image 1] BUZZScape 2.0 – Korean Mobile Advertising Landscape – LUMAScape inspired[/caption]

1. Augmenting Publishers Category

The biggest improvement that I made in this version is that the publisher category has been expanded a lot from just including few huge portals such as Naver and Daum Kakao to adopting more diverse types of publishers, as vertical service applications in mobile have grown considerably in terms of the volume of traffic, turning them into major inventory suppliers. [caption id=“attachment_5278” align=“alignnone” width=“2000”] [Image 2] Expansion/Diversification of Native Ad Inventories[/caption]

1.1 Publisher – Incentivized

First of all, publishers that provide incentivized traffic has successfully enlarged their user base despite some skepticism from the public. Among others, lock screen advertising players such as Honeyscreen (Buzzvil) and Cashslide (NBT Partners) have been leading the growth of the market, although they have also succeeded in scaling out their non-incentivized display advertising inventories. In 2014, lock screen advertising players accounted for 25% of mobile display advertising market, closely following the market leader category, which is portals. (Source: Buzzvil Research, Mezzo Media, etc.) In 2015 and 2016, the market will grow even bigger as big publishers such as OK Cashbag and 11st also tap into the market through partnerships with existing lock screen players. (Note: Buzzvil is the one and only player providing a lock screen advertising platform for publishers. See Buzzscreen if interested)

1.2 Publisher – Display

Secondly, I added two major rising categories, social media and messengers, in addition to traditional portals in the Display category. Social media has taken over the throne that web portals had had back then in the PC web era, thanks to its extraordinarily long ‘time-on-app length’ (visit duration) and massive active user base. In BUZZScape, only the applications ranked within top 300 on Google Play are included. (Note: Android takes 85% of smartphone OS market share in Korea.) The biggest trend in the mobile display advertising market is the fact that ad units are becoming more diverse. With the nature of small screens on mobile devices limiting displayability of ad units compared to desktop web advertising in terms of user experience and effectiveness, ad units that resemble their host service – ‘native advertising’, which I will explain later in the post – are becoming more and more popular. The native ad unit also naturally limits compatibility with the ad exchange ecosystem, as it is not completely standardized yet.

1.3 Publisher – Video

It seemed like YouTube was going to be a sole dominator in the market back in 2014. However, there has been a lot of news about mobile video advertising in 2015. First, SMR made exclusive contracts with an alliance of Korean web portals including Naver TVCast and Daum TVPot by providing them premium content from major broadcasting companies. This gave a chance for the Korean portals to gain a considerable volume of traffic, as well as mobile video advertising dollars. Moreover, Facebook and Twitter introduced their auto-play video advertising products displayed on newsfeed, and thanks to its massive video traffic, it is already comparable to YouTube. Lastly, incentivized video advertising networks such as Ad Colony, Vungle, and Unity all opened Korean offices and are trying to drive sales. From the ecosystem’s point of view, these significant changes in the market landscape mean more options for advertisers, and possibly better ROAS in the end. [caption id=“attachment_5279” align=“alignnone” width=“2000”] [Image 3] Auto-play video advertising of social media and incent-video networks’ entry into Korea[/caption][caption id=“attachment_5284” align=“alignnone” width=“3000”] [Image 4] Fragmented video advertising market due to hockey stick growth of Naver and Facebook[/caption]

