[Click eStock] "No Chuseok Effect" Advertising Market, Negative Outlook for Second Half

Concerns Over Growth Slowdown Amid Advertising Market Slump
Minimal Chuseok Effect... Continued Reduction in Advertising Spending
Double Burden from Consumption Slowdown and Intensified Commerce Competition

Shinhan Investment Corp. forecasted on the 4th that advertising revenue growth for domestic internet companies in the second half of the year will be challenging.

According to the report, the advertising market continues to be sluggish, and the September Advertising Business Outlook Index (KAI) recorded a low level despite the Chuseok effect. The Korea Broadcast Advertising Corporation (KOBACO) announced the September KAI at 102.8 points. The index for online channels was 104.3 points, slightly exceeding the overall index, but every September with Chuseok usually sees the index surpass 100 points due to seasonal effects. This year, the Chuseok effect was reduced compared to previous years, maintaining a negative atmosphere.

Additionally, according to the Korea Digital Advertising Association, PC channel advertising expenditures in June and July are estimated to have shrunk by -13.6% and -11.7%, respectively. Due to the limited market size and intense competition among online commerce and content platforms, individual companies’ performance remains negative. In particular, influencer-based content platforms such as YouTube and Instagram are improving efficiency by removing ads or launching new advertising products, which is expected to continue slowing the growth of domestic native platforms. Furthermore, although domestic real estate transaction volumes slightly rebounded in the first half of the year, they remain at low levels, making industry recovery through real estate advertising expenditures unlikely.

Consumption slowdown is adversely affecting advertising market growth. According to Statistics Korea, the internet service industry index for July 2024 was 162, showing a 4.4% increase year-on-year. However, this mostly reflects single-digit growth rates and is the lowest level since 2022. Online shopping transaction volume in July was about 20 trillion KRW, growing 5.4% year-on-year, but this is also the lowest level since 2022. Due to consumption slowdown and intensified commerce competition, domestic companies’ transaction volumes are likely to stagnate.

Researchers Kang Seok-oh and Ko Jun-hyeok of Shinhan Investment Corp. stated, "In conclusion, domestic internet companies face a difficult situation in the second half of the year," adding, "It is hard to expect a virtuous cycle of increasing advertising expenditures, and due to a lack of content competitiveness, it is also difficult to achieve traffic growth and secure advertising market share." Domestic companies that have failed to respond to intensified commerce competition and influencer-based content trends are losing competitiveness significantly compared to overseas companies, and accordingly, industry growth slowdown and corporate competitiveness decline are expected to continue causing multiple discounts.