Old dog’s new tricks

Through its search site, Naver (www.naver.com), NHN reigned over country’s Internet search market. However, with the Internet moving increasingly toward mobile devices like smartphones and tablet computers, the company is finding it difficult to extend its desktop dominance to the portable Web.

NHN struggles to extend dominance to mobile Web

NHN, the owner of Korea’s most widely used Web portal Naver, is ready to embrace mobile advertisements at a time when its key businesses are stalling.

It remains uncertain whether the company’s new initiative will pay off but NHN is confident that the transition will cushion falling business momentum in the local market.

“Profitability is the biggest concern.

But NHN has no option but to invest more for the business considering the uncertainties it is facing,” said Kim Dong-hee, an analyst at Taurus Investment.

The company said it will start its mobile advertisement platform from the second half of this year.

It has been diversifying its service line-up to include games, mobile messenger services and app stores at a rapid pace this year.

Mobile advertising may prove its biggest move so far that could disrupt the domestic mobile market ecosystem, according to market analysts.

“It is true that we are preparing for a mobile advertisement platform business,” said an NHN official. “Advertising has been our main business, and taking it mobile is a natural continuation of what we were doing before.” Mobile advertisement platforms allow firms to promote themselves via NHN’s service in designated locations for maximum exposure for the right price.

NHN currently dominates the online advertisement business owning over 70 percent of the market share, drawing concerns from industry associates that the influence is directly transferring to the mobile market.

The firm is testing the new platform and will start services in the “near future,” but the precise date has not been decided. The reason for the delay, according to NHN, is to create a model that makes the ecosystem active and allows fair competition.

“There are many companies in or venturing into the mobile advertisement market, but it is too early to decree their business models successful.

Mobile website operators and app developers want an advertising business that brings them the most profit,” said the official. The addition of NHN to the competition will ultimately boost smalland medium-sized business, the firm said.

“The mobile platform is just beginning to grow, with revenue far less than from the Internet.

But every company is looking into it, and it will become larger quickly,” said an industry associate who declined to be named.

“It is important that everybody shares the pie by growing handto- hand. Since there will be enough for everyone.” Due to the wide spread of smartphones, the mobile market is the most sought out niche by Internet, mobile and technology companies, both domestically and globally. Market analysts are predicting that the mobile advertisement market will grow 84 percent annually till 2015.

Global technology giants such as Samsung Electronics, Apple, and Google, and the three domestic mobile carriers — SK Telecom, KT and LG Uplus — are all aggressively investing into the mobile advertisement platform.

“It is highly likely that NHN will topple competitors such as Daum Communication or Google once it starts its mobile advertisement platform because of its strong brand image,” Thomas Kang, an analyst with Strategy Analytics, told The Korea Times over the phone. “Once the service starts, they will probably become top within a year, like on previous occasions in other markets.” As leader Daum has a longer standing and more knowhow in the area, there are opinions that NHN will have difficulty in overwhelming its rivals as it has before in different areas.

Domestic competitor Daum has been making headway in mobile advertising, having launched Ad@m in December, 2010.

The service is No. 1 in Korea and the company says it has monthly page viewings of 15 billion here, while Google’s AdMob is second with 8 billion.

“There won’t be a radically new model or huge influence in the mobile advertisement platform, just because one or two competitors (like NHN) join the race,” the official said. <Kore Times/Cho Mu-hyun>

news@theasian.asia