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Power of Cyber Marketing in Korea

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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