Television, other media to profit from more ads (The Jakarta Post)

January 23, 2008

Agustina Wayansari, The Jakarta Post, Jakarta

While local television stations are set to operate longer hour and newspaper pages are likely to get thicker, the public is set for an immense storm of ads as corporate sector is gearing up to raise their commercial spending this year.

Wrapping up last year with growth of 17 percent, the country's ad spending is set to swell even further this year on the back of major sporting events and aggressive marketing campaigns by corporations, a report said.

Nielsen Media Research Indonesia business manager Maika Randini said Tuesday that ad spending this year would grow an estimated 20 percent from last year's Rp 35 trillion (US$3.72 billion).

"Tighter business competition among business players and additional spending allocated for several international events, such as the Olympic Games and the Euro Cup, will fuel this year's growth," she said.

"The telecommunication sector will top the list of big spenders this year, especially with more players entering the market. Tighter competition will force them to raise spending for their marketing campaigns," said Maika.

Nielsen made public on Tuesday its recent survey on ad spending last year, highlighting a trend of increased interest in newspapers.

The agency surveyed ad spending for 19 television stations, 82 newspapers and 127 magazines and tabloids.

Newspapers enjoyed the highest growth rate in receiving ads, with placement soaring by 31 percent to Rp 10.6 trillion last year, the agency said.

"Newspapers became a favorite among advertisers last year most likely because they provided more space to deliver detailed information for products and services to specific markets," said Maika.

She said the telecommunication sector contributed the most to newspaper earnings, followed by non-commercial ads from government and political organizations, such as those from the gubernatorial election in Jakarta.

"Government and political parties spent around Rp 753 billion last year, a 154 percent rise from 2006. The Jakarta gubernatorial race contributed around 10 percent," she said.

The general secretary of the Association of Indonesian Advertising Agencies, Irfan Ramli, said newspapers were also popular because companies were looking for alternative ways to communicate their products to customers.

"Besides, the cost is also cheaper than TV ads. And we can use local newspapers to target a local audience," he said.

Although TV advertisement experienced slower growth compared to newspapers, television still enjoyed the lion's share of spending, receiving some Rp 23 million or around 66 percent of the total market, the survey showed.

Irfan said TV stations had to come up with creative ways to keep the interest of advertisers. He believed that such creativity was more common in print media, such as the Klasika and Urbana ad columns aimed at accommodating small ads in Kompas newspaper.

Nielsen showed the telecommunication sector spent a total of Rp 2.77 trillion on promotions in TV and print media.

The country's largest cellular provider Telkomsel was the biggest spender in the category, accounting for some Rp 250 billion of the total.

Hair care producers, with Clear shampoo brand topping the list, spent Rp 1.52 trillion, slightly higher than cigarette companies at Rp 1.5 trillion.

The remaining top spenders included motorcycle makers, government and political organizations, skin care companies, banking and financial institutions and department stores.

Erik Meijer, deputy president director of Bakrie Telecom, suggested advertisers be more strategic in selecting the right media to convey their products to consumers.

"Choosing the right media is the key. We can't place ads in media with a small audience," said Erik.

He added that ad spending would jump further within the telecommunication industry due to stiffer competition following the entry of at least 11 new providers into the market.

Erik said Bakrie Telecom would likely significantly raise its ad spending this year, while declining to cite any figures.

The Nielsen report showed Bakrie Telecom spent Rp 136 billion last year to promote its Esia brand.

"Almost 100 percent of our promotion budget is allocated for grabbing a higher market share," said Erik, adding the company would place most of its ads on TV as it targeted low- to middle-class buyers who spent less time reading newspapers.

The company preferred to place ads in local media, such as those in Bali, Surabaya and Riau, he added.

In the consumer sector, Coca Cola Indonesia planned to raise its ad spending this year to increase market penetration. The company manages at least 11 beverage brands in Indonesia.

"We consider Indonesia one of the countries where we experience the lowest market penetration for our sparkling beverage," said the company's media relations manager, Arif Mujahidin, adding the company would still focus on TV for its ads.