Indonesia’s adtech industry is growing rapidly, but not all stakeholders are going to come out winners

Digital advertising in Indonesia is growing rapidly. The 2019 Global Digital Ad Trends Report not only predicted that Indonesia’s digital advertising spend would reach US$2.6 billion in 2019 but also pointed out its amazing growth rate, 26 per cent, dwarfed other ASEAN countries such as Thailand.

In terms of programmatic advertising, a burgeoning category in adtech, Indonesia market also performed extremely well and the growth is in line with global trends. It is estimated in the report that the total advertising spends on programmatic advertising in Indonesia will achieve 89 per cent growth rate as compared to the previous year. This renders the archipelagic state the fastest growing country in the world.

Also Read: 4 ways blockchain will disrupt the traditional adtech ecosystem

While the aforementioned statistics sounds extremely amazing, the reality doesn’t seem quite exciting and optimal. After compiling our years of hand-on experience in Indonesia’s digital advertising, Tagtoo team highlighted three important points on the current state of the adtech industry in Indonesia 2019.

Adtech landscape in Indonesia remains fragmented

Indonesia’s market hasn’t seen any major adtech players in the field of programmatic advertising acquire any significant market share as Indonesia just pivoted its development focus to the digital economy. The industry landscape remains fragmented with international and local adtech companies competing with one another.

The fragmented landscape in fact comes with a reason. International players find it difficult to gain a strong foothold in Indonesia due to the existing under-the-table business culture and government’s strict regulation on the advertising industry for foreign ownership. Meanwhile, local contenders are striving to catch up with foreign companies by developing top-notch technology.

Knowledge gap of digital advertising is huge

As Indonesia moves towards the new digital era, business owners and entrepreneurs are becoming more tech-savvy and open-minded towards new technology. The power of performance-oriented adtech quickly wins favours of theirs and plays an indispensable role in the development of the digital economy.

With that said, Indonesia is hitting a widening gap in terms of digital advertising knowledge. Large corporations along with local unicorns startups continue adopting the latest adtech products and services thanks to the strong backup of capital. However, small and medium enterprises struggle to keep up as they do not possess the resources or capital to master digital advertising, leaving them lagging far behind..

Immature infrastructure holds back the industry advancement

While Indonesia possesses a whopping 145 million internet user population in 2017, according to The Association for Internet Service Provider in Indonesia, the imperfect internet infrastructure continues to be the major hindrance for adtech to reach its full potential.

Also Read: An end of Google-Facebook advertising duopoly could be a boon for adtech

Take conversion rate, a common metric to measure the performance of digital advertising, for example. Slow page loading times, instead of wrong audience targeting, is oftentimes the driving factor for the downturn in conversion rate. No matter how effectively adtech can help with audience targeting, conversion undoubtedly won’t happen when viewers lose their patience and leave the page before the website content is fully loaded.

Conclusion

The landscape of digital advertising is ever-changing in Indonesia. With more companies and startups trying to strengthen their strong online presence and boost their online sales, the demand for digital advertising is certainly going to be much larger in the coming years.

Most importantly, following the digital advertising boom, Indonesia’s adtech ecosystem is becoming an exciting game to watch; who will be able to survive until the end and ascend the throne?

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