INTERNATIONAL: Global expansion strategy the way forward for South Korean agencies
By DAVID KILBURN, campaignlive.co.uk, Friday, 16 August 1996 12:00AM
David Kilburn on agencies that use multinationals to achieve global expansion
David Kilburn on agencies that use multinationals to achieve global
The Asia Pacific region has never been seen as a successful launch pad
for truly global agency networks, perhaps because Japanese agencies -
despite their sheer size at home - have struggled to transplant their
culture into the furthest parts of the globe.
However, Japan’s nearest neighbour and arch-rival, South Korea, looks
like succeeding where its old coloniser has failed. Seoul’s five top
agencies are each gearing up for worldwide expansion at a rate that will
ensure Korea a place in the world’s top ten agency list come the new
Korea’s secret weapon in the race for global supremacy is the fact that
each of its top five agencies is a subsidiary of one of the country’s
giant industrial conglomerates, or chaebols. Each of the five has
expanded overseas as its chaebol has moved on to the world stage,
exploiting the vacuum left by Japan’s strong yen. And each has even more
aggressive plans for well into the next century.
Korea’s number one agency, Cheil Communications, for example, is owned
by Samsung, and has already opened ten offices around the world on the
coat-tails of its parent.
Its role is to maintain a global perspective in advertising and
marketing, as each division of the chaebol (for example, consumer
durables) uses its own locally-hired agency. Reporting directly into the
chairman’s office at Samsung, Cheil also creates and runs its own
international campaigns, such as the one that was launched last month.
Cheil’s billings are already expected to top the dollars 1 billion mark
this year and, according to its president, Ki-Seun Yoon, is set to more
than treble to dollars 3.5 billion by the year 2001. About 25 per cent
of this will come from overseas and all the international growth will
come via Samsung.
Korea’s number two agency, LG Ad, is a subsidiary of LG, formerly known
as Lucky Goldstar. It expects a network of 50 offices worldwide by 2005,
up from just three today. By then, agency billings could double from
1995’s dollars 38 million, with half coming from international business.
Third in the ranking is Diamond Advertising, a subsidiary of the Hyundai
conglomerate and already billing dollars 400 million a year. Diamond has
branches in Los Angeles and Frankfurt and is making plans for San Jose
Number four in the list is an agency called Daehong Advertising,
majority-owned by Lotte, with billings of dollars 310 million. It has
already set up in Beijing, where China’s first Lotteria fast food outlet
Korea’s fifth largest shop is Korad Ogilvy and Mather, a subsidiary of
the Haitai Group and also Daewoo’s main agency. Ogilvy and Mather has a
30 per cent stake in KOM, and WPP is sharing in the ambitious expansion
plans of the agency to move deeper into overseas markets as its two main
customers continue to grow.
So will Korea succeed where its big industrial neighbour has failed?
Confidence is high that it will. As KOM’s president, Myung-Ha Kim, says:
‘Long term, there’s no future in simply being a large domestic agency.’
This article was first published on campaignlive.co.uk