Digital Media Advertising Disruption in Indonesia: What Insights That Could be Learned?
Reza AshariNasution (School of Business and Management – Bandung Institute of Technology) &
Anna AmalyahAgus (Management Department, Faculty of Economics and Business, UniversitasIndonesia)
Correspondences email:
Background/Purpose:Media landscape changes and digital technology advancement, create a disruption in advertising media industry. Digital media publishers have evolved and becoming more relevant than traditional media publishers like newspaper, magazines, TV and radio. The evolution resulting in the rise of digital advertising platform. As consequences, the new landscapes not only create different playground for advertisers in optimizing their marketing communication strategies, but also give impact to other actors in industry both advertising media agency and digital media publisher itself.
The purpose of this paper is to describe the mobile digital advertising ecosystem in Indonesia,an emerging market country with higheconomics and internet/digital penetration growth. Scope of this paperwill discuss development, structures, actors, business model and driving forces of mobile digital advertising.
Design methodology/approach: industry data analysis through desk study and experts in-depth interview
Findings:We analyze the evolution in digital media advertising from the rise of mobile advertisement to the birth of mobile exchange in Indonesia. The analysis includesthe initiation of mobile exchange as well as disruption and improvement of digital media advertising landscape through mobile exchange.
Some of important findings are: 1) The development of digital media advertising in Indonesia are relatively fast and dominated by multinational FMCG. 2) industry structures tend to be monopolistic 3) there is a power-imbalance condition among four main actors: the agency, the advertiser, the digital media publisher and mobile exchange company. 4) mobile exchange company through its exchange platform, create more price transparency for digital advertisement.
Research limitations:Our first informant is a C-level executive with 19 years’ experience in advertising media industry. She has professional background in advertising media agency, marketing communication department at multinational Fast-Moving Consumer Good (FMCG) company and the first mobile exchange company in Indonesia. Our second informant is a Group-head level in a multinational media advertising company conglomeration which has 15 years’ experience advertising media agency, marketing research and consumer relationship management. However, in order to get more whole-rounded point of view, more informant from different type of actors are needed, especially advertisers from FMCG company.
Practical Implications:For business and marketing practice in Indonesia, this paper could help the industry players to have better awareness toward the disrupted advertising media landscape and could have better evaluation approach on the company digital marketing communication strategy.
Originality/value:The originality of this paper lies in the digital advertising media landscape andmobile exchange business modelin Indonesia, which have not been mapped to date
Keywords:advertisement, media disruption, digital advertising, mobile advertising, mobile advertising ecosystem, mobile exchange
Paper type:Exploratory
- Digital-mobile media landscape and e-commerce in Indonesia
1.a. Digital-mobile Media landscape in Indonesia
Technology advancement, had created disruption that changed the form of Media and the way consumer consume the media. From radio to television, printed media into news website, to rise of social media that could make the social media user becoming a media as well. Digital and mobile technology advancement through mobile phone had created media becoming not only as close as fingertip to the reader but also easy and much affordable to produce. Unlike the traditional media, digital media growth is fast and slowly but surely changing the industry through substituting the previously renowned media. The cases of printed-media bankruptcies in printed media in USA and detik.com outperformed Kompas in Indonesia are example how new digital media become more relevant to people in consume their preferred media nowadays.
The rise of social media likeyoutube and Instagram create quite media landscape changes.Youtube userswith high viewership and Instragram accounts with high follower numbers had become key opinion leaders which create a media within media that has its own commercial value. For example RiaRicis, a sassy young muslim Indonesian women using headscarf, has follower more than 1 million people, and her voices-aspirations-lifestyles become more powerful compare to traditional women magazine which circulation not even more than 50.000 readers; Or Jody, a 23 years old young Indonesian man with strong passion toward big motorbike and its supporting gadgets, had become a referent power for motorbiking and becoming target for motorbike producer like Honda, BMW, to endorses their product. Although Jody follower not more than 60.000 people, the follower comes from specific target market which similar with Honda & BMW targeting.
