THE-RICH-GET-RICHER-AND-THE POOR-GET-
POORER SITUATION
In 2004, all business areas encountered difficulties in achieving their annual growth goals. Sign-making businesses also showed a 20-50% decline in sales, as several firms and stores?
their end-users?tightened their budgets. The whole country, including the metropolitan areas, was under an extremely stagnant economic situation, creating a "THE-RICH-GET-RICHER-AND-THE-POOR-GET-POORER" outcome in the sign-making industry. That is, a large sign company can dominate the sign market, while relatively small companies rarely receive new orders from their customers or clients. A large sign company with a great marketing plan and a huge capital, compared to a small company, has better chances of succeeding. A more intense competition among these companies results in the decline of the prices of sign materials.

Value-added Products Increase Profits
The Korean economy is still shrouded by a heavy fog. We cannot expect that the economy will improve until the first half of 2005. But, fortunately, we need to keep in mind that dimensional signs, like channel letters, will become more popular, and will have added value in 2005. Conglomerates, such as Samsung and LG, are planning to replace their old, flexible-faced signs with a variety of dimensional signs, which can lift the sign industry. Instead of flat-faced signs incorporated into aluminum frames and flexible-faced materials, dimensional sign frames that use galvanic steel and stainless steel, with cold cathode and LEDs, will break the current economic crisis in the sign industry. In addition, the government is carrying out a large-scale, nationwide Improvement Project on the outdoor advertising system. This must be welcome news to the sign industry.

Convergence in Metropolitan Areas
The most notable features of the Sales Promotion Media in 2004 included falling subway advertising and rising streaming video advertising, and bus and taxi exterior advertising. Stiff competition among media agencies caused remarkably increasing ad rates, and subway advertising became less cost-effective. Also, last year, the Sales Promotion Media suffered a blow from the long-term economic depression and under-consumption. Most advertisers faced difficulties in planning advertising strategies that could generate a reduction in investment as well as less promotion and marketing. At the same time, a preference for outdoor advertising media resulted in deeply divided market shares. Even though many companies froze or reduced the following year’s advertising budgets, advertisers gave them special-grade media that converged on a metropolis. Accordingly, the ad rates of the local area’s outdoor media were on a rapid decline. A well-financed ad agency could also dominate the market.

Looking for More Reliable Media
As a matter of fact, so far, there has been no objective, effective, systematic, and statistics-based analysis of the effects of outdoor media. The existing analysis is somewhat subjective, estimating virtual effects related to product sales through rule of thumb. In the U.S. and Japan, the outdoor advertising industry or the government investigates the volume of traffic, the floating population, and, especially, certain consumer classes, and comes up with results to meet the client’s needs. In Korea, a systematic process in measuring the media’s efficiency will be highly required in the near future. Before, a company preferred to place an advertisement that symbolized its corporate image on a highly priced, large outdoor media. The media, however, which require less costs and shorter contracts, proved to be more desirable to most companies. The contract term of the existing media is around three years. Now, the period is shorter, from three to six months. For instance, advertisers have noticed vehicle graphics on buses and taxis because the type of media used did not require huge production costs, and had short-term contracts. Furthermore, they were evaluated as cost-effective media with a high frequency of exposure. Also, portable media and streaming video advertising seemed to have met the needs of the current customers. After 2004, we can expect that many types of advertising media, which can be operated for a short term, would cause a buzz in the outdoor advertising industry.

Total Digital Printing Solution
Fortunately, despite continuing economic depression, the digital printing industry in 2004 has matched the economic scale in 2003. Still, to survive in a competitive market, digital printer providers were willing to accept reduced profits from selling printers due to drastic competition. Ultimately, a number of distributors of digital printers went into bankruptcy. When the economic situation in the country was increasingly worsening, digital printer companies tried to diversify to make a profit. That is why digital printing system companies are now offering total solutions, including ink, media, and software, aside from digital printers. This year, they will mull over the strengthening of their cooperation with other companies to offer total digital printing solutions, and to survive unstable economies. In the digital printer market, the UV-curable digital printer is emerging as a cutting-edge equipment. Several UV printers released domestically and internationally last year have drawn wide market attention. These sets of equipment show great productivity and offer higher output quality. The digital printer companies, which plan to diversify their business domains, purchase these kinds of printers, and use them in interior decorations, as well as outdoor advertisements. The printers, which were used only for fabric banner accounting to gain a larger market share in the country, were introduced last year.

