Earlier this week Yahoo and Mindshare released a number of findings regarding the behaviors of Indonesian consumers as part of their wider research on ways for brands to embrace the increasingly mobile consumers in Asia Pacific. The research focuses on the fact that smart mobile devices are now central to the way many consumers live and shop but leaves out the majority of Indonesians who still use basic mobile phones. The study found that brands in Indonesia are still reluctant to make the jump to mobile and digital advertising, preferring to stick to traditional media instead.
In terms of advertising spend in the country for the year, the research shows that Indonesia is proportionally far behind the region, not to mention the world. Indonesian brands still have a lot to catch up to their regional counterparts in willingness to recognize and embrace the fact that targeting mobile is a crucial part of marketing strategy.
Brands in Indonesia overwhelmingly are still hanging on to traditional advertising media such as television, radio, and print publications, as explained by Deepika Nikhilender, Leader, Business Planning at Mindshare Asia Pacific, during the media event at Yahoo’s office in Jakarta.
Globally, advertising spend on digital is 22.6 percent of total expenditure which is USD 516 billion whereas in Asia Pacific the figure is 23 percent out of USD 143 billion. Indonesian advertisers in contrast spend just over five percent of USD 2.5 billion, on digital advertising.
“Indonesia is poised to grow its smart device penetration at a dramatic pace, which means marketers need to prepare for the brands to harness this opportunity”, Nikhilender said in a prepared statement to the media.
When it comes to non-SMS mobile advertising, the gap between Indonesian and regional advertisers in terms of expenditure proportion is much closer but still quite far behind. Out of the USD 138 million spent in digital advertising, only nine million dollars is spent on mobile, or six percent of digital. In Asia Pacific, the proportion for mobile ad spend is 12 percent, or four billion dollars out of 34 billion spent on digital. The global share of non-SMS mobile advertising is 13 percent of digital spend.
The opportunity for advertisers to reach Indonesian consumers on smart devices is still significant. It’s true that smartphones and tablets have only reached around 20 percent of the mobile market in Indonesia but when the market is concentrated towards the urban areas, that percentage shoots up to 31 percent according to the joint study. Indonesians in cities are clearly far more likely to own mobile devices running iOS, Android, Windows Phone, or BlackBerry than in rural areas
“In the urban market there are 24 million smartphones with a penetration of about 31 percent. While if you look at it from a national perspective, there are 41 million smart devices with a penetration of 19 percent. So today there are 41 million Indonesians reachable by smartphones”, Nikhilender said.
Not only is this a significant market already for advertisers, it’s a very lucrative market for anyone running a business aimed at smartphone owners. The digital and mobile oriented companies already have a sizable market size laid out in from of them, but the critical issue for companies selling mobile applications for example, is the willingness of these 41 million smartphone owners to actually spend on items such as digital books, music downloads or streaming services, applications, and other Internet-based service.
Unfortunately the research did not go into the digital and applications business, but it does explain that consumers on smart devices rely on applications and websites to make purchase decisions on items such as clothing and shoes, electronics, food and beverages, and personal hygiene. For electronics and clothing, the likelihood to search prior to purchase is between 58 and 60 percent while for food, beverages, and personal hygiene it’s between 36 and 38 percent.
According to the respondents of the study, the ideal mobile advertisements in Indonesia should be teaching them something new (75%), create something to talk about (67%), increase their social standing (64%), improve their existing experience (63%), and provide promotions (60%). Interestingly, providing promotions, discounts, or deals is the lowest of the top five desired characteristics of mobile advertising.
When combined with the recent reports on travelers and breakdown of mobile platforms, it’s obvious that Indonesia’s mobile consumers are already entrenched in the digital world, but as Nikhilender said earlier this week, it’s the brands or brand owners that still need convincing because the majority of them prefer to play it safe and stick to the traditional ways of promoting their products. In the meantime, brands like Zalora who do make the jump to engage their consumers on smart devices are making the most of the opportunity to increase their sales and awareness.