The media landscape becoming more dynamic when the traditional media also realize the power and create penetration digital and mobile media platform as new stream of revenues. There is a new phenomenon emerged in Indonesian television industry nowadays, mainly from the TVcompany mogul (EMTEK group & MNC group). They expanded to form a digital platform for re-broadcasting their TV programs.Provide live streaming for the show or upload videos of a recent programs. These could be a chance for TV to gain more revenue from the Digital Video platform, also can gain more awareness to the TV and the Digital Video platform. From the growth seen on Video, the Digital Video Platform gain a lot of traffic throughout the year supporting the TV platform which means more media value that could create business for media owner/publisher.
Within Indonesia Print media ecosystem, the fact that print media penetration continues to decline due tothe digital media attack that is so massive-up to date-easily accessible especially from mobile platform and accepted by market, is really hurting the print media nowadays. Therefore, having a digital/mobile platform is a must to avoid declining penetration. Since the reality on media penetration is also reflected to the revenue they got, especially from advertiser advertising spending.
With the help of internet, Radio Stations has spread their wings on digital and online platform.Radio station’s in Indonesia nowadays (Prambors, genGM, Trax, etc) also create whole-rounded activities through online media. Through combining Social Media, Website, and Radio Streaming Application makes the access to radio easier, its easiness increases the audience engagement and brings creativity into a new level. The advances in technology has triggered every radio station to be more creative. Social media and website also helps radio station broadcasts through the boundaries through Online podcast, livestreaming & video channel. Online podcast is a digital media files which is collected from a high demand favorite series on any radio station program. Many companies use the opportunity to advertise their product.Digital penetration on radio stations make a great opportunity for advertising. Radio station’s engagement with the audience is very promising for any advertising company through bumper ad-website, twitter media promotion and website advertising spot.
Digital in Indonesia is expanding and keep growing each year with 15% CAGR within last 5 years, since more People nowadays are attached to the internet.Trends on digital media are changing quite fast, developing into more sophisticated platform both the media publisher and the advertising media.
From we are social-2017 report, with total population more than 262 million people (est.2016), 55% urbanization rate, 132,7 million internet user (51% penetration, increasing 45 million since jan 2016), 106 million active social media users (40% penetration, increasing 27 million since jan 2016), 371,4 million mobile subscription (142% penetration, increasing 45 million since jan 2016), and 92 million active users (35% penetration, increasing 26 million since Jan 2016), Indonesia is one of highest potencies to become digital and mobile media players worldwide.
The room for growth is still high. Indonesia total media advertising spending (includes digital (desktop/laptop, mobile & other internet-connected devices), directories, magazines, newspapers, out-of-home, radio & TV)is $2.69 billion, meanwhileDigital percentage spending of total media(includes advertising that appears on desktop & laptop computers as well as mobile phones, tablets & other internet-connected devices, and includes all various formats of advertising on those platforms; excludes SMS, MMS ad P2P messaging-based advertising) ONLY 13.7 % from total media advertising spending.
Meanwhile If we look at other facts from Globalwebindex Q3 & Q4 2016 through WeAreSocial 2017, in regards of average daily time spent with Media for internet users aged 16-64, Indonesian tend to used 8 hours and 44 minutes on their average daily use of internet via PC or tablet, 3 hour 55 minutes daily use of internet via mobile phone , 3 hour 16 minute of social media and 2 hours 23 minute television viewing time. Combining total media advertising spending data and time spent in media data, we could conclude that digital media as well as digital advertising platform in Indonesia is still undervalue and has huge room for growth.
