Increased advertising expenditure and the rise of digital media offers a sound reflection of Indonesia’s strong economic performance, new research suggests.
Advertising expenditure across all media is expected to reach more than Rp 37 trillion ($4.1 billion), an increase of 9 percent from 2009, according to the latest GroupM media and marketing global report. The London-based media investment agency ranks Indonesia 10th on the global ad-spending contributor scale.
It also predicts the country will rise four spots to sixth place by the end of 2011, sitting behind India, Brazil, Japan, China and the United States.
“Indonesia is certainly one of the hottest markets, especially in Asia,” GroupM Jakarta office representative Ranjana Singh said. “Growth here is all driven by the economic environment and predominately driven by consumption. Higher confidence means higher advertising.”
Telecommunication companies are the leading source of ad spending in Indonesia at Rp 4.1 trillion, according to the latest quarterly survey by The Nielsen Company. In 2005, the two leading categories, cigarettes and hair products, spent Rp 2.3 trillion on advertising combined.
Traditional platforms such as television and radio continue to hold the largest audience share and attract the highest percentage of advertisements. Increased consumption of online media, however, has lured advertisers toward the Internet.
Newspaper penetration decreased 11 percent between 2005 and 2010 while Internet usership doubled, surpassing magazines, tabloids, newspapers and cinema to become the third-most consumed media format in Indonesia. Internet penetration at a national level is still low, though, with 80 percent of broadband users connecting using smart phones.
Investments that began this year in next-generation 4G broadband technology are expected to substantially increase penetration across the country. Conventional media, in order to keep their target audience, are now investing in online news portals and are developing online services accessible across numerous platforms, senior manager for corporate marketing and communication at Nielsen, Maika Randini, said.
“People may still be reading the same newspaper, but they are reading them online,” Maika said. “Everyone wants more information, they want faster news and more details and online can deliver that.”
Erick Thohir, owner of Mahaka Group, managing director at tvOne and also director of Republika online, is positive about future growth prospects for the media industry, noting how freedom of the press and spending power have contributed to the industry’s growth.
“Television is still No. 1 … and people are willing to spend $30 a month on pay TV or the Internet for premium content. Penetration is still low with room for growth,” he said, adding that successfully integrated companies will increasingly become focused on content production. “Companies can then share content that is similar but with a different angle and save money.”
Published in Globe Asia magazine and Jakarta Globe newspaper. December 2010.