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Navigating the Korean CTV Market: Players, Trends, and Growth Opportunities

Neandigital人 2024. 10. 3. 12:24

Many of our clients have key stakeholders based overseas. Whenever explaining Korean CTV solutions to those clients, I frequently encounter difficulties. This is because the key players driving the Koran CTV market are different from those markets. The Korean CTV market started forming its supply chain and ecosystem around IPTV provided by telecom companies since 2016. I have written a blog post to help industry professionals who are interested in the Korean CTV market. 
 

Market Size

According to Statista, the total advertising market size in the United States is expected to reach $421.3 billion in 2024, with Connected TV (CTV) advertising accounting for $30.1 billion, or approximately 7.15% of the total market. In contrast, South Korea's CTV advertising market size is $233.1 million, which is about 1.43% of its total advertising market size of $16.3 billion, making the CTV ad share in Korea only about one-fifth of that in the United States.
 

Overview of the Korean CTV Market

IPTV Dominance: In contrast to the U.S., the South Korean CTV market is primarily driven by three major telecom companies—KT, SK Broadband, and LGU+—which offer IPTV services bundled with internet and mobile plans. This model makes IPTV an affordable and convenient option for consumers.
OTT Services: Netflix is the dominant OTT service in South Korea. Additionally, local OTT services like TVING, Wavve, and Coupang Play have a strong foothold due to their localized original content.
FAST Services: The concept of FAST is still emerging in South Korea, and while the market is developing, global TV manufacturers based in Korea, such as Samsung and LG, are actively providing FAST services.
Market Data: Households subscribed to the three major IPTV providers, which form the main supply chain of the Korean CTV ad market, account for over 90% of all households. Furthermore, the increasing demand for OTT platforms offering diverse and trending content suggests significant potential for growth in the CTV ad market.
 

Key Differences Between the U.S. and Korean CTV Markets

Pricing and Content Access: In the U.S., the high cost of cable TV has fueled the growth of OTT and FAST services. Conversely, the Korean market is influenced by telecom-led IPTV services bundled with internet and mobile plans, making them more accessible and affordable for consumers.
 
Market Drivers: The U.S. market's cord-cutting trend, driven by the rise of FAST and OTT services, contrasts with the Korean market, where IPTV continues to play a dominant role due to the influence of telecom companies.
 

Key Players in the Korean CTV Ad Market

In Korea, the CTV ad market is categorized into three main supply segments—IPTV, OTT, and FAST—each playing a distinct role in the market's evolution. Various technology companies also facilitate ad services and programmatic buying within the CTV ecosystem.

  • IPTV (Internet Protocol Television): The dominant IPTV providers are SK Broadband, LGU+, and KT, which have driven market growth through bundled services with internet and mobile plans. Notably, SK Broadband began offering addressable TV ads using Any Point Media's technology in 2016, setting the stage for advanced targeting and advertising capabilities.
  • OTT (Over-The-Top) Services: Netflix holds a significant market share in the Korean OTT space, especially after launching its ad-supported subscription model globally, which has garnered attention from advertisers. Local OTT services, particularly TVING, have also made significant strides, securing exclusive online broadcasting rights for the KBO league from 2024, which has boosted its prominence and attracted more advertisers.
  • FAST (Free Ad-Supported Streaming TV): The FAST segment in Korea is still emerging but is showing potential for growth. Samsung TV Plus leads this segment with about 1 million users, while LG Electronics offers its own FAST service. Major content suppliers in this space include CJ ENM and NEW ID, providing diverse and premium content to audiences.
  • Tech Companies in the Korean CTV Ad Market: From 2024 onwards, CTV advertising in Korea has become fully accessible through programmatic buying methods. However, the lack of unified buy-side technology has created challenges for advertisers regarding standardized buying processes. Key technology companies in Korea's programmatic ad ecosystem include:
    •  Motive Intelligence: It is a Korean Ad-tech company that offers a CTV advertising solution with various type of inventory across IPTV linear, VOD and FAST enhanced by localized CTV-mobile matching data and DMPs.
    • Teads.TV: Teads is a global media platform that provides ad services in the CTV sector, reaching 8.5 million Korean CTV audiences through home screen, FAST channels, and in-app instream advertising. Teads designers help to build device-adapted Studio creatives including 3D and QR code.

Challenges in CTV Advertising

Despite its rapid growth, CTV advertising faces several challenges advertisers need to consider:

  • Fragmented Inventory: The CTV ad market is fragmented across various platforms like IPTV, OTT, and FAST, each with different policies and ad formats. This fragmentation can make it challenging for advertisers to plan and execute cross-platform campaigns efficiently.
  • Measurement and Standardization: Unlike traditional TV, CTV advertising lacks a unified measurement standard, especially in Korea. Although programmatic ad buying has become more accessible, the absence of unified buy-side technology complicates the buying process for advertisers, resulting in a more fragmented market.

GroupM Solution to CTV

  • Background: Despite the rapid growth of CTV, many marketers and media planners remain hesitant to invest in it. This hesitancy stems from CTV being a relatively new and unverified media solution for many in the industry. To address this concern, GroupM has actively worked to prove the effectiveness of CTV and build confidence among marketers and media planners.
  • GroupM's Effort to Prove CTV Effectiveness: In collaboration with LGU+ and Kantar, GroupM became the first in Korea to utilize identifier data to distinguish between ad viewers and non-viewers, examining CTV's advertising effectiveness. The study methodology was as follows:
  • Result: A technology company that utilized this solution found that CTV demonstrated high effectiveness in the mid-funnel of the consumer journey. Additionally, when respondents were asked custom questions about agreement with the advertising message, viewers showed a significantly higher positive response compared to non-viewers, indicating a meaningful uplift in message alignment.
  • Exclusive Offering: GroupM offers this CTV solution exclusively to clients until the end of December, providing them with a unique opportunity to leverage CTV's mid-funnel impact and gain insights into its advertising effectiveness.

Future Outlook for the Korean CTV Ads Market

Programmatic Expansion: From 2024 onwards, CTV advertising in Korea is fully accessible through programmatic buying methods. The gradual integration of DSPs, such as Google and The Trade Desk, will likely increase the standardization and ease of buying CTV ad inventory.
Growth of FAST Services: The FAST segment in Korea is still emerging, but it is expected to experience significant growth in the near future. Major TV manufacturers, such as Samsung and LG, are planning to invest in content for their respective FAST services. This investment in diverse and premium content is expected to attract more viewers, providing them with a variety of entertainment options. As the volume of content increases, the number of FAST users is likely to rise. Consequently, the growing user base is anticipated to boost the media power of FAST services as an advertising platform, making it an increasingly valuable medium for advertisers looking to reach a broader audience.
Lower-Funnel CTV Solutions: There is a possibility that CTV solutions functioning in the lower funnel could emerge in the near future. The Korea Broadcast Advertising Corporation (KOBACO) has already tested CPA (Cost-Per-Action) based CTV advertising, indicating the market's readiness for performance-driven ad models. Furthermore, stakeholders in the South Korean market are currently preparing a project to study the impact of CTV advertising on mobile app installations and user behavior within mobile apps. These development suggest that future CTV solutions could potentially influence direct actions, bridging the gap between awareness and conversion.
 

 
Writter: Junsu Bae(Head of Solutions and  Innovation, GroupM Korea) has dedicated 18 years to the digital advertising industry in South Korea, focusing on planning, buying, and developing localized solutions in collaboration with various ad tech companies. Currently, at GroupM Seoul, the media investment management arm of WPP, he strives to achieve marketers' business goals through a wide range of solutions, from programmatic media buying to influencer marketing.