Concerns mount over economic growth potentially dropping to the 1% range and the won-dollar exchange rate reaching its highest level since the 1997 financial crisis. (Image courtesy of Yonhap)
SEOUL, Jan. 3 (Korea Bizwire) — Advertising industry experts predict a significant downturn in South Korea’s advertising market this year, citing growing political uncertainties and deteriorating economic conditions.
The absence of major sporting events like the Olympics or World Cup has further dampened prospects for market recovery.
As concerns mount over economic growth potentially dropping to the 1% range and the won-dollar exchange rate reaching its highest level since the 1997 financial crisis, companies are expected to substantially reduce their advertising budgets.
“We plan to cut advertising spending by nearly 20% compared to last year due to unpredictable circumstances,” said a food industry executive.
“Consumer spending is contracting due to political instability. To survive this period, we need to reduce costs, and advertising budgets are typically the first to be cut. Once reduced, it’s uncertain whether these budgets will ever return to previous levels.”
An advertising industry insider noted that ad engagement has declined since the impeachment proceedings began, predicting continued decreases until the impeachment situation is resolved.
The current political climate differs from previous impeachment proceedings, with increased uncertainty due to delays in Constitutional Court judge appointments and the prime minister’s impeachment.
The absence of major sporting events in 2025 compounds the challenges. “Unlike last year when we had the Olympics to boost advertising, this year offers no such opportunities,” another industry source explained. “Companies won’t finalize their marketing plans until the political situation stabilizes.”
Traditional media faces particular challenges. While news consumption has increased during the political crisis, this hasn’t translated into advertising revenue. Newspaper advertising, which companies often view as a risk management tool rather than a performance driver, faces especially severe cuts.
“Broadcast stations are concerned, but newspapers face an even greater risk,” said an advertising executive. “During economic downturns, companies prioritize measurable advertising effectiveness, which is difficult to quantify with newspapers.”
The market contraction could lead to increased concentration of advertising spending. Industry observers expect advertisements to gravitate toward larger media outlets with proven effectiveness, while smaller outlets struggle.
Video streaming platforms may benefit as advertisers shift away from real-time news broadcasts during the period of political uncertainty.
“Live news advertising has become extremely risky,” noted an industry source. “With political stability unlikely in the near term, advertising will likely shift from real-time broadcasting to video streaming platforms.”
M. H. Lee (mhlee@koreabizwire.com)
