It may seem counterintuitive, but Indonesia and the Philippines, with per capita GDP of US$3,514 and US$2,843 respectively, are some of Asia’s most voracious consumers of online mobile content.
For startups and VCs across Asia, the two countries represent growing economies benefitting from advancements in technology, a young consumer base, the development of telecommunications infrastructure and the dispersion of cheaper, better, smartphones in the market.
By aggregating and analysing data from their mobile advertising platform and exchange servers for India, Indonesia, the Philippines and Vietnam, a Bay Area-based mobile branding platform, Opera Mediaworks, came away bullish on the potential of the region’s mobile marketing potential.
“There is consumer opportunity which is already exploding; The amount (of) time consumers are spending, the penetration rates, the content consumption. I think in a couple of years’ time there will be a lot more broad-based advertisers who will be coming on board,” Vikas Gulati, Managing Director of Opera Mediaworks Asia told e27.
We focussed on Indonesia and the Philippines for the sake of providing meaningful analysis in a digestible manner.
Growing economies with young consumers on Androids
After China, the Philippines is the second fastest growing economy in Asia, with a rate of 6.1 per cent in 2014. The central bank is targetting a seven to eight per cent growth rate for 2015 and the telecommunications industry has followed suit — growing by 4.7 per cent last year. Smartphones were a key driver.
According to an International Data Corporation report in March, the Philippines surpassed Vietnam to became the third largest smartphone market in Southeast Asia. Budget offerings from vendors boosted shipments of smartphones to the country by an impressive 76 per cent year-on-year for a total of 26.8 million units. Fifty eight per cent of the phones shipped cost less than US$90.
In Indonesia, much of the excitement about it becoming Asia’s next economic ‘golden child’ has worn off thanks to disappointment in the Joko Widodo administration. But the country still hopes for 5.7 per cent growth in 2015 and it remains the top smartphone market in Southeast Asia.
Notably, according to Opera Mediaworks, while the total Internet penetration rate in Indonesia is still below 30 per cent, 93 per cent of those adoptees are on mobile.
“One of the biggest categories that is growing in Indonesia right now is e-commerce. There are a host of homegrown companies that are setting up their businesses primarily on mobile. And that is fuelling the growth,” said Gulati.
For startups wondering about the best operating system for these growing markets, the clear winner is Android.
The percentage of Android users in both countries is 50 per cent as compared to iOS’ penetration rate of less than 20 per cent in the Philippines and less than 10 per cent in Indonesia. Additionally, over 30 per cent of mobile users are on ‘other operating systems’ in both countries.
“You have a whole lot of manufacturers here in Asia, specifically in China which is a big presence…and all of these manufacturers are in a race to produce cheaper, better, faster phones and all of them are based on Androids. So that becomes the operating system of choice for users as well,” said Gulati.
When it comes to age, both countries trend young — the average age of Filipino mobile users is 21 and in Indonesia, it’s 24. Half of all mobile consumers in both countries are under 25. According to Gulati, this makes video advertising crucial for a successful marketing campaign.
“It might be difficult for us to imagine sitting in front of a mobile screen and watching a full movie on a video. But for the younger audience… it is pretty much a reality, that’s what they do day-in and day-out. Publishers have realised that fact — the average session time is increasing by the day,” he said.
The Philippines exceeds the worldwide average of video ad impressions. While Indonesia lags behind globally, it still exceeds the average for all of Asia.
Differences in market
Indonesia and the Philippines certainly have similar characteristics, but startups need to take into consideration certain differences before entering the market.
First, there is a gender disparity between the two countries. In the Philippines, the consumption rate is split more evenly at a rate of 54.5 per cent male vs. 45.5 percent female. In Indonesia, it is far more likely the mobile user will be male — the numbers are 76.4 per cent male vs. 23.6 per cent male.
Additionally, social media marketing is especially important in the Philippines.
According to a 2014 report from Ken Research Private, Filipino Internet users spend 10 per cent more time on social media compared with other sites. Additionally, statistics portal Statistica says the penetration rate, as of March 2015, was 42 per cent.
To take it one step further, Opera Mediaworks data seen by e27 suggests social media far outstrips content consumption in other categories such as technology, business, news and entertainment. Facebook (#1), YouTube (#3), Twitter (#6), Tumblr (#8) and Wattpad (#10) all make the top 10 most-viewed websites.
By comparison, despite Indonesians visiting social media sites more often than the worldwide average (Facebook also holds the top spot), the percentages break down more evenly across subjects. For example, the country’s appetite for business content is much higher than the average global user — Kaskus.co.id is the top rated news site at #5 (compared with the Philippine’s abs-cbnnews.com coming in at #12).
As the data suggests, this makes Indonesia a more diverse advertising market. Opera Mediaworks explains:
“Indonesian users have a broad range of interests, with significantly more users engaging in cross-site/app activity than our global average (or the Philippines, where cross-site interest is low). As such, cross-site behavioural advertising has the greatest potential in Indonesia.
Filipino users focus their interests and their page views on a very small, select group of sites and apps, making success in advertising dependent on close partnerships with those top publishers.”
At the end of the day, Gulati says advertising in the region is all about having a clear idea of the what you want to accomplish.
“It depends on the goals of the company. If you want user acquisition, you could look at a variety of strategies, you could look at video but also look at standard display. It all boils down to the goal of what these companies are looking for,” he concluded.