The Indonesian advertising industry passed the USD 11 billion revenue threshold in 2015 and total media spend is growing at more than 15% per year. At the same time the advertising game is changing radically due to the impact of digital technology – in this post we look at the profound consequences for both companies and consumers.
Digital advertising spend is growing fast in Indonesia
The shift to digital marketing that has occurred in more advanced Southeast Asian markets such as Japan and South Korea is now taking hold in Indonesia, and companies here are recognizing that they need a new operating framework for their marketing activities.
Conventional marketing communications processes are in transition – from one-way, highly- structured messaging via conventional channels such as TV and print to an open, dynamic, and collaborative dialog taking place across many platforms between companies and their customers.
Indonesia leads the Asia-Pacific region in terms of the projected growth rates for total media expenditure, ahead of powerhouses like Singapore and China. The market research firm eMarketer recently projected that the rate of growth for digital advertising spend in Indonesia will be five times that of the Asia Pacific region to 2018.
Paid advertising delivered to desktops, laptops, smartphones and tablets will show an annual average increase of 65% in Indonesia through to 2018, compared to 13% p.a. for the region.
The shift to digital advertising game is inevitable
Let’s take a look at the factors underlying the transformation of advertising in Indonesia. We see two closely-related drivers causing this shift, namely
1. The evolution of the ‘mobile-first ‘ economy in Indonesia, and
2. The ’hyper social’ nature of Indonesian consumers.
Indonesian companies and advertising agencies are adjusting their media campaign strategies as these trends gather pace.
With consumers becoming more well-informed and increasingly empowered through technology, the battle for ‘share of mind’ and most importantly ‘share of wallet’ is intensifying.
Mobile connectivity continues to change the way that Indonesians conduct their personal and business lives. They will have the power to buy what they want, where they choose, whenever is most convenient for them– all as a consequence of the ubiquity of wireless service in most parts of Indonesia.
All the vital signs for the wireless market in Indonesia are strongly positive, as the mobile gadgets owned by most Indonesians – smartphones or tablets – will likely be their primary computing device.
- Smartphone penetration will hit 28% by end-2014, according to Google in their annual Consumer Barometer survey. And demand is accelerating as smartphones become more affordable, with the entry level price point in Indonesia now approaching USD 30.
- Total data traffic ‘payload’ across the Big 3 mobile networks – operated by Telkomsel, XL Axiata and Indosat – has been doubling every year since 2011. The Cisco Visual Networking Index (VNI) predicts that total mobile data traffic in Indonesia will increase by a further five times through to 2018.
- Indonesians are increasingly turning to mobile apps rather than native web browsers as they seek a better user experience on their smartphones. InMobi , a global mobile ad network provider, report that Indonesia is an “app-crazy nation”, accounting for 8% of total app downloads globally. The rate of per-user app downloads for Indonesia is second only to Malaysia, according to InMobi. It is clear that apps will drive future media consumption on mobile devices, and advertisers have to prepare for this reality.
Meanwhile, mobile web optimization is an important consideration for Indonesian advertisers, and the dominance of smart gadgets compels companies to offer a high quality user experience across multiple device platforms and multiple screen sizes is .
Core functionality such as searching, browsing and transacting via a mobile site has to be seamless and intuitive in order to create and sustain a high level of consumer engagement. Otherwise savvy Indonesians will inevitably look for better alternatives.
However the dizzying trend towards multi-screen usage within Indonesia (see below) implies that companies are obligated to maintain a coherent and integrated communications strategy across multiple channels – online and offline – even in a ‘mobile-first’ market such as Indonesia.
2. Hyper social
The way that Indonesians have integrated social media applications into their lives is changing the balance of power between consumers and the brands that they follow. More than ever, they are creating communities, generating unique content and voicing their opinions loud and clear.
Facebook is a foundation platform for advertisers
With 65 million active users in Indonesia, advertisers are leveraging the unique position of Facebook as a social media hub in order to extend the reach and impact of their marketing campaigns.
Marketers are centralizing and aggregating their social media programmes on Facebook with direct linkages to adjacent platforms:
- Mobile messaging applications e.g. LINE (20 million active users in Indonesia) and WeChat (15 million users)
- Engagement channels e.g. Twitter (30 million users)
- Professional networks e.g. LinkedIn (3 million users)
- Lifestyle channels e.g. Pinterest (1 million users)
Other advertising channels are maturing quickly
The hyper-social, mobile-first nature of the Indonesian market offers advertisers an opportunity to open up alternative marketing communications channels.
Indonesians are avid consumers of mobile video material and are highly pro-active in sharing relevant content – including ads and promotional offers – within their social media circles. Given their reach and familiarity in Indonesia, both Facebook and Blackberry Messenger (BBM) are popular channels for distributing video material to family members and friends.
Video-based content is perceived to be a richer, higher value alternative to the text and icon-based communications available from the popular mobile messaging apps such as LINE and WeChat.
Indonesian cross-screen users – those individuals having simultaneous access to a TV and a smartphone or tablet – consume a daily average of nine hours of total screen media. This is the highest level of multi-screen engagement in the world, with the global average being around seven hours of media time per day.
So across a typical day, Indonesians may be watching TV, as well as checking their social media accounts, browsing web content, viewing videos and clicking through adverts via a selection of connected devices.
Leveraging the capabilities and effectiveness of these adjacent media platforms, as well as appreciating the motivations of consumers as they shift from one device to another is the basis upon which advertisers can unlock the newly-emerging multi-screen marketing opportunity.
Unsurprisingly Indonesians prefer to transact in a social manner, and they are pro-active in sharing news of their purchases and recommending products on social media sites via photo-messaging, tweeting or blog posts.
Social media applications enable Indonesians to shop virtually and interactively with their contact networks, thereby emulating the conventional retail experience.
Mobile and social already combine to play a role throughout the in-store shopping process, with customers searching for products on their phone, scanning bar codes and making purchases in a seamless fashion. And advertisers are using location-based technologies such as geo-fencing to track customers within the vicinity of shopping malls in order to offer localized promotions and incentives.
Advanced wireless-enabled technologies such as sensor networks and wireless beacon applications will also become part of the in-store capabilities available to advertisers, as they seek to engage with shoppers in an ever- richer retail experience.
Icehouse, an early stage Indonesian mobile app developer, has recently launched an interactive app in conjunction with the prestigious Pacific Place Mall in Jakarta. The app combines Bluetooth technology with photo streaming functionality to offer a Treasure Hunt game and prize awards to mall visitors. The goal is to stimulate new customer footfall and to revitalize the experience of regular shoppers.
This is a very encouraging sign for the tech start-up community in Jakarta – and will be a spur to other app developers throughout Indonesia. Given the vast potential and unique characteristics of the Indonesian market, there are exciting times ahead for the local advertising industry and for the eco-system that supports it.