Kakao (035720.KS) is stepping up efforts to expand its global earnings through the upgrade of its KakaoTalk-based advertising services. The company plans to accelerate its push into the North American market, a core pillar of its global ad business, while entering Japan this year and eventually expanding to Vietnam.
According to industry sources on Monday, Kakao is preparing a service expansion to mark the first anniversary of KakaoTalk's entry into the North American advertising market. In addition to its existing core offerings of message and display advertising and branded emoticons, the company plans to launch Kakao Sync, a business-to-business (B2B) business solution.
Kakao Sync is a service that helps KakaoTalk users easily sign up for brand websites. Through channel friend integration, it can also be used to deliver customer relationship management (CRM) messages. While the company has so far focused on exposure-based advertising targeting individual consumers, it plans to expand its business scope to B2B business solutions going forward.
Kakao officially entered the North American market at the end of April last year, opening its ad business in the region where the largest Korean diaspora community is formed. The decision was based on the judgment that with approximately 1.7 million local KakaoTalk users, there is sufficient advertising demand from small business owners and English-based brands. The company offers KakaoTalk-based advertising identical to that in Korea, but optimized for the characteristics of local users. Representative offerings include display ads shown on the friends and chat tabs, message ads sent through brand channels, and branded emoticon ads provided when users add channels.
This year, the company plans to officially launch its ad service in Japan. Japan is the country with the second-largest Korean expatriate population after the United States, and local KakaoTalk users are estimated to exceed 1 million. Kakao plans to gradually expand its global ad services through Japan and then to Asian regions including Vietnam.
However, for this global ad business to translate into tangible results, expanding KakaoTalk's user base is essential. As of the end of last year, monthly active users (MAU) outside Korea stood at around 5 million, just 10% of the domestic level. Without growing the user scale, meaningful overseas ad revenue is difficult to expect under the current structure.
The reason Kakao is staking so much on its overseas business is to shed the label of being a "domestic-only company." In 2022, Kakao declared its "Beyond Korea" vision to raise the share of overseas revenue from 10% to 30% by 2025, but ultimately failed to achieve the goal. The acquisition of SM Entertainment, which had been pursued to expand its global business, unexpectedly escalated into legal risks, disrupting the existing management strategy. Since then, Kakao has been trimming down by selling off affiliates such as Kakao Games, and is currently carrying out a sweeping business restructuring centered on its core platform, KakaoTalk.
"Based on the platform competitiveness and operational know-how we have proven domestically in messaging, content and community, we will steadily expand our user-based services globally," a Kakao official said.
