Knowledge Bridge

//Ran Ju /June 26 / 2012

Growing smartphone use opens opportunities for Indonesian advertisers

Sales of basic feature phones have started to decline, but now smartphones such as handsets powered by Google’s Android are leading the way in the Indonesian mobile advertising market. This significant shift provides advertisers with more space to develop their advertising strategy, not only because the larger screens of smartphones give more space to display ads but also through collecting and sorting vast amounts of data.

“Indonesia continues to show strong growth rates as one of the most mobile-centric markets in this region. Smartphone adoption will continue to ramp up quickly — with Android leading the way — allowing brands even more creative and engaging opportunities to connect with their audiences,” said Phalgun Raju, InMobile regional director and general manager for Southeast Asia, Hong Kong and Taiwan, in a press statement.

The Indonesian advertising market is still dominated by television, which captured 78% of  the country’s advertising spend last year. However, mobile advertising impressions are growing rapidly, promising future growth in revenues. According to InMobile, the Indonesian mobile ad market grew by 99% year-over-year, from 13.6 billion in May 2011 to 27 billion ad impressions delivered in May 2012.

In terms of digital advertising, Indonesia is all about mobile. The country almost has as many mobile phones, 200 m, as it has people, 240 m. Most of the computers are in offices and schools, so for many in Indonesia, they connect to the Internet via their mobile devices.

Nokia phones delivered 56% of ad impressions in Indonesia, followed by Android-powered handsets with a 9.7% of impressions. Blackberry maker RIM and Apple delivered 4% and 3% of ad impressions, respectively. Even though the mobile advertising market in Indonesia is currently dominated by ads on feature phones, revenues are expected to shift from SMS-based ads to application-based formats as more users shift to smartphones. Although over 70% of the phones in the market are feature phones with a price below US$100 or US$150, sales of smartphones are experiencing rapid growth and are expected to surpass feature phones in the next generation.

 The growth of smartphones is expected to allow advertisers to build up more effective connections with audiences, with more highly targeted campaigns. Before the next wave in mobile advertising innovation, Indonesia will need to build an advanced telecommunication infrastructure. Slow connections will hinder the roll-out of application-based advertising.

News organisations should monitor this developing trend. Too often, news outlets have waited too long to adopt advances in advertising, leaving them to technology and telecommunications companies. By the time the markets reach significant size, news organisations often struggle after to play catch up after ceding these markets to new advertising players such as Google and other search engines or even tech companies like Apple.

Article by Ran Ju