In-house ad agencies comparatively have more stable billings in South Korea: Yehoon Lee

South Korea ranks 38 on WARC Effective 100 and 23 on WARC Creative 100 as per the most recent data. It is also a most distinct advertising market dominated by in-house agencies.

At a time when the country is hosting its biggest global advertising festival AD STARS in Busan, we caught up with Yehoon Lee, Vice President and Executive Creative Director, Cheil Worldwide, the country’s biggest ad agency, who spoke about what it means to advertise in a technologically advanced South Korea.

WPP, Publicis and other agency networks, which are known for their creativity world over, have very limited influence in the South Korean market where the top five ad agencies are considered to be in-house agencies like Cheil, Innocean and HS Ad. Why?

Advertising and marketing mainly depend upon human resource and a well-maintained system. Outstanding and creative individuals engender outstanding creative thinking. This type of systematic approach could directly contribute to the client’s business and the outcome could bring in a much more productive result. In-house agencies, because of comparatively stable billings, are able to invest in searching for talented individuals, which allows the company to design comprehensively and work effectively. This offers in-house agencies the possibility of attempting a distinct marketing communication approach for their leading client’s needs and that could be quite challenging sometimes.

However, this process will accumulate authentic ‘know-hows’ and ‘know-wheres’ and could provide competitive business solutions. I think such a virtuous circle is the chief factor which leads to success. Also, it doesn’t seem proper to judge the creative influence of other agencies like WPP by rankings in the market, which is based on billings.

Over the years Cheil has branched out and how… it is no more considered as just a Samsung agency… what was the turning point for the agency?
In the journey to contribute to our clients’ successful global business, Cheil has extended its branches across the world and also achieved quality of growth. Also, one of the factors that has helped us be an outstanding global agency is that we have competed with some of the world’s most competent agencies.  

Today what percentage of your revenue comes from non-Samsung brands globally?
It is difficult for me to give a specific number. However, the number of our clients is more than 600. ‘Market Kurly’, one of the most spotlighted O2O brand in Korea, has become our new client. Coca Cola’s ‘Sprite’ is also our new brand this year. In addition, since numerous potential clients want to have a partnership with Cheil and that can provide effective business solutions, I prospect the number of non-Samsung brands will continue to grow.

For the very first time, advertising expenditure on digital platforms rose to over 4 trillion won ($3.55 billion) in 2018, surpassing the amount spent on broadcast ads in Korea (as per data shared by Cheil). While advertising markets in other Asian countries are aiming to be digital-first, looks like you are already there. What are the factors that led to this?

Cheil recently announced its new mission called CONNEC+ (Connect Plus). It connects both the brand and consumer, both advertising and retail, and both online and offline. The mission is to create new business value through connecting our thinking, experience and technology. To make it possible, Cheil has invested in marketing solutions for data-driven marketing and ad-tech campaigns in order to raise the effectiveness of our digital campaigns. Most other leading agencies also seriously prepare for the changed situation. Furthermore, as digital-based agencies are rapidly growing in Korea, they stimulate other traditional agencies. Creative directors who have trained in traditional agencies have moved to digital-based agencies during the past years. And digital-based agencies are investing on development of their solutions to improve digital advertising effectiveness. These moves can accelerate digital-first and bring more qualitative changes.

How different is advertising in the South Korean market compared to the rest of the world? What makes it distinct - culturally and technologically?
Korea is more advanced than any other country in terms of digital infrastructure such as smart phone penetration rate and internet speed. It has changed Korean consumers’ media consumption habit so rapidly. In addition, the social media participation rate among young generation, and YouTube viewership among older people seems to be higher than other counties. The power of the influencer is also very high. Censorship by collective intelligence influences our advertising campaigns. We usually learn from brilliant creative content uploaded by some internet citizens. Sometimes I get frustrated with their creativity and speed.

It is believed that if a brand has to pitch a product in South Korea, they are most likely going to need a celebrity to help them do it… Are celebrities still the number one choice for selling a product in South Korea and why?
I do not think using a celebrity is most important in advertising. However, most of the times a celebrity could draw lot of attention, which makes the audience remember the brand easily, and this is a very important factor in sales. In the case of new and unfamiliar brands, it is most likely that they will rely on celebrities for that reason. For example, even a plain pair of socks can become extremely popular by utilising celebrities like BTS. In this case, the socks brand simply becomes the BTS socks.

How important are awards for you? What are you looking forward to the most at AD STARS festival this year?
Each and every award can be an opportunity to evaluate our perspective towards advertising. I always receive a new insight and some wonderful inspiration from other juries and the stunning works. I am truly excited by the success of AD STARS and this year we have more than 20,000 entries from 60 countries, it’s amazing.

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