As we know, people are buying actual products through internet shopping malls and early adopters are trying to make a deal via a mobile channel. Therefore online advertisement gets more important every day and the competition between search engine providers is becoming severe in Korea. Since Naver, Korea’s overwhelming search engine leader, exchanged an advertisement agency to its subsidiary NBP, Daum and SK Communications have talked a detailed alliance plan to cope with Naver’s movement.
Eventually, the grand alliance between Daum and SK Communications was released. The main contents about the alliance are to share the advertisement platform and to cooperate together in internet services. While Daum is strong in the web mail, blog service and community cafes(internet club service), SK Communications owns the largest SNS in Korea – Cyworld. Most of all, this alliance will be very powerful in a way that they will display the same advertisement at their internet channels.
Would it be possible for both companies to efficiently overtake Naver based on this cooperation?
Not Easy, But Possible
Naver is one of the most powerful internet service provider in Korea. After grabbing the status of the number 1 search engine, the company never yield its position to other players. Naver has gathered a lot of advertisers and established the impregnable online channel. Because the gap between Naver and other providers is wider than ever, it is impossible for Daum and SK Communications to change this situation with ordinary methods.
The two companies agree to make their authentication system compatible as well as sharing of advertisement channels. There is no detailed plan for cooperation yet. But they can make synergy by only connecting Cyworld to Daum cafe. And if NATE, the internet portal service provided by SK Communications, adopts a Daum blog service, it will lure out Naver bloggers who are tired of the closed environment of Naver Blog.
But it is just an ideal scenario. Though two different firms have a same goal, it is very difficult for them to agree with a detailed option for cooperation. Nevertheless, this partnership may make more synergy than expectation in a way that they desperately want the actual turning point of their internet businesses.
A Lot of Challenges
As I wrote before, Naver has started an internet shopping business with its coupon service. Though there is an additional market such as mobile services and a smart TV, Naver can’t grow further only with a search engine and advertisement platform. This movement creates a lot of rivals who are operating their businesses.
Like the case where G-Market and Auction withdrew their shopping DB from Naver Shopping last year, Naver is intensively kept in check by other players. Even though Naver has its alliance with device makers and other players to expand its business area, Naver appears to spread its power to deal with too many things.
According to the report of Korean Click, a research company, Naver’s market share of a search engine reaches at 69.6%(Daum: 20. 5%, Nate: 5.5%). Naver is still the number 1 service provider. But if other providers leverage other service platform, the paradigm of an internet business can be changed.