Will Facebook survive in Korea?

Facebook founder and CEO Mark Zuckerberg

New ‘promoted post’ service unlikely to attract more people here

The buzz surrounding social network service (SNS) Facebook seems to be dying down quickly in Korea due to recent moves that industry observers say are precarious.

The biggest question for the company is whether it can find a sustainable business model that ensures survival in the volatile information technology industry after the humiliation of seeing its stock price halved after it went public.

Facebook has revealed a new service, “promoted posts,” available to those with over 400 “likes” in which users can select posts and increase their exposure by payment. Users set a budget to pay for the duration of the posts which “will be shown in the news feeds of more of the people who like your page than you would reach normally.”

“Friends of the people who have interacted with your post will also be more likely to see the story in their news feeds,” Facebook says.

The recent move seems to be a part of the company’s focus on expanding its advertising businesses, which is raising some doubts of whether it will succeed in Korea.

“The added feature reflects the pressure Facebook is under to find a revenue pipeline,” said Kim Min-kyu, a cultural content professor at Ajou University, over the phone. “Even before the company went public, there was the opinion in the industry that the bubble will soon pop.”

Kim said the initial attraction Korean consumers felt for Facebook may turn to disappointment due to the large implication of “being a business” that the service will introduce.

“Many users will be disappointed that an SNS service’s main selling-point as a place of communication and meeting is being transformed to become more about making money. This is the dilemma that all recent SNS businesses are facing; how to become profitable without tainting their image,” he said.

Starting to charge from mostly offering things free has always been a dangerous move in Korea that saw Internet services that once seemed invincible to collapse in a heartbeat. A notorious case is that of Freechal, founded in 2000, which secured 10 million subscribers and over a million blogs (a substantial feat at the time) but saw its popularity collapse when it started charging for services in 2002. It never recovered and was bought by different owners throughout its life-span until it finally went broke last year. “Korean consumers have always turned away from services that charge, especially on the Internet. That is why the free-to-play model works. Companies need to find a way to lure them and make them pay without thinking about it too much,” said an official of a domestic portal company. “Kakao Story, Facebook and other SNSs pushing promoting games is one example of keeping users on their services. This increases advertisement exposure as well as making them pay for more features of the game naturally.”

Facebook recently reached 1 billion global subscribers. Backed by the numbers, CEO and founder Mark Zuckerberg said in a media interview that the company will obtain huge revenue by advertising services on the mobile platform.

“Facebook excels in advertisement targeting compared to Google,” said Thomas Kang, a Seoul-based industry analyst. “Facebook has a good chance to earn sustained revenue from Korea if it expands its advertisements here.”

“Advertising companies put Facebook on a par with television, broadcasting and online as a category when they are planning their marketing strategies. Besides, Korean consumers have more tolerance for advertisements that are flashy compared to the United States; they are use to Web portal Naver, which posts many eye-catching ads.”

The professor concurred, saying that if the company succeeds in transferring the new service and other advertisements successfully onto mobile platforms, there is a chance of a boost in revenue from Korea. <The Korea Times/Cho Mu-hyun>

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