1.4 Publisher – Native

Native advertising has two distinct definitions from my perspective: UI Native and UX Native. The best example of UI Native is Facebook’s mobile app install advertising on news feed, which fits into the service’s user interface. UI Native doesn’t harm the user experience in terms of interface, but it should be also noted that users can easily notice it is a sort of advertising campaign, as it is unnatural to see posts about mobile app install on their Facebook news feed. The definition here might be a bit controversial as it seems Facebook has been trying to make the ad unit more natural in terms of user experience, just like clicking likes and/or making comments on promoted posts. However, I can confidently say that it is still different from my definition of UX Native, which is more similar to an editorial type of advertising. You can take promoted posts on Huffington Post as one of the examples, which look like a normal article but it is actually sponsored by brands. The most natural user experience on those news media for users is to read articles. UX Native provides the completely same user experience as regular articles while it talks about brands or products in indirect ways. [caption id=“attachment_5281” align=“alignnone” width=“3000”] [Image 5] Definition of Native Ad[/caption]Recently, it is a huge trend that mobile web/app media adopt monetization strategies utilizing the UI Native concept, thanks to Facebook’s triumph on mobile advertising. It’s already the norm now, so it would be useless to separate the Display and UI Native category. Hence, I have put UX Native inventories in Native category on BUZZScape to remove any vagueness in the definition. The largest content curation media such as Pikicast, Huffington Post Korea, and VONVON are notable leaders in the category.

1.5 Publisher – Native-Video

If we look at the Native-Video category, it may confuse you even more seriously. Native-Video could have been one of subcategories of the UX Native, but the reason why I made it an independent category is that they are not media but content producers. I believe you have heard of MCN which stands for Multi-Channel Network, as it is a buzzword in startup and media industry. To put it simply, MCN is management agency that has a number of video content creators at its management, who are often called YouTube Influencers (aka YouTubers). These creators have captivated millions of fans or followers on Youtube or Afreeca (one of the best real-time video broadcasting services for creators in Korea) with video contents about various topics such as game, beauty, music and etc. and have considerable influences on those watching their contents. It is also notable that some of advertisers who are brave enough to experiment these new media have made success promoting their brands or products by collaborating with MCN. Among others, I would like to introduce one example from Sandbox Network, one of the leading MCNs focused on game category in Korea, which is an advertising campaign for ‘도망가 친구들 (Spooky Runner)’. The process was simple. A few creators from Sandbox Network had featured Spooky Runner by posting YouTube videos of playing the game by themselves and followers who watched the video went play the game right after and it went viral. The campaign made 100,000 downloads for 200,000 video views in a week, and also a number of user created video contents were created and posted on YouTube afterwards by enthusiasts trying to copy whatever had been done by their idol. [caption id=“attachment_5282” align=“alignnone” width=“3000”] [Image 6] Advent of MCN and video content native advertising digital[/caption]

2. Categorizing Ad Networks

The Ad Network category has also adopted more detailed classifications just as the Publisher category: Incentivized, Display, and Video. Particularly, the growth of the Video advertising market is noteworthy, so I reserved an independent section for it. BuzzScreen, the lock screen advertising network developed by Buzzvil, is also listed in the Display category.

3. Ad Exchange Ecosystem

The Mobile Ad Exchange ecosystem ranging from DSP/Retargeting to Ad Exchange to SSP didn’t show much improvement last year. In this version, I try to limit the scope of BUZZScape by only taking in players helping ‘Korean advertisers’ buy ‘Korean inventories’. Korean inventory here by definition is not limited to Korean publishers but inclusive of media overseas generating advertising inventories of Korean users. That’s because I believe there are better resources out there, like LUMAScape, covering those global players. [caption id=“attachment_5283” align=“alignnone” width=“3000”] [Image 7] Advertising strategies of major social media[/caption]Overall, inventory supply for ad exchange has been steadily growing thanks to increase in smartphone penetration and usage but it is a notable fact that there have been no major events in the area. For instance, Facebook and Instagram don’t sell their inventories through ad exchanges on mobile and instead, they encourage advertisers to buy through FMP (Facebook Marketing Partners). KakaoStory also sticks to closed-RTB platform, not being connected to ad exchanges. It should be noted that these premium publishers/media trust that connecting to ad exchanges will not only harm user experience as they lose control over what kinds of advertising will be displayed to users, but will also damage profitability too. Hence, they instead created their custom-built APIs which allow advertisers/demand partners to talk to their ad server or platform to buy inventories. It is a strategy that only premium premium publishers can adopt as it creates a certain level of inefficiency to advertisers/partners by causing operational/development-related burden on them. Anyway, mobile big players so much care about user experience and they are smart enough how to leverage its own traffic. It’s unsure when mobile ad exchange will be supplied with these huge inventory sources.

