[E-Daily Reporter SHIN MIN JOON ] CheilWorldwide(030000)·INNOCEAN WORLDWIDE INC.(214320)· #HSAD · #Daehong Planning—the “Big Four” of the domestic advertising industry—are stepping up their efforts to secure non-affiliated clients (advertisers). All four companies are affiliates of major conglomerates and have grown primarily on the strength of advertising for their parent groups. However, with the volatility of advertising volume from group affiliates increasing due to the recent global economic slowdown, analysts interpret this move as an effort to secure a stable revenue base by expanding their client base to include non-affiliated companies.

According to the advertising industry on the 25th, CheilWorldwide, an advertising agency affiliated with the Samsung Group, has secured new clients this year, including XAVIS CO., Ltd., Naver Shopping, Airbnb, and Dunamu’s Upbit INC. Given the substantial advertising volume from group affiliates such as SamsungElectronics(005930), CheilWorldwide’s reliance on non-affiliated clients is relatively low compared to its competitors.

However, CheilWorldwide has been steadily reducing its reliance on the group by securing new non-affiliated clients recently. In the first half of this year, the share of gross profit from non-affiliated clients (domestic) at CheilWorldwide stood at 29%, an increase of 1 percentage point (p) compared to the same period last year (28%). On an annual basis, this figure is projected to rise from 28.9% last year to 30% this year. The advertising industry regards gross profit as a key performance indicator. This is because gross profit—calculated by subtracting costs such as media placement fees and outsourcing expenses from revenue—reflects the actual scale of business secured by an advertising agency.

CheilWorldwide is actively seeking to attract non-affiliated clients by highlighting achievements such as increased brand favorability and higher new customer acquisition rates. A prime example is XAVIS CO., Ltd., the operator of “Samjeomsam,” the No. 1 tax refund platform. According to CheilWorldwide, the new customer acquisition rate for XAVIS CO., Ltd.’s “Samjeomsam” platform campaign, conducted from April to May of this year, increased by approximately 22 percentage points compared to before the campaign. Brand favorability also rose by 18.9 percentage points compared to those not exposed to the campaign.

#INNOCEAN WORLDWIDE INC., an advertising agency affiliated with HyundaiMotor Group, has also secured new clients this year, including △KTCorporation(030200), △INDUSTRIALBANKOFKOREA, △Korea Tourism Organization, and △Korea Hydro & Nuclear Power. INNOCEAN WORLDWIDE INC.’s gross profit share from non-affiliated companies in the first quarter of this year stood at 45%, an increase of 3 percentage points from 42% in the same period last year. INNOCEAN WORLDWIDE INC. is attracting non-affiliated clients by increasing its integrated, large-scale customer experience (CX) campaigns.

Daehong Planning, the advertising agency affiliated with Lotte Group, also secured new clients this year—including △SK Innovation, △Nexon, △CJ Corp. Olive Young, and △Naver Pay—expanding the proportion of gross profit from non-affiliated clients to approximately 60%. Daehong Planning is strengthening its collaboration with its subsidiary Spoon (specializing in digital and media) to attract non-affiliated clients. Daehong Planning is generating synergies with Spoon in areas such as digital ad production and execution, as well as enhanced media solutions.

HSAD, the advertising agency affiliated with LG Corp., has secured new clients this year such as Dunamu and J-Sys Medical, attracting new advertisers from a wide range of industries including △gaming △business-to-business (B2B) △finance △pharmaceuticals △medical devices △food △and securities. HSAD has recently been focusing on full-funnel marketing—which involves the integrated management of the entire customer journey, from a consumer’s initial brand awareness through purchase, repeat purchase, and eventual loyalty—as well as artificial intelligence (AI) and generative AI engine optimization (GEO), areas where demand from non-affiliated clients is high.

The reason the advertising industry is actively pursuing non-affiliated clients is that the business environment remains challenging. In the second half of this year, companies are adopting a more cautious approach to advertising spending due to the global economic slowdown and sluggish consumer spending, compounded by a reduction in major sporting events. The trend among major conglomerates to streamline marketing expenses is also contributing to this shift.

Expanding the non-affiliated client base is helping advertising agencies improve their performance. For example, CheilWorldwide’s operating profit for the second quarter of this year was 92.7 billion won, a 0.6% increase from the same period last year. INNOCEAN WORLDWIDE INC.’s operating profit for the second quarter also rose 22.4% year-over-year to 44.6 billion won.

An advertising industry official stated, “When an advertising agency relies heavily on work from group affiliates, the volatility of advertising volume inevitably increases depending on the affiliates’ performance,” adding, “Since non-affiliated clients span a wide range of industries, agencies can secure a relatively stable volume of advertising work compared to that from affiliates.”