Kakao to Apply Advertising Revenue Model to 'Open Chat' Starting Year-End

Namgoong Hoon, CEO of Kakao

[Asia Economy Reporter Seungjin Lee] Kakao announced plans to maximize profitability by introducing revenue models such as advertising to KakaoTalk Open Chat, which has secured 9 million daily active users, starting from the fourth quarter, and to launch a separate app called 'Open Link' in the future.

On the 4th, during a conference call following the announcement of the second-quarter earnings, Namgoong Hoon, CEO of Kakao, stated, "The application of a revenue model to KakaoTalk Open Chat is scheduled to begin in the fourth quarter of this year. Primarily, an advertising model will be introduced first," adding, "Subsequently, B2C2C (business-to-consumer-to-consumer) and Web 3.0 business models will be applied."

He continued, "The Open Chat rooms themselves will become subscription models, enabling room hosts to generate revenue from providing information, or allowing hosts to make decisions to introduce advertisements within the chat rooms and assist monetization by utilizing business tools such as commerce," and explained, "However, since the application of revenue models for creators requires sufficient testing before introduction, we will provide detailed explanations after implementation."

CEO Namgoong also revealed plans to launch KakaoTalk Open Chat as a standalone app called 'Open Link.' He said, "We plan to launch Open Chat as an independent app called 'Open Link,' establish a domestic base, and then expand overseas," adding, "We look forward to global fans who enjoy Korean webtoons meeting on Kakao Webtoon's Open Link and discussing works in the near future."

Additionally, Kakao anticipates that growth in Talk Biz will slow somewhat in the second half of the year due to economic uncertainties and a contraction in the online commerce market, and has also announced fundamental improvements to its business structure.

CEO Namgoong explained, "Starting in the second half, we plan to introduce search and content advertising based on interests in Open Chat and improve completeness," adding, "We will consider and experiment with products that advertisers will find attractive in places where user interests gather, such as shopping within KakaoTalk or local searches through Kakao Map."

He diagnosed, "The fundamental area needing improvement is shifting from image-based advertising exposure to video-based advertising," and said, "The biggest reason advertisers have not allocated a large portion of their advertising budgets is the lack of expansion in video advertising."

He emphasized, "Biz Board currently displays image exposure, but since last year, we have been able to provide video material advertising as an extended form of Biz Board, which has received a strong response from advertisers," and added, "We expect the share of video advertising to increase."

Jae Hyun Bae, Chief Investment Officer (CIO) of Kakao, stated, "Due to overall macroeconomic uncertainty and significant changes in endemic users, growth in the second half is expected to slow somewhat," and added, "Given the increased uncertainty, we will strive to achieve solid growth in the second half."