Understanding Korean Magazine Advertisement Market T o B e P r - PowerPoint PPT Presentation

Understanding Korean Magazine Advertisement Market T o B e P r e s e n t e d a t F I P PS e o u l C o n f e r e n c e 2 0 0 2 o n A p r i l1 8 t h Jaekook Chun CEO & President SIGONGSA, Korea 1

Contents Contents Ⅰ . Magazine Industry : an overview Ⅱ . Magazine Advertisement Market Ⅲ . Buyer Side of Magazine Advertisement Ⅳ . Advertisement Sales Forces Ⅴ . New Challenges 2

Ⅰ . Ⅰ . Magazine Industry : an overview Magazine Industry : an overview 1. Market Entry Was limited Prior to 1987 ( For local Publishers ) Government regulation was lifted in 1987 Number of published Magazines increased and diversified. Fig 1 : changes in number of registered monthly magazines(By year end) year `91 `92 `93 `94 `95 `96 `97 `98 `99 `2000 Number of registered 2,672 2,910 3,146 3,367 3,701 3,129 2,863 2,461 2,289 2,483 magazines changes 310 238 236 221 334 -572 -266 -402 -172 194 3

Ⅰ . Ⅰ . Magazine Industry : an overview Magazine Industry : an overview 2. Emergence of International Brand magazines. Due to continued economic growth and socio-economic changes, international brand products have increased their market share. Korean government joined OECD in 1996 Foreign investment for periodicals publishing house was allowed up to 50%. Licensed magazines launched after 1990 Elle ------------------------------------------------------------------- 1992 Marie Claire ------------------------------------------- ------------ 1993 VOGUE, BAZAAR ------------------------------------------------ 1996 Madame Figaro, Deco Figaro, anan, Cosmopolitan ------ 2000 L`’official ------------------------------------------------------------- 2001 VOGUE girl, 25ans ----------------------------------------------- 2002 Elle Girl -------------------------------------------------Expected in 2002 4

Ⅰ . Ⅰ . Magazine Industry : an overview Magazine Industry : an overview 3. Summary The number of registered monthly magazine reached its peak in 1995. But, it has never been fully restored ever since. Number of magazines with more than 20,000 USD monthly ad revenue is 50+ (Out of some 2000 more). The relative importance of international brand magazine has increased significantly in the korean market. New magazines new threat for local publishers pressure to change fundamentals - Higher Editorial Standard - challenge generally accepted practices 5

Ⅱ . Ⅱ . Magazine Advertisement Market Magazine Advertisement Market Fig 1. Magazine Advertisement Revenue by Year (Unit : 100mkw) 2 , 5 0 0 2,000 2,130 (expected) 2 , 0 0 0 1,634 1,563 1 , 5 0 0 1,300 1,024 1 , 0 0 0 -51.9 26.9 25.7 20~30 -4.3 -51.9 26.9 25.7 20~30 -4.3 5 0 0 0 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 Before the national financial crisis : Total Size was 213 BKW(168M USD) During the crisis : `97 -> `98 51.9% Reduction 99 -> Present Slow recovery For year 2002 : Expected to grow at 20~30% 6

Ⅱ . Ⅱ . Magazine Advertisement Market Magazine Advertisement Market Fig 2 Advertisement Spending for 4 major media (Unit : 100mkw) media 1998 1997 % change rank TV 10,261 15,477 -33.7% 4 Radio 1,372 2,314 -40.7% 2 Newspaper 13,437 21,261 -36.8% 3 Magazine 1,024 2,130 -51.9% 1 Fig 3 Advertisement Spending for 4 major media (Unit : 100mkw) media 1999 1998 % change rank TV 1,492,122 10,261 45.4% 1 Radio 175,121 1,372 27.6% 3 Newspaper 1,805,462 13,437 34.4% 2 Magazine 130,028 1,024 26.9% 4 TV > Newspaper > Radio > Magazine seems to be the revealed preference by advertisers. 7

