Digital Advertising Takes Off in Indonesia

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.