Indonesia Digital and Content Marketing Report in 2017

1. INDONESIA’S DIGITAL AND CONTENT MARKETING REPORT IN 2017

2. TABLE OF CONTENTS Executive Summary Key Findings Overview of Indonesia’s digital landscape The state of Indonesia’s digital marketing in 2017 • Finding 1: Social media, the most effective marketing channel; and B2B’s focus on content marketing • Finding 2: Increasing shares of digital in marketing mix • Finding 3: Average and median digital spending in Indonesia • Finding 4: Key digital marketing problems • Finding 5: Clarity on digital marketing goals and measurements • Finding 6: Most exciting opportunities: customer experience and content marketing Content marketing deep-dive • Finding 1: Content marketing main goals are engagement & awareness • Finding 2: Most effective content type: written articles and videos • Finding 3: In-house and outsourced digital marketing; B2B vs B2C About GetCRAFT and this white paper I II III IV V VI 01GetCRAFT.com

3. EXECUTIVE SUMMARY Indonesia’s digital landscape is rapidly growing with country’s over 260 million population along with rapidly rising number of internet users, striking 40% of social media penetration rate, and developing infrastructure. Blessed with growing economy, digital literacy, and rising urban population, Indonesia has a potential to become a hotbed of digital creativity. However, despite being one of the most attractive and lucrative markets in South East Asia for digital marketers, digitalization taking place across industries still seems to be quite overwhelming for some players, and the practice of Digital Marketing in the country is still far from its optimum state. The proliferation of digital platforms and improved technology savviness are making consumers more discerning about how they spend their time online. With this, there is a real emerging mindset shift among marketers, as they start to think as a publisher to lure prospects to their own channels with compelling contents, among other strategies. GetCRAFT observed that a lot of marketers in In- donesia are still struggling when it comes to digital marketing. An online survey was therefore initiated across big cities in Indonesia (Jakarta, Bandung, Yo- gyakarta, and Surabaya) to capture general market overview and analyse the current state of the industry to obtain some valuable learnings. Based on the findings from our survey, social media tops the list on the most effective digital marketing channel in Indonesia, with organic social media campaigns ranked first on the list, followed by social media ads. This is mainly due to high level of active users across social platforms in the country, making ways for wide marketing campaign exposures for brands. 02GetCRAFT.com In terms of digital investment, marketers surveyed will spend 31% of their total marketing budget on digital in 2017 (an increase from last year), which is translated into an average of IDR 1.9 billion annual spending on digital. This shows an increasing positive perception of digital marketing as it allows more detailed measurements and optimisation for performance improvements. Marketers also realise that digital marketing campaigns focus on netting long- term returns and prove to be more efficient over time. However, growth of digital does not come without challenge. Budget restraint along with skills and resources gaps are two main issues faced by marketers in Indonesia. Additionally, a striking 55% of marketers admitted that they still lack clarity about how their digital marketing activities drive business objectives. Whilst financial issue in digital practices can be coped with effective strategies through content marketing, a better knowledge transfer scheme, such as seminars, is necessary to close skills and resources gaps. Thewhitepaperalsogoesintomoredetailsoncontent marketing, showing that the most effective content marketing types are articles and videos. However, the use of content marketing in Indonesia is primarily still aimed for customer engagement and awareness, not yet sales or lead generation. Thereisfurtherelaborationoneachfindingastowhat drives every trend, what opportunity is available to be leveraged for better marketing performance, as well as some strategic advices on how to improve the digital and content marketing initiatives for the readers. This white paper does not only showcase the state of the industry and market overview, but also aims to address key challenges and provide some actionable strategies for all marketers in Indonesia.

4. KEY FINDINGS 03GetCRAFT.com 1. Social media is the most effective marketing channel 3. Average digital marketing budget: IDR 1.9 billion / year 4. Key digital marketing challenges: budget restraints and skill/re- source gaps 5. 55% of marketers lack clarity on how digital marketing drives business objectives 6. Most exciting growth opportunities: customer experience and content marketing 2. Marketers spend 31.5% of their budget on digital 1. Main content marketing objectives: engagement and awareness 2. Most effective content marketing type: Written articles and videos 3. On doing content : B2B prefers in-house, B2C relies on agencies On Digital Marketing On Content Marketing (deep-dive)

5. TOTAL POPULATION LAPTOP & DESKTOP TABLET DEVICES MOBILE PHONE 262 million 55% 40%51% URBANISATION PENETRATIONPENETRATION YEAR-ON-YEAR CHANGE YEAR-ON-YEAR CHANGE YEAR-ON-YEAR CHANGE 106 million132.7 million TOTAL ACTIVE MOBILE INTERNET USERS 123.3 million 28% 2% +3% -7% NUMBER OF INTERNET USERS 47% of total population 69% -1% ACTIVE SOCIAL MEDIA USERS INTERNET USERS MOST ACTIVE SOCIAL MEDIA PLATFORMS SHARE OF WEB TRAFFIC BY DEVICE 04GetCRAFT.com OVERVIEW : INDONESIA’S DIGITAL LANDSCAPE Source: Global Web Index, GSMA Intelligence, Statista, Akamai, StatCounter, Ericsson YOUTUBE FACEBOOK INSTAGRAM TWITTER WHATSAPP GOOGLE+ FB MESSENGER LINE LINKEDIN BBM PINTEREST WE CHAT 49% 48% 39% 38% 36% 38% 31% 30% 26% 28% 21% 22% SOCIAL NETWORK MESSENGER/ CHAT APP/VOIP

