Daum, Nate Form Partnership to Take On Naver

      April 15, 2011 11:02

      Major web portals Daum and Nate are joining hands in a bid to overtake market leader Naver. Daum Communications and SK Communications, the operator of Nate and Cyworld, on Thursday signed a memorandum of understanding on cooperation in content sharing and online advertising. The deal is likely to reshape the portal industry and shake up the online advertising market, which is almost entirely dominated by Naver.

      ◆ New Alliance

      Daum and Nate will share content with each other starting in June, allowing users to more conveniently browse their online content such as blogs, forums and videos. Until now, domestic portals stuck to a closed structure with their content and services available exclusively to their respective users. This will be the first sharing of content by major portals.

      SK Communications boasts some 33 million users on its Nate messenger service and operates the popular social networking service Cyworld, while Daum features e-mail services, forums and news. The two sides are hoping to create synergy through the cooperation.

      Daum and Nate users will be able to enjoy services offered by both portals without having to log-in separately. The two firms also plan to expand their cooperation to include mobile services for smartphones such as location tracking.

      ◆ Online Ad Market

      Portals rely on advertising on search engines for the majority of their revenues. Naver's operator, NHN, has a wide lead over its rivals in the online ad market with sales of W700 billion last year, more than half the estimated W1.2 trillion overall market. The company aims to boost its sales to W1 trillion this year by engaging directly in marketing activities rather than through an ad agency, and has set up an advertising unit with hundreds of employees. The efforts appear to be paying off already, with the number of advertisers on Naver up 28 percent in January from the previous month.

      In a bid to grab some of NHN's market share, Daum and SK Communications will put particular focus on search advertising in their alliance. Advertisers on Daum will also see their ads pop up on Nate and vice versa. Both firms expect this scheme to significantly improve profitability through greater efficiencies with fewer staff. They also plan to form an even bigger alliance by joining forces with other content sites such as Yahoo.

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