13 December 2006

South Korean web portal teams up with Google

Daum, one of South Korea's most popular web portals, has teamed up with Google in the competitive sphere of online advertising. Daum will now display advertisements to their 38 million registered users from Google's pay-per-click AdSense network.

The deal will commence in January, after their current contract with Yahoo!-owned company Overture comes to an end. Daum saw their search advertising revenue rise by 31.6 per cent between July and September this year. In the same period, Google's AdSense generated 39 per cent of the search engine's revenue. Daum expects advertising sales in the search industry to grow by 27 per cent in 2007, but the web portal aims to beat this figure by teaming up with search giant Google.

The move expands Google's market presence in Asia and builds on previous links between the companies, which started in 2003 with the integration of Google web search into Daum's websites. The new deal could well be seen as a triumph for Google, as Overture is a major player in the Asian search market.

South Korea has the largest online population in the world, with 83 per cent of the country's residents connected to the internet. Although Google enjoys in excess of 60 per cent of the world's search traffic, the company lags behind local offerings in South Korea as a result of various factors, such as large graphics functionality and support for the Korean language. Google currently has plans to open a research and development house in Seoul and has also signed an agreement with the government of South Korea in order to operate in the territory, whilst expanding business relationships nationwide.

After establishing themselves in the South Korean market, Daum previously attempted to expand their business worldwide with the purchase of the $95 million Lycos search portal in August 2004. But a series of hindrances, widely attributed to the restructuring of Lycos, have allowed NHN Corp.'s Naver search engine to take advantage of the South Korean market. It is hoped that partnering with Google, the world's most successful search engine, can give Daum the boost it needs to compete more successfully.

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