Naver, Kakao expand commerce ecosystem to improve profitability

2023.09.22 09:49:01 | 2023.09.22 14:42:54

[Courtesy of Naver and Kakao]이미지 확대

[Courtesy of Naver and Kakao]

South Korean platform giants Naver Corp. and Kakao Corp. are expanding their commerce advertising ecosystems within their key services as they go all out to improve profitability amid the stagnant advertisement industry.

Kakao announced Thursday that it has revamped the KakaoTalk Channel Home to allow businesses to freely configure their online spaces to suit their industry characteristics.

KakaoTalk Channel Home is akin to a homepage for each channel via which users can view and purchase content published on the channels.

Businesses can also easily arrange feature templates according to their industry-specific needs, such as reservations, subscriptions, deliveries, and ticket bookings.

Store operating information provided by KakaoMap can also be integrated into KakaoTalk Channels. Information such as store operating hours, ratings, and review counts registered on KakaoMap will be automatically linked and displayed on the channel homepage.

Menu and product information registered on KakaoMap will also be automatically integrated into KakaoTalk Channels alongside Kakao Talk buttons for customer inquiries.

“Businesses can choose and customize templates that suit their industry characteristics from five themes - offline stores, brands, online shopping, order placement, and reservations,” a Kakao official said. “We will also continue to add Industry-specific support features.”

The latest revamp is part of Kakao’s strategy to expand KakaoTalk from a closed communication channel centered on existing acquaintances to an open business channel centered on local communities.

Kakao has recognized limitations in the expansion of its existing KakaoTalk banner advertisements, which are centered on large corporations, amid the growing need for improving profitability.

Instead, Kakao is focusing on strengthening Talk Channel activation, which can be used by a variety of businesses, from large brands to small and mid-size businesses, whose owners want to communicate directly with consumers.

According to Kakao, the number of active channels increased to 2.04 million in the second quarter of this year.

[Courtesy of Naver]이미지 확대

[Courtesy of Naver]

Naver has already established a stable advertising and commerce ecosystem that encompasses large brands, small businesses, and individuals through its main search portal service, namely the Smart Store, Brand Store, and Place.

Naver is preparing to expand its advertising products in the interactive search service Cue: that was launched earlier in the week.

Cue: provides a connected flow that not only answers a single question but also allows users to compare products and make purchases or reservations. This is made possible through various Naver services, such as shopping, payment, and places.

It also search advertisements provide brand product advertisements alongside AI-generated responses to user questions and when users click on recommended follow-up questions related to the product, they receive answers provided by the brand.

It is as if an offline store employee is implemented online through AI.

Naver plans to unveil pilot advertisements in November, select test advertisers in December, and begin beta service in March next year. It is reported that it is currently collaborating with more than ten brands.

The focus now is on large brands but it has plans for expansion to include small and mid-size businesses within the ecosystem as advertisement execution size increases while decreasing costs.

For its part, Kakao is focused on revamping KakaoTalk’s Talk Channel to target small and mid-sized enterprises, going beyond traditional banner advertisements. It is shifting away from relying on a few major corporations that spend a significant amount of money to expand their advertiser base and ensure stable revenue generation.

Naver is also preparing a new advertising service using generative artificial intelligence (AI) within its existing search portal.

By Woo Soo-min and Lee Eun-joo

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