INDONESIA: Change in strategy boosts newspaper ad sales

Rising revenues from newspaper ads ensure future of print media, says research agency

Friday, December 1, 2006

By Ika Krismantari, The Jakarta Post

Jakarta --- In a world where digital technology dominates people's lives, many assume that the future prospects of the newspaper industry are dim.

However, based on findings by Nielsen Media Research, Indonesia's newspaper industry can breathe a little easier this year after advertising revenues soared 23 percent in the first nine months, far exceeding advertising growth in other media.

The research agency attributed the higher growth in newspaper ad spending to a new strategy by advertisers: concentrating on the details.

"Advertisers nowadays are very concerned about detail as Indonesian customers demand in-depth information about a product before they will buy it. For example, if a person wants to buy a mobile phone, he needs to carefully study the model and the sort of technology employed. No medium is capable of delivering this kind of information as effectively as newspapers," Nielsen Media Research executive director Ananto Pratikno said Thursday after the company's 2006 marketing and media presentation.

During the first nine months of this year, total ad spending rose by 17 percent to about Rp 22 trillion (about US$2.4 billion), compared to the same period last year.

Of this figure, the ad spend on newspapers increased by 23 percent to Rp 6.06 trillion (US$673 million) from Rp 4.91 trillion in the same period last year.

The biggest chunk of newspaper ad spending was by companies providing communications services and devices, with the total spend amounting to Rp 521 billion. This was followed by motorcycle producers on Rp 510 billion, television programs and schedules on Rp 382 billion, and public service ads on Rp 349 billion.

The 23 percent growth enjoyed by the newspaper industry beat growth in TV advertising, which increased by 16 percent to Rp 15.18 trillion from Rp 13.11 trillion during the first nine months last year.

But despite the lower growth, TV remained dominant, accounting for 68 percent of the total ad spend, much higher than the 27 percent enjoyed by newspapers and 5 percent by magazines.

The data also reveal that magazines are not doing as well as newspapers, registering only four percent growth in advertising revenue, which came in at Rp 920 billion during the first nine months of the year. This was partly due to the increasing number of free magazines being distributed around the country.

The research was conducted based on surveillance of 18 national and local television stations, 81 newspapers and 205 magazines.

"In line with the many events that will be staged at the end of the year, along with the year-end sales, we forecast that advertising in newspapers will increase by between 26 and 30 percent this year," Ananto said.

ACNielsen Indonesia retailer services director Yongki Susilo said the main newspaper advertisers at the end of the year would most likely be hypermarkets and malls as they competed to attract shoppers during the year-end shopping rush.

Up to the end of September, hypermarkets and shopping centers only contributed Rp 39 billion to the overall newspaper advertising spend.

"We are upbeat that next year's advertising spend will increase further as the retail industry expands," Yongki said.