JAKARTA: A combination of a slowing economy, falling consumer confidence and a weakened currency is hitting adspend in Indonesia and media owners are struggling to adapt to a new situation.
"People are just not buying and it is hitting the marketers in a big way," according to Yasir Riaz, managing director of Starcom Indonesia. "All the big-spending FMCG multinationals, which report their profits in dollars, have cut advertising budgets in a big way to meet their bottom lines."
And he told Campaign Asia-Pacific that Starcom itself had seen a 15-20% year-on-year slowdown.
Warc data show that, after years of double-digit growth – 24.7% in 2011, 22.1% in 2012, 21.6% in 2013 – advertising expenditure in Indonesia slowed sharply in 2014 when it increased just 2%.
Television accounts for around two thirds of media spend measured by Warc and for this channel the slowdown was even more abrupt, from 28.4% growth in 2013 to 3.7% in 2014.
Data for 2015 from Nielsen indicate that, for the first three quarters, TV and print spending is down 2% year on year and Riaz suggested the full year could see a 5% decline.
Revenues at television channels have been adversely affected and Campaign Asia-Pacific suggested that some media owners were "in panic mode" as a result.
"This is the first year where year-on-year CPRPs have actually gone lower than the previous year or remained constant," noted Parthi Kabi, technical advisor at Maxus Indonesia.
"This is primarily due to the willingness of TV channels to negotiate on price and break all barriers – TV channel revenues have been hit in a big way and they have been desperate this year."
Apart from falling revenues, TV channels are also coming under pressure to improve the quality of their content.
The Indonesian Broadcasting Commission recently claimed that cheap soap operas and gossip shows were having an adverse effect on the nation's youth and called on advertisers to shift their spending to quality programming.
Data sourced from Campaign Asia-Pacific, Asia One; additional content by Warc staff