A Decline in the Quantity of Digital Printing
The width of digital printing media has grown since 2003. The 5-m-wide media have not gained a large market share, but the demand for the media has constantly increased while 5-m-wide digital printers were being used widely in the outdoor advertising industry. Additionally, the new type of flexible-faced, canvas-like material used in fine art has recently been introduced in the market. Under an economic depression, the digital printing industry showed a decline in sales in 2004, from 20% to 50%, compared to 2003. In fact, companies cut down on advertising expenses, and hesitated to invest on large billboards. They stopped placing existing advertisements on billboards, causing economic contraction in the sign industry. Most people in the digital printing industry mentioned that the difficult situation would continue until the first half of 2005 due to lack of special events and a sluggish long-term economy. The government is also strengthening the regulation of flat outdoor advertisements.

Cold Cathode Increasing Market Share
In 2004, neon was used less and less in the lighting market for the outdoor advertising industry. The whole market for lighting systems is still enormous, but each lighting source has a definite market. Most neon products have been replaced with cold cathodes. Because of a high light diffusion coefficient, cold cathode lighting has been used in lieu of neon on dimensional signs. Its application stands out in interior illumination. Except in the reduction in market share, such a shift did not affect the neon industry. If the outdoor advertising market, however, is under steady depression, the small neon industry will also suffer a blow, resulting in the deterioration of the quality of neon products. A neon-related company revealed that, generally, neon arrives on a technically stable track, but cold cathode precedes it step by step in development, and its quality and technology must be verified by end-users.

A New-concept Lighting to be Widely Used
The enforcement ordinance of the City of Seoul, which was announced in 2004, encourages storeowners to install dimensional signs at their shops. Accordingly, various new lighting fixtures suitable for this type of signs have been developed over the last several years. Among them are the LEDs, which were highly appreciated as a lighting source for channel letters in 2004. In the latter half of 2004, along with other neon products, many companies released ready-made LED lighting products for channel letters. Whether LEDs will eventually enter the outdoor advertising market in 2005 depends on pricing. New lighting-manufacturing companies attended KOSIGN 2004, and some existing lighting source manufacturers also came. Other light-panel and EEFL manufacturers attended the show. Lighting manufacturers are developing and producing high-tech lighting fixtures, like EEFL and CCFL, so they could lead the market.

A Reform Bill on Sign Code
Sing Administration will have enforced a variety of sign codes during 2004 & 2005. Last year, a National Assembly carried a reform bill on outdoor advertisement, which will have a significant effect on the sign industry across the country. According to sign administration, the primary purpose of this reform bill is to develop and create a comfortable and agreeable environment for a residential area, and a reform bill make a sign company register its business to the related administration and obtain business permit, instead of reporting its business to the office. The most critical issue is a registration system on sign companies. A sign company released that a registration system would make the sign industry more competitive because a sign company without business proprietary would end to close its business. The registration system of a reform bill will be carried out in the latter half of 2005.

Strict Requirements
We cannot make an exact forecast of the final decision on a reform bill. But roughly, three big issues are likely to change the atmosphere of the sign industry in 2005. First of all, as for a requirement to open a sign business, a signmaker should take a qualifying examination and obtain a license from government, and own a business proprietary. The size of business proprietary is different according to each local government. Even though the existing signmakers can prepare all requirements for attaining a business license in two year, there are few signmakers, which meet the requirement from a reform bill. Another issue is that a sign under 6th floor is considered legal, According to the conventional sign code, all signs over third floor all are illegal signs. It must be good news to signmakers. Will not only old and illegal signs be regarded legal, but also it could result in re-vitalization of the outdoor advertising market. Additionally, for increasing the quality of sign systems and making up an active environment in commercial districts, dimensional signs will be highly required. Lastly, sign installers or storeowners must own an insurance policy in installing a sign, which includes a government’s strong intention of defining liability for an accident from signs. The member of Korean Outdoor Advertising Association takes out an insurance policy in party, but for non-member, it could be a burden to take an insurance policy. A Lawmaker plan to finish the reform bill on sign codes including the matter described above in the first half of 2005.