Exclusive
"Even with over 100 billion won in ad volume..." Digital First withdraws from media rep business

[비즈한국] Digital First, a digital advertising subsidiary in which the mobile data platform company IGAWorks invested approximately 10 billion won, is withdrawing from the media rep business. It has been confirmed that Digital First recently shared its plan to shut down the business internally and has begun follow-up procedures related to workforce management.

On the surface, the decision comes as a surprise. Digital First is known to have handled approximately 100 billion won in advertising volume annually based on ad execution. However, its actual revenue (operating profit) recorded in the 2024 audit report stood at only about 6.4 billion won. This highlights the characteristic gap between transaction scale and accounting revenue inherent in the media rep model, which acts as an agent and intermediary for advertising expenses.

Profitability had worsened further. In 2024, Digital First recorded an operating loss of 2.7 billion won and a net loss of 4.7 billion won. Having posted a net loss of around 3.3 billion won the previous year, this marks four consecutive years of losses. With accumulated losses mounting, the deficit in retained earnings had expanded to approximately 7.9 billion won by the end of 2024.

Its financial structure also shrank rapidly. Total assets at the end of 2024 were approximately 21.7 billion won, half the level of the previous year (43.3 billion won), and total equity plummeted from 8.4 billion won to 3.6 billion won. The company's size contracted as trade receivables and agency receivables decreased significantly, while its capital cushion weakened due to the impact of accumulated deficits.

It is reported that the parent company, IGAWorks, re-examined the overall structure of its subsidiaries in light of these financial trends and decided to close the media rep business. The industry interprets this decision as one that prioritizes the group's overall financial stability and mid-to-long-term strategy over short-term performance. It is seen as a move to reallocate resources to core businesses through "selection and focus" rather than maintaining a business where losses have become structurally entrenched.

Digital First's management is also known to have reviewed the sustainability of the business from various angles. At one point, plans for independent operation through external investment attraction were discussed, but given the recent cooling of investment sentiment across the advertising and media industry and the decline in valuations for the media rep business, these were not easily realized as practical alternatives.

Currently, the company has shared several wind-down options with its employees. These include: converting to contract positions after February to wind down the business before termination, voluntary retirement, and providing opportunities to transfer to other IGAWorks affiliates. In the case of transfers to affiliates, a separate interview process is required.

Many in the industry view this case not merely as the failure of an individual company, but as a cross-section of the structural changes in the digital advertising market. As the trend of allocating advertising budgets directly to large platforms such as Google, Meta, and Naver strengthens, the profitability of the media rep business—which acts as an intermediary for ad sales and operations—is facing structural pressure.

An advertising industry official stated, "The digital advertising market is rapidly shifting toward a phase that prioritizes profitability and efficiency over external growth," adding, "In a media rep structure where high ad execution volume does not immediately translate into profit, calmly judging whether to sustain the business may actually be a healthier choice in the long term."