There are also interesting facts from Indonesia association of internet service provider (APJII) 2016 report. First, most of Indonesian connect the internet through mobile platform (92,8 million user) compare to 17,7 Million accessing from home, 14,9 million accessing from campus, 2,9 million from internet Café and 1,2 million from Café. This fact is implying a strong message that mobile platform is the most significant media platform as well as advertising media device that use digital technology compare to laptop or computer devices. Second, most reasons to connect the internet are search for information 31,3 million, work related 27,7 million, leisure 17,9 million, socialize 13,6 million, entertainment 11,7 million, education 12,2 million and trade 10,4 million. This fact implying that shifting from the classic marketing communication AIDA (awareness-interest-desire-action) approach to AISAS (Awareness-interest-search-action-share) approach is confirmed for Indonesian consumer.
Technology also enable digital/mobile media becoming easier to track for better evaluation on industry, product and consumer. Currently, personal data, traffic, activities, could be search through social media platform, GPS and telecommunication platform. Consumer data is easier not only to access but also give deeper insight toward consumer behavior. In the old days, readership/viewership is the only way for advertiser evaluating the media value, but nowadays digital media platformcould provide data on its active consumer/viewer not only in the number of hit/unique users but also getting deeperinsights like consumer aspirations, lifestyle, specific interests and behavior and even purchasing power by partnering with specific business entity. Data becoming transparent, renowned and more that 3-decade medialike Kompas that owned kompas.com does not necessarily have better performance compare to less 5 years old than kumparan.com. Since the media industry landscape and digital media platform changing and to some extent create disruptions that put some moment-inertia for advertisers, there are necessity of new approach in advertising through digital/mobile channels which has totally different management compare to traditional media advertising management.
Based on our informants, there are some insights regarding industries as follow:
- Overall ad spending in Indonesia is up after a challenging 2015; TV is the biggest recipient of ad budgets by far.
- Ad spending on digital channels across all sectors is still quite small in Indonesia, but there is a large potential for growth, especially in digital services.
- FMCG brands are among the biggest spenders overall in Indonesia. Ecommerce sites also invest heavily on advertising, but much of their budget goes to TV and print.
1.be-commerce market as digital media
Based on Techinsasia 2016 research based prediction, Indonesia E-Economy sectors is predicted to grow dramatically in 2025 and e-commerce is the prime driver of e-economy sectors with 22 times higher than today. Based on survey by emarketer.com, 60% of internet users are digital natives and based one research, 71% of internet users in Indonesia respondents said they purchased a product after watching influencer advertisement. Refer to the previous data on active internet user in Indonesia and emarketer data, it could be inferred that e-commerce play significant role not only as distribution channel but also a strong presence digital media.
Similar with Techinasia research, businessinsider also find that Indonesia By 2020, it is projected to reach US$130 Million, and making Indonesia the 3rd largest e-commerce market behind China and India. In 2025, Southeast Asia’s digital economy (which include e-commerce, online games, and online advertising) will surge to USD $200 billion. And Indonesia forecasted to have account for 40.5% or USD $81 billion of it’s total market region, and half of it come from Indonesian e-commerce. In 2016, Third party merchants (Lazada, tokopedia, rakuten, elevenia, etc) led internet retailing in Indonesia by 34% of value sales. Blibli.com recorded as the highest increase in term of value sales in internet retailing in 2016.
There are interesting fact on the consumer behavior of e-commerce in Indonesia based on globalwebindex Q3 & Q4 2016 data, through WeAreSocial 2017 report.Based on self report-survey responses from consumers, 48% respondent searched online for a product/service to buy, 46% visited an online retail store, 41% purchased a product or service online, 34% made online purchase via a laptop or desktop computer and 33% made an online purchase via a mobile device. This survey result also implying there is a connection between digital media usage and e-commerce performance.
While the growth is promising,WeAreSocial 2017 report also describe that total value of the consumer (B2C) E-Commerce market, and average e-Commerce revenue per user per January 2017 in Indonesia still has room for growth. Number of people purchasing via e-commerce 24,74 million , e commerce penetration (number of purchaser vs total population) 9%, Total value of national e-commerce market in 2016 US $ 5,6 billion (compare to nearly US $ 1 trillion economy) and average annual e-commerce revenue per user in 2016 US $ 228 (compare to US $ 3,603 per capita).
