KT-affiliated advertising agency PlayD expands commerce business into manufacturing and more

Health Functional Food Sales Business
Cosmetics and Food Manufacturing and Sales Business, etc.
Plan to Add Business Objectives at the General Meeting

CEO Heo Ukheon’s Term Expires This Month
One-Year Renewal Proposal Submitted

[Asia Economy Reporter Cha Min-young] PlayD, a digital advertising agency affiliated with KT Group that recorded sluggish business performance last year due to the impact of the COVID-19 pandemic, is expanding its commerce business.

According to industry sources on the 8th, PlayD will add various wholesale and retail businesses and manufacturing to its business objectives at the shareholders' meeting scheduled for the 26th, in addition to its existing advertising agency business. The newly added businesses include sales of health functional foods (health supplements), manufacturing and sales of cosmetics and food products, wholesale and retail of daily necessities, wholesale and retail of pets and related products, home appliances, warehousing and transportation, manufacturing of medical supplies and pharmaceuticals, totaling 17 items.

CEO Heo Wook-heon announced plans to enter the commerce business last December by creating private brands (PB) such as "Double Percent" and "Pyeonbaekne." The company is diversifying its business portfolio through a D2C (Direct to Consumer) sales method that oversees product planning (MD), development, marketing, and sales. Double Percent is a total brand targeting male customers, offering 15 products including skincare lines, functional toothpaste, toothbrushes, and clothing. Pyeonbaekne focuses on daily healing care items infused with the scent of cypress.

However, this move is interpreted as an effort to compensate for the poor performance of the core business caused by COVID-19. Last year, the company's annual sales fell below 30 billion KRW for the first time since 2016. Sales showed an upward trend with 31.4 billion KRW in 2016, 36 billion KRW in 2017, 34.7 billion KRW in 2018, and 38.6 billion KRW in 2019, but dropped to 29.3 billion KRW last year, immediately declining after its KOSDAQ listing in March of that year.

Profit indicators also declined. Last year's annual operating profit was 1.1 billion KRW, down 87.5% from the previous year, and net profit was 1.5 billion KRW, a 77.4% decrease. Compared to the previous operating profit margin in the 20% range, this is a significant hit. The company explained that this was due to budget cuts by major advertisers caused by the COVID-19 pandemic. PlayD's major clients include Naver, Kakao, and Google.

Despite the poor performance, the board of directors is expected to support CEO Heo's leadership for the time being. CEO Heo, whose term expires this month, is scheduled to be reappointed for another year, following last year's reappointment. Inside and outside the company interpret that it is difficult to hold management accountable as the impact is due to the COVID-19 pandemic.

CEO Heo, a former head of NHN Services' Search Marketing Center, has led PlayD since 2014. He has expressed his intention to transform the company from its existing core keyword advertising business into a comprehensive online advertising agency providing big data-based solutions.