Tastes and platforms: A young and savvy population is changing consumption patterns

A few basic statistics about Indonesia’s economy and demographics speak volumes about the main trends in the country’s media and advertising sector. Economic growth, for example, averaged 5.5% per year between 2002 and 2011, and is accelerating, hitting 6.5% in 2011. A strong middle class has begun to emerge, with a GDP per capita of $3495 in 2011, expected to hit $6000 in 2016 and already widely assumed to be over $11,000 in the Jakarta area, according to unofficial estimates. The population is also predominantly young – the median age is 28 years – and is rapidly adopting, and in some cases adapting, higher standards of living and more expensive consumption patterns.

RISING EXPECTATIONS: “There have been several eras in the evolution of today’s consumer,” Hario Hadiwaseso, Nielsen Indonesia’s manager of marketing and sales, told OBG. “From 1998-08, people were looking for what they could afford, the cheaper choice. Now, however, things that are affordable but good quality are what people want. They’ve moved from, say, Chinese-made goods to Korean-made goods.”

Retailers have also noted the difference with higher quality goods on offer, although often with cheap packaging options to bring down costs. An international cosmetics company, for example, sells products in boxes in Jakarta, rather than the cans it uses in Japan.

TECH-SAVVY: Today’s Indonesian consumers are far more IT savvy than before, opening up possibilities for online advertising. According to Internet World Statistics, as of June 2012 Indonesia had around 55m internet users, or 22.1% of the population. Some 47.5m had a Facebook account too, the highest number in Asia, other than India. At the same time, mobile phones have become a major platform for online access, with smartphones taking a major market share. Indeed, in the first quarter of 2012 around 62% of Indonesians had a smartphone, according to networking organisation MobileMonday (MOMO). Mobile banking, payment and other e-services are also a part of many Indonesians’ lives, with advertisers responding to these realities.

According to MOMO’s report, the InMobl Network, one of Asia Pacific’s leading mobile ad grids, recorded 23.67bn ad impressions in Indonesia in the first quarter of 2012. This was nearly 10 times the number for Malaysia, and around 20 times the Philippines. In the first quarter of 2012 mobile impressions grew 14%, while smartphone impressions grew 19%. Thus, while current industry estimates of less than 1% of total advertising expenditures going to online services may be correct the potential for mobile online is clear.

NEW OPTIONS: The potential for online is also, of course, that ads can be much more specifically targeted. This is also the realisation behind another relatively new platform – LCD screens. Set in lobbies, waiting rooms and other spaces where people gather, Alternative Media Group (AMG) has been dominating this medium recently in Indonesia. AMG has also taken account of a new favourite gathering place for young Indonesians, the neighbourhood convenience store.

“With the expansion of small convenience stores of the 7-Eleven variety, and with these providing chairs and tables, people have started hanging out at these convenience stores recently,” Billy Andrian, an investment officer with AMG, told OBG. “While they are there, they can see our LCD media.” The screen can promote items in store and, furthermore, provide a platform for more creative content and a softer sell.

At the same time, online media have been expanding. The business news portal Indonesia Finance Today has seen an uptick in popularity, while most print titles have their own websites. One popular online area for ads might also be comparison websites. These are proving highly popular, as consumers become more discriminating, while also wishing to minimise exposure to the traffic in congested cities such as Jakarta.

“Before, you’d have to spend all day travelling from one store to another to check things out,” said Andrian, “but now they can do it all online.” Patterns are changing, with much still to evolve, as the middle class becomes more discriminating, connected and assertive.