Weak telecommunication infrastructure remains the main obstacle for the growth of online advertising in Indonesia, despite the huge potential to sell products through the Internet, a media executive says.
Agung Adiprasetyo, CEO of Kompas Gramedia, said in Bali on Thursday that unlike in the US and Europe, in Indonesia, online advertising had not affected traditional media, such as newspapers and magazines.
“Even though online advertising spending has doubled or even tripled in the last few years, it is still small as it started from a very low figure, he said. “Future growth will be flat if there no significant improvement in telecommunication infrastructure,” Agung said in his opening remark at the Asia-Pacific Media Forum on Thursday.
At the end of 2000, there were roughly 260 million Internet users in the world. Last year, the number jumped to 2.3 billion users, with Asia home to the largest number of users, and this number still growing.
In developed countries, the traditional media industry is struggling, marked by declining revenues from advertising, which has been the main source of income for the past four decades.
In developing countries such as Indonesia, the growth in online advertising is still relatively low.
Agung said that building a brand through the new media would not be easy due to the lack of credibility of some websites, which were often associated with hoaxes and misleading information.
People in the advertising industry should therefore think about a concept that combines the use of both traditional and new media in promoting a product or a brand.
“The final goal is how to optimize the use of all forms of media to build our brands by using the right
method,” he said.
According to data from AC Nielsen, Indonesia has 200 million cell phone users, 78 percent of which own an Internet-capable cell phone.
There are 55 million people accessing the Internet through a laptop or desktop computer, about 20 percent of the population, with Internet access through cell phones higher. There has been phenomenal growth in the last five years because of the price of cell phones and the declining cost of connectivity. Indonesians are also known as savvy social media users, ranked third in the number of Twitter users after Japan and India and fourth in Facebook after the US, Brazil and India.
The Internet’s contribution to the economy, which has doubled since 2008, is projected to grow three times faster than the overall economy over the next five years, according to a Google report. The report forecasts that the annual contribution of the Internet to the gross domestic product (GDP) of Indonesia will jump from the current 1.6 percent, or around US$13.3 billion, to at least 2.5 percent by 2016.
Tourism and Creative Economy Minister Marie Elka Pangestu said that businesses had to change to use new media to be more creative.
“The advertising business is changing. TV and printed media are still important sources for news, but online media is becoming increasingly important as well; although, we have to be careful about the quality of the information. The use of Internet TV is also expected to explode in the next 12 months.”
She said that the number of people accessing advertisements and commercial messages through social media was around 20 percent with 11 percent looking for items to buy and 8 percent advertising items to sell. The growth of advertisement spending in television, newspapers and magazines was about 20 percent last year, with a value of around Rp 72 trillion or $7.7 billion.
News from the Jakarta Post