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Indonesia 2016 | Highlights | Media Spend

Boom in mobile fuels growing advertising investment

The rise of mobile phones, mobile internet and social networking is transforming the landscape for advertisers in Indonesia, who are investing heavily in digital advertising options. Online advertising grew by 41.3 percent in 2015 after five years of more than 40 percent growth – and is expected to expand by a further 39 percent in 2016. This surge in spending comes against a backdrop of the slowest growth in over a decade in the overall ad market; total investment grew by 6.1 percent in 2015, impressive by global standards but slow for Indonesia, though spending picked up late in the year and is on track for 8.3 percent growth in 2016. E-commerce brands have been among the heaviest investors in digital advertising.

This is a market in which television remains king – for now, at least – capturing 65.4 percent of total ad investment in 2015, about the same proportion as has been the case for years. But the growing importance of digital media, which grew to 9.2 percent of total spend in 2015 and is due to near 12 percent in 2016, is taking its toll on newspapers and magazines, which have both seen spending decline.

Internet penetration is expected to reach 40 percent in 2016, and at least 40 percent of all mobile phone users will be on smartphones by the end of the year. Some estimates put smartphone penetration at 50 percent already. This is leading to a surge in online shopping, which is tipped to almost double in value during 2016 to US$6 billion, or US$60 for every internet user in the country, excluding online purchases of travel services.

Social media, dominated by Facebook, is immensely popular, with 80 million Indonesians signed up. This is only one third of the total population, though, and there remains room for further growth. Facebook, Kaskus, Twitter and LinkedIn are popular not only for social networking but for instant messaging and live chat. Among smartphone users, phones account for 35 percent of the total time they spend on a screen. Indonesians spend more time watching screens than the global average – nine hours each day, compared to just under seven hours in the rest of the world. Total advertising investment in Indonesia is forecast to grow to IDR31.1 billion, or US$2.2 billion, in 2016.