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Power of Cyber Marketing in Korea
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By Tom Coyner
Korea Times
May 4, 2007
During its seven-year history, Seoul’s St. Patrick’s Parade, though always
colorful, has had relatively small turnouts. At best, perhaps 1,000 people
might participate. Last March’s event, however, some 5,000 people attended.
The key difference was the event’s primary sponsor employed young people to
monitor and participate in influential blogs for six weeks prior to St.
Patrick’s Day.
About two years ago, this Internet-centric market, in which 70 percent of
the population today has high-speed connections, put more trust in
information on the unregulated Internet (26 percent) than in what they view
on television (22 percent). A more recent survey by Edelman (2006) revealed
that Koreans trust newspapers and web-based media equally (41 percent) with
television (16 percent) and radio (a mere 1 percent) rating far behind.
According to Edelman, Korea is unique among Asia-Pacific nations in equally
trusting the Internet with newspapers -- and one can imagine in the future
more Koreans than ever will trust what they read on their PCs and mobile
phones.
Many have noticed the power of the Internet in whipping up public opinion.
Korea boasts the world‘s highest ratio (66 percent) of consumers reporting
they have shared negative opinions about a company over the Internet --
almost double the rate for American consumers. And a recent survey suggests
as many as 40 percent of Koreans believe what they read on others’ blogs.
``South Korea is the leader of the rise of citizen journalism in Asia by a
wide, wide margin. The younger generation has really embraced blogging,’’
says Robert Pickard, managing director of Edelman in Korea. ``The media is
seen not as the ‘voice of authority,’ but as the voice of the people
challenging that authority.’’
Make Mine Digital -- at Internet Speed
Koreans are among the world’s most computer- and telecommunications-literate
consumers. While in 2004 there were more than 26.5 million landline
telephones, there were also more than 36.5 million mobile cellular phones.
In the same year, there were almost 40 million Internet users, representing
62 percent of Korean households (72 percent by 2006), and being served by
more than 5.4 million Internet server sites.
Ninety percent of the country has three-megabits-per-second broadband at
home; and similarly high-speed wireless connections on the road. The telecom
companies are fiercely competitive, and broadband service costs the consumer
less than $20 a month.
Korea has 20,000 “PC bang,” or Internet cafes, where the consumer can rent a
super fast PC for about $1 an hour. Ninety-five percent of Koreans in their
twenties and students use the Internet, and that jumps to 98 percent if one
counts only students. Research found that about 76 percent of the male
population (17 million) and more than 64 percent of the female population
(14.5 million) use the Internet. A recent survey found that 70 percent of
Korean Internet users depend on the Internet for information searches and
more than 15 percent use the Internet for shopping information.
Meet You at the Cybermall!
Korean consumers are arguably Asia’s most enthusiastic. The South Koreans
are not satisfied, however, with simply blogging. They have gone a step
further than the rest of the world. From a base of an estimated 33 million
Internet users, more than half of whom have their own web sites, the Koreans
have come up with a new concept, SNS -- or social networking service.
Korea’s biggest telecom company, SK Telecom, which pioneered the first form
of this kind of service in 1999, owns the premier SNS provider, Cyworld. Two
years later, Cyworld begun offering next generation mini-home page services
like ``Mini Homep’s.’’ -- a Korean transliteration of ``Mini Home Page.’’
Today, Cyworld is Korea’s leading SNS, allowing some 18 million Koreans to
express themselves on line as individuals -- and as often as not, in
creative, non-serious ways. The penetration is remarkable. About 90 percent
of all South Koreans in their twenties have signed up for Cyworld.
The attraction of SNS is that consumers can create avatars (virtual but
visible representations of themselves) and visit each other to share ideas
and opinions. Hosts decorate their virtual spaces by purchasing decorations
such as furniture, etc., with cybercash, called “Dotori” (acorns). And these
are serious acorns. As of early 2006, Cyworld denizens were daily spending
$300,000 worth of Dotori, which would come to almost $110 million annually.
That means on average, each Cyworld denizen spends about $7 per year on
Dotori -- whereas, at about the same time, the average American user at
MySpace was spending less than a third as much at $2.17 per user.
Marketers are discovering that Cyworld and other virtual markets are
increasingly becoming as important for a number of products and services as
the physical markets. One estimate has as many as 90 percent of all Korean
teenagers and 20-somethings registered with Cyworld alone -- and they are
uploading over six million photos to that site every day. What once was a
mall experience for American young people is now replicated in cyberspace
for Korea’s younger set.
One estimate puts as high as 90 percent of all Korean teenagers and people
in their twenties are registered to Cyworld alone -- with over six million
photos being uploaded to that site a day. What once was a mall experience
for American young people is now replicated in cyberspace for Korea’s
younger set.
User Created Content
Given this background, UCC (user created content-- yet another Korean
acronym) has come to the forefront as a remarkably effective form of
marketing, as evidenced by this year’s five-fold St. Patrick’s Parade
attendance.
UCC takes on a wide array of strategies, but the common denominator is that
the consumers participate in the creation of marketing message and thereby
assume ownership that makes them more willing to consume the offered product
or service.
The simplest delivery is to create an attractive blog or to participate in
other influential blogs. And in broadband Korea, blog inputs are often
multimedia of uploaded music and videos being rather commonplace. In fact,
one technique is to run a contest where the top consumer-created videos are
rewarded with worthwhile prizes and those videos are used in the overall
advertising campaign.
For a concrete example, consider the Nong-Sim Octopus Snack & Daum UCC
during January and February 2007. Nong-Sim ran a UCC event through Tvpot &
Pie service by teaming up with Daum UCC. The TVpot UCC theme was ``How I
release my stress with Nong-Sim Octopus Snack’’ while Pie service’s UCC
theme was ``Absolute Stress Force.’’ Some 150 consumer participants uploaded
videos which were viewed over 100,000 times. At the end of the campaign, UCC
consumers chose the best video among the top 5 finalists culminating in
Nong-Sim producing and airing a commercial based on the consumers’ top
choice.
In comparison to Naver, Daum, Cyworld and Tagstory; Google, Yahoo! and other
foreign web services with their simple & clean layouts are, well, just
boring. And that is part of the reason why foreign search engine-based web
services have not as done well here as other markets. At least Yahoo! Korea
is trying to adopt. Last year they acquired Korean web services Flickr,
del.icio.us, and Webjay.
In short, Korea is a world leader in consumer Internet marketing -- and at
the same time it is very different than what may be happening in Europe or
the U.S. Consequently, it is critical for business professionals to pay
attention to more than just statistics. It pays to look closely at how
Koreans increasingly engage their favorite Web sites.
Tom Coyner is president of Soft Landing Korea (www.softlandingkorea.com),
a sales-focused business development firm, and co-author of Mastering
Korean Business: A Practical Guide.
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