Top 10 Shopping Apps in Indonesia
Top 10 C2C Apps(Apple iOS)
1. Tokopedia
2. Bukalapak
3. Shopee
4. Carousell
5. eBay
6. Selter
7. Prelo
8. GOAT
9. Taobao
10. imSold / Top 10 B2C/B2B2C Apps
(Apple iOS)
1. Lazada
2. Zalora
3. ID.id
4. Blibli
5. Elevenia
6. Akulaku
7. Berrybenka
8. MatahariMall
9. Aliexpress
10. Althea / Top 10 C2C Apps
(Google Play)
1. Tokopedia
2. Shopee
3. OLX (P2P)
4. Bukalapak
5. Carousell
6. Kudo
7. Kaskus
8. jualo
9. Sellter
10. eBay / Top 10 B2C/B2B2C Apps
(Google Play)
1. Lazada
2. Akulaku
3. Elevenia
4. Salestock
5. Blibli
6. Alfacart
7. Zalora
8. MatahariMall
9. ID.id
10. Blania
Notes: C2C = Customer to Customer; B2C = Business to Customer; B2B2C = Business to Business to Customer
Data is Source from SimilarWeb and App Annie. Last Updated: March 16 2017
*rank is based on top websites categorize under ‘shopping’ category by SimilarWeb
*Ecomerce is defined as ‘commercial transaction conducted electronically on the internet’
From the previous example and data we could inferred that digital media publishers have evolved and becoming more relevant than traditional renowned media publishers like newspaper, magazines, TV and radio. Rise of key opinion leader and e-commerce also shaped the digital media into more dynamics and sophisticated.The evolution resulting in the rise of digital advertising platform. As consequences, the new landscapes not only create different playground for advertisers in optimizing their marketing communication strategies, but also give impact to other actors in industry both advertising media agency and digital media publisher itself.
- Actors in Media landscape in Indonesia
The publisher/media house (traditional & digital)
Mogul group : EMTEK, MNC, Trans group, Kompas group, Bakrie group, Media Indonesia group, Kapanlagi network, independent publisher (kumparan, kata-data,gobagi, Prambors, Facebook Indonesia, Google Indonesia
The agency (traditional media & digital media)
WPP group (the biggest advertising media conglomerations in Indonesia) : Group M mindshare (clients : unilever 100 milyar billing, telkomsel, loreal, indofood, tokopedia, etc) , Mediacom (clients P&G, cocacola, BAT, shopee, etc), Mediaedge, Xaxis (demand side trading desk)
DentsuAgies :Dentsu, jepang2 (acquiring the biggest local agency dwisapta – clients : Wings)
IPG : Initiative (J&J, BMW, Sampoerna)
The advertisers (focus on specific segment)
Multinational: Unilever, P&G, Loreal, Samsung (starcom), coca cola, Shell,
National: Telkomsel, Wings Group, Bank Mandiri, Bank BNI, Tempo Scan Pacific
New economy :Shopee, tokopedia, bukalapak, Garena
Brokers :adnetwork
Players highlight :
- Advertising media agency has high power compare to publisher due to accumulated fund from their clients they could push the publisher giving the cheapest price on advertisement slot pricelists
- Clients/advertiser have the power toward advertising agency since they are giving business toward advertising agency. The bigger the billing size and commission/fee the higher the power toward advertising agency
- Publisher have to attract advertisers to put their marketing budget on the publisher. However most advertisers
- WPP is the biggest conglomeration in Indonesia, Mindshare and Mediacom constantly become the best advertising media agency that attract bigger billing type of clients
Overall power : advertising agency > advertisers > publishers
- Mobile Media platform in Indonesia
The rise of smartphone usershas changed the mobile media platform in Indonesia. Due to different size of screen between laptop/desktop with mobile phone, digital media publisher need to make adjustment in order to make consumer/viewer getting the most convenient way in consuming their digital media as well as penetrating advertisement slot within themobile screen in engaging manner. Therefore the purpose of optimum efficiency results could be achieved.