Among my Korean friends Naver is the most popular search engine. This article tells of Naver's bold moves, including a launch in the U.S. market. What will determine NHN success will be its ability to localize to global markets....
Naver, the county's most popular portal, will first and foremost try to deliver a better search experience, its chief executive said, adding that its news service is of secondary concern.
"I want to find a win-win model for NHN and newspaper companies," Chae Hwi-young, chief executive of NHN Corp. said. "If people keep finding faults with our news service, I might even consider scrapping the service altogether."
Naver has been criticized for trying to gain the upper hand over newspapers and broadcasters and making arbitrary judgments on the value of news items. The portal uses articles supplied by newspapers, news agencies and broadcasting networks on its front and news pages.
Around 6 million Koreans click on Naver news on a daily basis.
Acknowledging its impact on setting the social agenda, Naver recently set up a consumer committee, through which users can reorganize the order of news on their own front pages.
Chae Hwi-young, chief executive of NHN Corp. [NHN]
The company also launched a 24-hour report center, tasked to deal with defamation and copyright issues, and the "daetgul" or comments made by users on articles.
To further quell criticism, Naver plans to introduce an out-link system from November, as Google does, the 42-year-old Chae said.
Out-link redirects users to the websites of newspapers or broadcasters, when they click on headlines on the Naver portal.
Among Naver's three main services - search, news and knowledge services - search comes first. The search market is still in its early stages and has a bright future, he said.
On the growth prospects for the search market, Chae cited statistics from the Internet Marketing Council of Korea and Morgan Stanley. The domestic market for search ads is estimated to stand at 625.6 billion won ($661 million) this year and expected to reach over 1 trillion won in 2009.
There are certainly good reasons why search engines can promise financial success, as evidenced by Google.
Google keeps search results free and makes a profit by allowing advertisers to reach their users. For instance, its keyword-targeted text ads, triggered by users' specific search requests, can be very profitable.
Because there are no flash or irrelevant banners competing for attention, the text ads are read carefully by users, who also find them to be as valuable as the actual search results. A search engine can earn up to 1,000 won for one click of an ad.
Chae said Naver will invest a total of 1 trillion won in human resources and technologies over the next three years. For the remainder of this year, it will invest 300 billion won.
Chae, a former reporter, is also determined to challenge the U.S. and Japanese markets. Naver will begin a beta service in Japan early next year. NHN's proportion of overseas business should increase from the current 16 percent, Chae said.
Naver had a grueling experience in Japan in 2001 when it launched Naver Japan. The service failed due in part to the shortage of manpower and relevant local expertise.
But we regained confidence as our search engine business has been strengthened by acquiring 100 percent of the shares in First Snow last June, he said.
First Snow's unique algorithm - which defines most frequently searched words based on the number of Web pages the words have appeared on - has been adopted by NHN.
NHN also will actively carve a foothold in the U.S. market, leveraging on game portals. NHN has invested 1.2 billion won on its U.S. game portal. Kim Beom-su, who has led the company along with Chae, will be relocated to head the company's U.S. operations.