by Michael O'Neill
April 24th, 2013

Mobile services are coming under the spotlight as user trends for social media shift to mobile devices. For confirmation, look no further than Facebook, which since its IPO has been focused on developing services for mobile, such as the recent ‘Home’ service for Android.

Korea, a country with 33 million smartphone users as of January 2013, is no exception to this trend. The established social media players are rapidly extending their mobile offerings, with Naver launching its ‘Line’ instant messaging app and Daum rolling out a similar mobile service ‘My People’. However, the leading social platform in Korea is a relative newcomer, free mobile messenger service Kakao Talk.

Launched in May 2010, Kakao Talk was from the beginning focused on becoming  a global mobile social platform. By March this year, it was well on its way to achieving that objective, with the service now available in 13 different languages across 230 countries and with a cumulative user account of 88 million.

What though are the key factors behind this fast growth? Perhaps the most important is the integration of Kakao’s mobile gaming division with user’s social graphs on Kakao Talk. A person’s score on popular games such as Anipang and Dragon Flight can be shared and ranked with friends and associates on Kakao Talk, while users also depend on likes and ‘tokens’ from friend’s to increase game time. This has led to significant traffic growth and a sharp increase in sales.

Kakao has also been able to revitalise the mid-to-small mobile game start-up industry, further encouraging new mobile game development while inviting major game producers to enter the Kakao platform. For example, Dragon Flight, built by an independent developer, has flourished through its availability on KaKaoTalk — a win for both sides.

This win-win strategy is at the heart of the companies business model and can also be seen in other KaKao Talk offerings such as ‘Plus Friend’, a corporate marketing platform that allows users to receive content from brands and media companies. Although companies pay to be registered as ‘friends’, the service does not charge separate traffic fees, which benefits both brands and users.

A further factor driving Kakao’s success is how it has introduced various business models to decrease its dependency on traditional banner advertising. These include commerce revenue (‘Gift’), content distribution revenue through ‘emoticons’ and ‘game items’, as well as branded content revenue around ‘Plus Friend.’ The development of a business model that is not overly focused on mobile banner ads has played an important role in increasing traffic on Kakao Talk by shielding users’ from unilateral advertisements, thereby improving its overall level of customer satisfaction.

Despite the challenging market situation amid intensified competition from global social media like Facebook, as well as local rivals, Kakao continues to press forward to become a true global mobile social platform. Korean companies are showing heightened interest in Kakao Talk’s rapid growth in user numbers, seeing the platform as a potential channel for both marketing promotion and media. Kakao’s future initiatives, as well as its promise as a corporate communication channels, are something worth keeping an eye on.

Hoya Kim is senior account supervisor, Korea, at Weber Shandwick

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