TV continues to dominate ad market despite clutter problem
TV continues to dominate ad market despite clutter problem
Sudibyo M. Wiradji and Hendarsyah Tarmizi, The Jakarta Post, Jakarta
The change in the way people spend their leisure time has
reduced the impact of TV commercials on viewers.
People have more options available for their leisure time.
Rather than watching TV, they might prefer to turn on their DVD
player to watch their favorite movie or spend the evening with
friends at a cafe or restaurant.
The increase in the number of entertainment options, however,
is not the only reason why many people are spending less time
watching TV.
Many people are also turning away from TV due to the huge
number of ads particularly during prime time. Today, the volume
and concentration of ads is becoming a major problem for the
Indonesian television networks.
According to a survey by Initiative Futures Worldwide,
Indonesia, the U.S., Mexico and China have the most cluttered TV
environments in the world.
The clutter in these countries is considerably higher than the
global average; for example, in Indonesia, adults are exposed to
52 percent more TV commercials than average.
Despite such problems, Indonesian television networks continue
to dominate the advertisement market.
According to a report issued by Nielsen Media Research, ad
expenditure on TV commercials totaled Rp 15.42 trillion (about
US$1.7 billion) in 2004, accounting for 69 percent of the
country's total ad spending in the year which reached Rp 22.21
trillion.
Irawati Pratignyo, the executive director of Nielsen Media
Research Indonesia, said the viewing rate of the Indonesian
people on TV remained high despite the clutter problem.
However, she warned that the increase in the number of
regional TV stations would give viewers more channel options, and
this would, in turn, make it difficult for advertisers to reach
their target market.
TV stations acknowledge the ad clutter during prime time, but
so far, it has had no adverse effect on the revenue. "The
condition is still normal. Only particular programs with top
ratings are cluttered with commercials ," said SCTV's vice
president for marketing Stephanus Halim.
He said particular programs like TV drama serials with an
appealing storyline made the viewers loyal despite the clutter.
Indosiar's head of public relation affairs Gufron Sakaril
shared Stephanus' view, saying that viewers that ignored
commercials only accounted for around 35 percent.
"So, I think TV ads are still effective," he said.
Trans TV's news director Reza Primadi said that spot bonuses
provided by several stations had attracted more advertisers to
promote their products during prime time.
"That's how I think cluttering happens," he said, adding, "But
it is not yet a disturbing problem."
Meanwhile, RCTI's sales and marketing director Daniel Hartono
said that the clutter was unavoidable given the tight competition
in TV ad market.
"To help find a solution to the clutter problem, issues such
as setting standard prices for advertising must first be dealt
with," he said without elaborating further.
Currently, at least 10 nationwide commercial stations operate
in Indonesia following the establishment of new commercial
stations like Metro TV, Trans TV, TV7, Lativi
and Global TV.
The new players have to compete with the stations established
earlier, like RCTI, (SCTV), TPI, ANTV,
Indosiar and state television, TVRI.
TVRI is now accepting TV commercials and sponsored programs.
Several regional TV stations also operate in a number of the
country's provinces.
Despite the clutter issue, major TV stations reported a growth
of between 25 percent and 50 percent in their gross ad revenue in
2004 due to the huge ad spending made by political parties and
presidential candidates for election compaigns.
In a report issued by Nielsen, SCTV, for example, booked a
gross revenue of Rp 2.6 trillion in 2004 (including non-
commercial ads), a 25 percent increase from Rp 2.07 trillion in
2003.Indosiar's gross ad revenue also rose by 40 percent to Rp
2.76 trillion in 2004 from Rp 1.95 trillion in 2003, while RCTI
reported a 50 percent increase in its gross ad revenue to Rp 3.1
trillion from Rp 2.5 trillion in 2003.
Gufron of Indosiar said that with TV viewers becoming more
critical, it was not enough for TV operators to keep up with the
market trend to attract advertisers. "We have to be creative and
innovative in producing new and quality programs. We strive to be
a trend setter," he said.
RCTI's sales and marketing director Daniel Hartono said that a
plan was underway to establish more production houses to produce
not only quality TV drama serials but also other programs that
cater to the needs of advertisers.
The growth of the total ad expenditure was quite impressive in
2004, due in part to the increase in ad spending for the
political campaign during the legislative and presidential
elections in the middle of the year.
According to Nielsen Media Research, the country's total ad
spending reached Rp 22.21 trillion from January to December,
2004, an increase of 32 percent from Rp 16.80 trillion in the
same period in 2003.
About 69 percent of the total ad expenditure in 2004 went to
television, 26 percent to newspapers and another 5 percent to
magazines and tabloids.
Television remains the most effective media for certain
products, especially Fast Moving Consumer Goods (FMCG) such as
toiletries, cosmetics, branded food, beverages and home care
products. Unilever, for example, sees TV as the most effective
media for most of its products.
The growth rate of Indonesia's ad expenditure is among the
highest in Asia. In its earlier report, Nielsen said that
Indonesia's ad expenditure (in U.S. dollars) rose by 49 percent
to US$2.43 billion between January and October, from $1.6 billion
in the same period in 2003.
The growth rate of Indonesia's ad expenditure was equal only
to that of China, which also recorded a 49 percent increase in
its total ad spending in the same period. This growth rate is
quite high compared to between 7 percent and 20 percent recorded
by other Asian countries.
The advertising industry remains optimistic that Indonesian ad
expenditure will remain high in 2005, although there will be no
political campaigns in the year.
RTS Masli, the chairman of the association of advertising
companies (PPPI) estimates that the total ad expenditure would
rise by about Rp 4 trillion or about 20 percent in 2005.
About 62 percent of the projected ad expenditure will go to
television and the other 28 percent to the print media. Print
media will certainly have to work harder to get a higher share in
the growing advertisement market.