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Biz News Korea(Eng)
Naver drops new search ad plan in face of market backlash
- Collected
- 2017.07.13
- Distributed
- 2017.07.17
- Source
- Go Direct
According to industry sources on Monday, the web portal recently released a plan to modify its ‘power link’ search ad service for NPay member merchants by adding an eye-catching icon that says ‘NPay 3%’ to their online and mobile ads from July 12. With the new ad scheme, NPay users would receive a 3 percent bonus point on their purchases through the ads from Naver.
But soon after the plan was unveiled, it was met with strong protest from payment services and large online shopping malls, claiming the new ad structure relies on Naver’s dominant market position to sway potential customers toward NPay from rivals. Naver now occupies more than 70 percent of online and mobile web searches in Korea.
Rival payment service firms raised concerns that the new scheme could discriminate non-NPay merchants, forcing them to choose NPay over other payment services to sell their goods on Naver.
The same complaint was heard from large online shopping malls that run their own payment programs but depend on Naver ads to attract customers.
A marketing expert who wanted to be anonymous said the 3% indication icon is very powerful to attract potential customers, making many merchants feel the implicit pressure that they must subscribe to NPay.
As a result of the mounting protest, Naver said Monday morning it will maintain the current status for power link bonus point ads, exposing only the ‘NPay’ icon and no percentage indication.
Legal experts echoed concerns that Naver might have violated the fair trade rules.
By Seok Min-soo
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]