Ⅲ . Ⅲ . Buyer Side of Magazine Advertisement Buyer Side of Magazine Advertisement 1. clients 2. Agency (Unit : M USD) (Unit : M USD) rank company revenue rank Industry spending % 1 Cheil Comm 726.9 1 Fashion & Garment 27.0 22.3 2 LG AD 515.9 Cosmetics & Health 2 20.8 16.6 products 3 KumGang 495.5 Computers & 3 16.4 13.1 4 DaeHong 244.1 Telecomm. Tourism & service 5 Oricom 154.7 4 14.1 11.2 industry 6 TBWA Korea 145.4 5 Home Appliance 7.0 5.6 7 Korad 131.8 6 Pharmaceutical 6.5 5.6 8 Phoenix Comm 128.1 7 Food 5.7 4.6 9 Well Comm 125.1 8 Beverage 4.9 3.9 10 McCann-Erickson 78.6 9 Electronics 3.6 2.9 10 Distribution 3.5 2.8 . . . . . . . . . 163,367 100 8

Ⅲ . Ⅲ . Buyer Side of Magazine Advertisement Buyer Side of Magazine Advertisement 3. Who is the real decision maker : Client vs Advertising Agency Smaller Companies tend to play bigger role. Client/Agency relationships are different for each category of a magazines. Small agencies play more important role than these top 10 agencies in magazine industry. 4. Factors affecting Decision making process : General Brand Image human relationships Scientific Data Promotional Incentives (i.e., Discounts) 9

Ⅲ . Ⅲ . Buyer Side of Magazine Advertisement Buyer Side of Magazine Advertisement 5. Relative Importance (1) Human Relationship (2) General Brand Image (3) Scientific Data (4) Promotional Incentive 1 0

Ⅲ . Ⅲ . Buyer Side of Magazine Advertisement Buyer Side of Magazine Advertisement 6. Case Study Fig 1 Relationships between Ad. Price, Circulation, Readership rate, Subscription rate Average Sub - Readership Monthly name Circulation scription Ad. rate revenue rate price A 36,000 5.1 1.6 847,692 3,000 B 38,000 6.7 0.7 788,461 3,100 License Magazine C 21,000 2.3 0.9 413,076 2,300 D 35,000 4.6 0.4 541,153 2,700 E 70,000 7.2 4.9 673,846 3,000 Local F 40,000 7.0 2.1 447,692 2,100 Magazine G 40,000 7.0 2.2 342,307 1,800 (Unit : USD, Date Provided by Korea Marketing Research) Average Ad. Price does not reflect objective Research data in a systematic way. 1 1

Ⅲ . Ⅲ . Buyer Side of Magazine Advertisement Buyer Side of Magazine Advertisement 7. Summary Human Relationship is still a very important factor affecting Ad buying/Selling decision making process. Due to the changes in market structure induced by the emergence of International brand magazines. There are increasing pressure to justify Ad spending by some kind of scientific data. General Brand Images are very important. Developing & Maintaining positive brand value poses new challenges for publishers. 1 2

Ⅳ . Ⅳ . Advertisement Sales Forces Advertisement Sales Forces 1. Over 90% are male in their early 30s 2. Females not been very active for the last 10 years (no changes) 3. Average job experience is about 5-7 years (Mostly Junior staff) 4. Limited opportunities for proper training 5. High turn over rate. 1 3

Ⅴ . Challenges for Magazines Market for magazine advertisement not grown much for the last few years. ( U n i t : 1 0 0 m k w ) 1997 % 1998 % 1999 % 2000 % Media TV 15,477 28.8 10,261 29.4 14,921 32.3 20,686 35.3 Radio 2,314 4.3 1,372 3.9 1,751 3.8 2,503 4.3 News paper 21,261 39.5 13,437 38.6 18,054 39.1 21,214 36.2 Magazine 2,130 4.0 1,024 2.9 1,300 2.8 1,633 2.8 cable 1,282 2.4 1,166 3.3 1,281 2.8 1,736 3.0 internet 380 0.7 537 1.5 812 1.8 1,360 2.3 Total 53,769 100% 34,846 100% 46,205 100% 58,534 100% Notable Factors : 1. Relative importance of the advertisement market for printed media seems to be declining. 2. New Media's importance is increasing. 1 4

Ⅴ . Challenges for Magazines Challenges Korean magazine ad market still has more growth potentials. % of Total Ad spending on Magazines Japan 9.7% Taiwan 10.5% HK 13.4% China 2.7% Singapore 4.6% Korea 2.8% Missions • Creative contents with competitive advantage • Develop more efficient sales tool • Improved training for sales forces Demonstrate "our value" • 1 5

Thank You! Thank You! 1 6