Marketing in Indonesia: From Slow Connection Speeds to Ad Fraud, Digital Faces Big Challenges - eMarketer
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Marketing in Indonesia: From Slow Connection Speeds to Ad Fraud, Digital Faces Big Challenges

February 28, 2017 | Ad Spending


SK Biswas
COO
Dentsu Aegis Network Indonesia

Television reigns as the advertising vehicle of choice across industries in Indonesia. SK Biswas, COO of Dentsu Aegis Network Indonesia, offers eMarketer’s David Peter Green a wide-angle view of Indonesia’s advertising ecosystem, including drivers of overall ad spending and what’s holding back digital.

eMarketer: Total media ad spending in Indonesia will total nearly $2.8 billion in 2017, according to our estimates. Where are advertisers allocating that spending?

SK Biswas: Fast-moving consumer goods [FMCG] remain the primary driver of growth. An average Indonesian family spends $55 out of every $100 on food and beverages.

In Jakarta and other major cities, FMCG advertising in TV, print, and radio accounts for 61% of the total media spend. After that, telcos and automobile spending is next.

Indonesia is close to India in terms of pure FMCG domination. It’s much less like China, where the automobile, tech, financial services and beauty categories make up a lot of ad expenditures.

“Fast-moving consumer goods [FMCG] remain the primary driver of growth.”

eMarketer: We estimate that digital ad spending will trail TV until well beyond 2020. What keeps TV such a dominant medium?

Biswas: It’s largely due to spending by FMCG companies. But we also don’t have another media platform with significant reach. In Indonesia, TV is at 90% penetration, while newspaper and magazines combined are at less than 15%. To get the same reach as TV, other media options become cost prohibitive. Also, Indonesia’s cost per rating point [CPRP] is among the lowest in the world.

eMarketer: What keeps the television’s CPRP so low given the lack of other media options?

Biswas: There’s a lot of inventory. Indonesia lacks a regularity body for a common guideline on rates, on commercial time. If you look at the proportion of commercial time to programming worldwide, it will vary between 10% and 15%. In Indonesia, it can vary from 20% to 35%.

“The CPRP of Facebook is similar to that of TV, but on a much smaller scale, and 70% of the time without sound. Facebook also has huge viewability concerns.”

The CPRP of Facebook is similar to that of TV, but on a much smaller scale, and 70% of the time without sound. Facebook also has huge viewability concerns. That leaves buyers with YouTube and other video platforms, where the CPRP can cost as much as two-and-a-half to four times that of TV.

eMarketer: What about digital?

Biswas: Advertisers have not embraced the concept of the digital ecosystem. They are willing to invest in digital video but they will not build in that ecosystem, and that’s bringing down the effectiveness of overall digital.

The underlying factor holding back digital spend is that Indonesia has the lowest connection speeds in the Asian market, not including Laos and Myanmar. Compared with Vietnam, Thailand, Philippines, Malaysia or Singapore, Indonesia’s speeds are very, very slow. We’re talking about 4 to 6 megabits per second on a fixed line, and about 8 to 9 Mbps on LTE.

eMarketer: Do you see that improving in the near future?

Biswas: This year, the government announced $1.5 billion in investment for high-speed internet connections. Indonesia is primarily a prepaid wireless market—98% of all SIM cards are prepaid—and telcos are moving into LTE in a big way.

Once the telcos and the government start investing more capital, we expect speeds to go up significantly between 2018 and 2019. As a result, online video spending should go up.

“You’re looking at at least 65% of impressions being delivered without a viewability matrix or to fraudulent views.”

eMarketer: What will drive the growth of digital ad spending in Indonesia?

Biswas: The ecommerce, financial tech, gaming and FMCG sectors. In general, ecommerce and financial tech are the biggest spenders on Google AdWords and search. FMCG takes a lead on branding advertising, be it on Google Display Network, Facebook or online video like YouTube.

eMarketer: Is there a national standards body for digital advertising, and how does that play into potential concerns over ad fraud?

Biswas: No there isn’t. There is deliberate fraud, where the ad is served to a website where it’s not supposed to be. About 40% to 50% of impressions go to poor-quality sites.

Also, most clients do not monitor ad serving. Some vendors don’t really care whether the ad is being served, or how viewability is measured. That kind of adds to the fraud. If you put these two together, you’re looking at at least 65% of impressions being delivered without a viewability matrix or to fraudulent views.

eMarketer: What are the most necessary steps needed to encourage further investment in Indonesia’s digital advertising ecosystem over the next 12 months?

Biswas: I will tell you what I tell my clients: The key to media investment is not media, per se. It’s having the right idea and the right content. Don’t jump into digital media just to get a video or some other digital asset. Don’t spend on media unless you’ve got the entire ecosystem and path to purchase right first.

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