Nike looks to lure Korean customers with Naver’s generative AI ad platform

Nike Inc., the leading global sportswear brand, has launched an advertising campaign in South Korea on the generative artificial intelligence (AI) ad platform of the country’s online giant Naver Corp., which is seeking new growth engines.

The US athletic footwear and apparel company introduced the ad on CLOVA for AD, Naver’s advertising business based on its large language model (LLM) HyperCLOVA X, the South Korean tech behemoth said on Wednesday.

When a customer looks for Nike running shoes on the Naver website, a chatbot-styled search service appears and the generative AI of the ad recommends particular models with explanations of their product details and designs. If the user searches for shoes with a specific weight or heel-toe drop, the AI tool provides related information and links to purchase such models.

Through the service, the generative AI plays the role of brand manager at an offline store as it handles all sales steps such as product recommendation and purchase assistance, according to Naver. The AI answers customers’ questions based on the brand’s content while promoting its latest flagship products.

Such a series of chats between the AI and users is expected to boost customer purchase intentions, Naver said.

“Users get product information more effectively through the chats, which is likely to increase their chance of buying and allow advertisers to expect higher purchase rates,” a Naver official said.

The ad on CLOVA for AD reported a higher click-through rate by some 20% versus the existing banner ads during the service’s pilot operations from Jan. 15-19, Naver said. Three out of 10 users who chatted about products visited the advertiser’s website to search for them, according to Naver.

NEW FORM OF ADVERTISING

Naver aims to foster CLOVA for AD as a new form of advertising. 

“It will create demand for a new ad channel, which allows interaction between brands and customers,” said Ha Seon Young, the leader of Naver’s ad product planning team, although she declined to comment on ad costs.

Generative AI ads are expected to generate a catfish effect -- where a strong competitor causes the weaker to improve -- in the digital ad market, industry sources said.

The global generative AI ad market was forecast to soar to $192.5 billion by 2032 from only $60 million last year, according to MezzoMedia Inc., a digital marketing subsidiary of South Korea’s entertainment powerhouse CJ ENM Co.

The world’s retail sector is increasingly employing generative AI.

Global tech giant Google in June last year launched its virtual try-on feature for apparel, which shows users what clothes look like on "real-life" models with a wide variety of different body shapes and sizes.

Mercari Inc., Japan’s largest community-powered e-commerce company, also introduced generative AI to recommend products to customers through a chat function. 

Write to Ji-Eun Jeong at jeong@hankyung.com
 
Jongwoo Cheon edited this article.