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Kakao Talk to compete with global rivals in UK

Publication Date : 26-12-2013

 

As Kakao Talk ramps up its efforts to infiltrate the UK market, much attention is being paid to whether the Korean mobile messenger will be as successful there as it is on its home turf.

Kakao made an impressive debut in the UK in August when it ran an advertisement at Cardiff City’s stadium during a football match between the Wales-based home club and Manchester City. The company’s logo also appeared on the jerseys of Cardiff players.

After the match (Cardiff beat Manchester City 3-2), it was the unusual sponsorship by the Korean venture, not the final score, that really drew in soccer fans in Korea.

“Given that Kakao Group was marketing in one of the U.K.’s most lucrative business sectors, Korea’s largest mobile messenger is definitely eying a foothold there,” a market watcher said.

An executive from Kakao Corp., operator of the mobile messenger, recently said the response from Kakao users was “quite positive,” hinting that the firm may deploy similar marketing tactics down the road.

The promotions at the football stadium were planned by the Korean firm’s partner Friendster Inc., a social networking service firm based in Malaysia, and its parent company MOL Global, an online payment service company.

Tan Sri Vincent Tan, the owner of Cardiff City FC, is a principal shareholder of MOL Global.

Vincent Tan has expressed keen interest in the Korean mobile messenger, and is said to have vowed to support Kakao in increasing its presence in Southeast Asia and Europe.

Kakao Corp. and Friendster signed an exclusive partnership deal to launch the Kakao platform in Malaysia.

Different types of mobile services from those available in Korea can be introduced in the UK market as Kakao’s co-CEO Lee Sir-goo recently hinted that the firm could provide different services that fit each regional market, reflecting various cultural aspects.

“Each market has its own uniqueness. For example, messaging is a major means of communication in Korea where typing letters is relatively convenient, while voice calls are popular in China because complicated Chinese characters make texting difficult, and video calls are widely used in the US,” Lee said at a recent meeting with reporters.

Kakao has launched an array of services along with the messenger, including KakaoStory to share everyday events and pictures with friends; KakaoHome, a smartphone launcher; KakaoMusic, a social networking music service that enables users to share music with their friends; and KakaoAlbum to compile pictures.

A market watcher said KakaoTalk, however, would take cautious measures in trying to increase its presence in global markets due to concerns about hurting business relations with Tencent Inc., operator of smartphone messenger WeChat and one of the largest investors in the Korean firm.

Last year, Tencent invested $63 million, equivalent to a 14 percent stake, in the Korean firm.

“Kakao, which is short of funds, will be cautious in expanding its foothold in foreign markets since they could eat away the market share of the Chinese company’s service and will need further investment from the Chinese firm,” the market watcher said.

As an initial public offering is not expected for a couple years, Kakao Corp. may fall short on marketing costs, he added.

KakaoTalk’s local rival LINE spent 90 billion won on marketing in the third quarter, almost half of Kakao’s anticipated annual revenue of 200 billion won.

Overcoming entry barriers established by other global mobile messengers such as WhatsApp and Google Hangout is another challenge.

“Since Kakao and other Korean messenger services are latecomers in the U.K. market, the situation is not favorable for Korean firms,” said Lee Min-a, an analyst at HI Investment and Securities. “Differentiated and highly localized services are necessary.”

 

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