Acquisition and Establishment of Multiple Popular SNS Channels
Employees Mobilized to Post Music Promotions
First Sanction for Deceptive Advertising in the Popular Music Industry
Kakao Entertainment, which mobilized employees pretending to be ordinary people to post promotional music recommendation posts on social networking service (SNS) channels, will face sanctions from the Fair Trade Commission.
On the 24th, the Fair Trade Commission announced that it would impose corrective orders and a total fine of 390 million KRW on Kakao Entertainment for violating the Act on Labeling and Advertising.
According to the Fair Trade Commission, Kakao Entertainment acquired or established famous SNS channels such as 'Idol Yeonguso' and 'Noraeneun Deudgo Dani-nya,' directly owning and operating them while hiding their connection to Kakao Entertainment to promote their own music and albums.
Employees belonging to Kakao Entertainment also wrote advertising posts about music and albums distributed by Kakao Entertainment on major online communities, pretending to be ordinary people.
There were also cases where economic compensation was paid to advertising agencies to promote music and albums through SNS without disclosing the economic interests involved.
Kakao Entertainment instructed designated upload channels to post advertisements, including attached content (photos, articles, music), and to monitor consumer responses such as views and likes and submit the results.
From July 2016 to December 2023, it was confirmed that about 860 million KRW was paid to 35 advertising agencies, including The Fan (Idol Issue, Neoga Joahalk Issue, etc.) and Banana Marketing (Sigan Hook Ganeun Page, etc.), resulting in a total of 427 posts.
The Fair Trade Commission viewed Kakao Entertainment’s promotional strategy as deceptive advertising and imposed corrective orders and fines.
Due to such concealment and omission, ordinary consumers who encounter the posts are unlikely to recognize them as advertisements planned by Kakao Entertainment and are more likely to accept them as sincere recommendations or introductions by ordinary people.
The Fair Trade Commission explained, "The total number of followers of the SNS channels used by Kakao Entertainment for advertising its distributed music and albums reaches 4.11 million, and the number of members in online communities reaches up to 1.5 million, which is judged to have a significant influence on music consumers."
A Fair Trade Commission official stated, "This action is the first case of sanctioning deceptive advertising in the popular music field, confirming that in fields like popular music, which are heavily influenced by others' preferences and recommendations, businesses must clearly disclose economic interests when promoting through SNS."
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