Rapid growth in spending on digital advertising in Indonesia is providing a boon to advertisers and telecommunication companies as increasing connectivity changes the way companies go about marketing, say industry analysts. And according to a recent study, demand for digital advertising is only set to soar.
As more and more of the country’s 250 million people enter the middle class, access to devices that allow them to view online content expand. Enlarged smartphone and tablet screen sizes have also made mobile “an increasingly popular way for viewers to access content,” said Susan Salop, vice president of TubeMogul in Asia, a California-based software maker for digital video advertising.
“Indonesia is in a unique position where population growth is coinciding with unparalleled technological development,” she said.
Many brands now go straight to digital without having to spend big on more traditional marketing, such as billboards and television ads.The booming e-commerce market here also plays a role in propping up the value of the country’s digital advertising sector, say experts.
In the past two years, e-commerce companies “have spent huge amount of their budgets on advertising,” said Italo Gani, CEO of advertising start-up Adskom, which helps local website developers deliver better targeted banner ads on their sites.
And growing investments into e-commerce companies, such as Tokopedia, a business-to-consumer marketplace, are enabling them to spend more money on marketing and advertising on the Internet, he said.
Companies are predicted to spend more than $800 million on digital ads this year, up 80% from last year’s $460 million, according to an April study by data tracker eMarketer. Of that amount, $130 million will go toward ads targeted for mobile devices, a whopping increase of 200% from $4 million last year, it said.
In fact, spending on digital and mobile advertising in Southeast Asia’s largest economy is set to grow faster than any of the 22 other countries surveyed, including Argentina, France and Brazil.
Growth will continue steadily through at least 2019, when the total ad market in Indonesia —including ads appearing on traditional media —is predicted to skyrocket to $19.58 billion, with spending on digital and mobile ads expected to contribute around $7.6 billion.
Industry analysts say digital campaigns will be more effective if targeted for mobile than for desktop platforms, since people here increasingly get online through their mobile phones.
Already telecommunication companies have been quick to take advantage of the potential.
Network provider PT Indosat Tbk recently launched a marketplace called Indonesia Mobile Exchange, a marketplace for mobile ads that links brands with website operators to create more targeted mobile ads by drawing on data such as real-time locations of the network’s subscribers. PT Telekomunikasi Seluler (Telkomsel) and PT XL Axiata Tbk. also help advertisers better target their mobile ads to subscribers by providing them with subscribers’ demographic information, including age, gender and handset type.
Social media promotions are also effective in Indonesia, a huge market for both Facebook and Twitter.
To aid in that effort, Facebook Inc. has launched a program called Creative Accelerator to help improve the way brands in countries like India, Indonesia, and South Africa advertise on the site.
Video ads are also expected to drive spending across digital mediums, analysts say.
According to a recent survey by TubeMogul, last year purchases of video ads in Indonesia grew by more than 600%, the fastest in Southeast Asia. The report covers Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
“While TV advertising represents the largest single portion of today’s advertising spending, consumers are increasingly watching video content on digital devices,” Ms. Salop said.
Internet connections still remain incredibly slow in much of Indonesia, however, meaning bandwidth-hungry ads, such as videos, often take forever to load, she added.
Analysts also said some advertisers in Indonesia are wary about their pre-roll ads driving people away rather than wait for them to finish before their content plays. And in some cases digital ads have missed the market and been subject to criticism for delivering messages perceived as insensitive or insulting.