4. Predicting Changes in 2016

Last year, my post highlighted more about mobile ad exchange RTB ecosystem. This year, let me extend the scope a bit further to these three keywords: Programmatic, Video, and Native.

4.1 Programmatic

[caption id=“attachment_5285” align=“alignnone” width=“3000”] [Image 8] Will Premium Publishers Adopt Programmatic?[/caption]Firstly, let’s take a look at Programmatic keyword. As described earlier in the post, I believe the growth of mobile ad exchange ecosystem will be led by supply of native inventories from premium publishers. That said, if KakaoStory or Naver Band adopted one of either strategies between a) open RTB connected to ad exchanges or b) closed-RTB with certificated API partners, it would have a huge impact on the industry. The media power of them is very strong, but not as powerful as Facebook, and that could potentially make some difference in what strategy they will take. It is not easy to answer that question myself, but it won’t be easy for Naver to open the platform due to its long history of closed platforms, and KakaoStory might open its platform to a handful of certified API partners, or even ad exchanges. If you take a look at KakaoStory, it is quite hard to find ads there, meaning they may be suffering from demand shortage. Perhaps you can say that it is a strategy to maintain best user experience, but thinking of Facebook’s success story, it is hardly an answer. Hence, I personally believe that KakaoStory is most likely to and should open its platform to a few DSPs directly through open-RTB standard. It is neither strategy a) nor strategy b). It is more like the middle ground of them, and takes advantages of the both strategies: you can leverage technical advancement and rich targeting information of open-RTB without building sophisticated advertising platform by yourself. It takes a long time to build an ad platform like Facebook, especially in Korea – we can’t easily hire ex-Googlers who previously worked on Adwords.

4.2 Video

[caption id=“attachment_5286” align=“alignnone” width=“3000”] [Image 9] Growth of Mobile Video Traffic and Necessity in Managing Multiple Channels in a Consolidated Way[/caption]Mobile video traffic growth is on fire thanks to many fundamental macro factors such as mobile network infra development, cheaper/unlimited data plan, mobile-friendly video service, more attractive contents produced by creators supported by MCN, etc. For these reasons, mobile video traffic is expected to continue strong growth and it is possible that premium publishers such as KakaoStory and lock screen services will start to provide video advertising services which will boost up the growth. On the other hands, mobile video advertising channels are becoming more and more diverse, increasing the value of mobile video DSP to consolidate management of video campaigns.

4.3 Native

[caption id=“attachment_5287” align=“alignnone” width=“3000”] [Image 10] Rise of Native Ad, Contrasting to Programmatic[/caption]UX Native ad will grow faster, produce more diverse successful cases, and possibly become one of the must-have channels of advertisers. Especially, as the role of content creative becomes more important, publishers/agencies producing quality contents will excel at their business. Talking about the vast ecosystem of mobile advertising, there might be some faults in my writing so any feedback or different perspective will be always welcomed. I hope this post helps you better understand what is going on in Korean mobile advertising market. For those interested to know more about it, please drop me an email at ohsu.kwon@buzzvil.com, or message my LinkedIn profile. *You may freely quote or share this post, but please don’t forget to include the link to the original! I truly appreciate it. Lastly, you may access to the full version of slides here: [slideshare id=58360395&doc=mmcbuzzscape201602enrevisedfinal-160217073101] Special thanks to those who helped writing and reviewing the post: Jihong Lee (Marketing at Supercell) Pilsung Lee (CEO at Sandbox Network) Steve Segon Jang (CBO at Buzzvil) Key Koowhan Lee (Chief of Innovation Center at Yello Digital Marketing Group) Charlie Moon (Country Manager - Korea at AppsFlyer) Teddy Cross (Software Engineer at Buzzvil)

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