Newspapers Can Still Count on Ad Revenue, for Time Being

Ismira Lutfia 

Jakarta. The Indonesian newspaper industry can breathe a sigh of relief, as experts insist that advertisers are not migrating in hordes to new media like in the United States and other developed nations. At least not yet.

Advertising in conventional media, such as newspapers and TV, will continue to dominate advertisers’ spending, with TV taking the lion’s share, said Maika Randini, an executive at media research firm Nielsen.

“Ad spending in newspapers in Indonesia has increased significantly since 2006, with an average rise of slightly more than 20 percent,” she told the Jakarta Globe on Thursday.

Maika said the increase in Indonesia was attributable in part to advertising by political parties.

The country held general and presidential elections last year, while regional elections have been scheduled until well into 2011.

Maika added that telecommunications companies were the biggest advertisers in both TV and newspapers, with papers still valued for the large display spaces they offer.

Total ad spending in both forms of media between January and March 2010 amounted to Rp 13 trillion ($1.46 billion) according to Nielsen, with telecoms accounting for Rp 1.3 trillion of that figure, a 54 percent increase over their spending in the same period last year.

Ricky Pesik, the secretary of the Jakarta chapter of the Indonesian Association of Advertising Agencies (PPPI), said that despite the massive shift of ads from print outlets to digital media in the United States, the same trend did not apply in Indonesia.

“There has been no significant shift from advertising spending from newspapers to online news Web sites,” he told the Globe.

And according to University of Indonesia marketing communications lecturer Firman Kurniawan, the shift is unlikely to happen here anytime soon.

“Advertisers still think it is more effective to place ads in newspapers because there is still no major change in the media consumption behavior of Indonesian people from conventional to digital,” he said. 

A recent Boston Consulting Group report on Internet users in Brazil, Russia, India, China and Indonesia showed that in 2009 there were only 31 million Internet users in this country, which has a population of 237 million.

The report predicted that user numbers would rise to 94 million in 2015.

The report, which was released this month, also said that 47 percent of Indonesian digital consumers read online news portals, with Detik.com and Kompas.com among the most popular.

Ricky added that most Indonesian advertisers still regarded banner ads on Web sites as an “extension of advertising in conventional media,” a view that is shared by Firman, who suggested that advertisers needed to rely on both old and new media for their marketing campaigns. 

But Firman said the rising trend of digital media consumption was something that advertisers should quickly adapt to.

Ricky said the most valuable advertising would eventually migrate into interactive forms of new media.

“Advertisers are spending heavily to campaign for their products through social media, and these budgets are not detected by research firms,” he said.

“I’m sure that budgets for these types of campaigns are bigger than those spent on placing banner ads on news Web sites,” he said, adding the trend would become a “huge phenomenon” in the coming years.

He said newspapers should develop new ways to cope with the changes, but said “it’s still a long way to go before ad spending in digital media can overtake that of conventional media.”

Ricky said the full switch to digital media advertising was still far off, since most of the decision makers at major advertisers were from generations who grew up reading newspapers regularly.

“But newspaper executives should watch out for the generation shift, when those who grew up getting information digitally will take the helm of corporate leadership,” he said.

“That’s when Indonesian newspapers will have a big problem.”