6. THE STATE OF INDONESIA’S DIGITAL MARKETING IN 2017 05GetCRAFT.com

7. FINDING 1 SOCIAL MEDIA IS THE MOST EFFECTIVE MARKETING CHANNEL FOR MARKETERS, BUT B2B WILL PRIORITISE CONTENT MARKETING IN 2017 Digital Marketing channels’ effectiveness (B2B & B2C) When it comes to measuring marketing effectiveness, what works for each marketer may differ depending on their strategies, business objectives, resources, target audience, and more. Effectiveness often comes down to the return on investment (ROI) of each initiative and this is where measurements become pivotal in the decision-making process. Our survey revealed that the majority of brands admit that social media (paid and organic) is the most effective digital channel to do marketing. Effectiveness level here is gauged based on the rating (0 – 5 point scale) submitted by each respondent, and they put social media on top of the list. This could be due to several main reasons: its high number of active users in the market (a third of the entire population, or ~80 million), audience engagement-enabling feature, cost-efficiency, and more – all of which encourage 06GetCRAFT.com Social Media Social Media Ads Paid Search Marketing Content Marketing Influencer Marketing Search Engine Optimisation (SEO) Sponsored Content Email Marketing Display Advertising Webinar & Podcasts Level of Effectiveness brands to leverage this channel more than others. Ranked third, paid search marketing is also deemed effective as it enables better audience targeting. Indonesia’s huge market asks for specific targeting to achieve more relevant reach and prominent exposure – both of which are offered by paid search marketing. Some of the most successful social media initiatives are also combining organic and paid campaigns, as the two have synergistic effects. On the other hand, display advertising is ranked rather low in terms of effectiveness. Interestingly enough, brands are still investing in quite big amount of money for display advertising but with the rise of ad blockers and improving performance of native advertising, display advertising will have to evolve or it would not survive in the market. 0 1 2 3 4 5

8. As social media appears to prevail over any other distribution channels, another interesting finding was revealed when we compare how marketers in the business-to-consumer (B2C) and business-to-business (B2B) companies prioritise their strategies for the 2017. B2C marketers align their plan to focus on social media marketing in 2017, but B2B marketers put content marketing on top of their priority list this year. This asks for further observation as to why content marketing registers more importance over social among the B2B marketers. By nature, B2B firms are targeting key decision makers and business owners — the cohort which requires a lot of information in the process of their purchasing decision. This makes content imperative in educating these people about products and services which may be conveyed via white paper, report, video, blog, article, webinar, and more. An effective content marketing strategy is never a one-way street;instead,itincludesinteractionandengagementfrom Why do B2B marketers prefer Content Marketing over others? Prioritised channels by B2B marketers “Social media has a high penetration and reaches almost all internet users, which is a primary need for B2C - they would like to leverage content marketing combined with social media to reach and engage consumers. In the case of B2B, since the target is usually more well defined and smaller in number, it is possible to focus on pure content marketing.” - Matt Wiggers, CEO at Havas Jakarta 07GetCRAFT.com Level of Effectiveness the audience or customers to not only facilitate knowledge sharing, but also build brand loyalty. For B2B brands, this means a lot as their buying cycle tends to be longer and purchasing decision is likely to be more complex. But this does not necessarily mean that social media channels are overlooked by the B2B brands. Great B2B marketers uti- lise it as one of the main distribution channels to do specific targeting and reach out to their niche audience.

9. On average, marketers we have surveyed will spend 31% out of their total budget on digital. This is an increase compared to last year, according to 76% of them – with nearly half of the total respondents admitting that this year’s increase is less than 25% of last year’s spending. On the flip side, almost a quarter (24%) of the total respondents will not increase their budget allocation for digital marketing in 2017. Their reasons may differ: financial con- straints, business objectives and needs, knowledge and skill gaps within the organizational structure, failure to prove effectiveness in digital initiatives, or more. However, this portion will have no other option than to decrease as digital marketing will only grow and companies inevitably will have to adjust in order to survive. A big chunk (48%) of all marketers surveyed plan to rise digital budget by less than 25% out of the 2016’s spending. FINDING 2 MARKETERS SPEND 31% OF THEIR BUDGET ON DIGI- TAL, 76% SAY THIS IS AN INCREASE Increase of Digital Marketing Spending in 2017 It is important to note that the actual amount differs for each company size and revenue number across industries. Whilst it seems healthy that the digital budget is increasing within the marketing mix, it poses a question worth consid- ering: is knowledge increasing, too? Although there is no solid scientific evidence that marketing excellence is getting better, digital is still promising a good bet as more and more marketers are seeing higher ROI over time through digital initiatives. We are seeing significant digital campaign transformations in brands from their formerly traditional initiatives. Digital is inevitably taking shape in Indonesia, but this is not to say that conventional marketing is neglected. Some of the most successful campaigns combine both, and the key is really finding the right formula of mixing them along with proper measurements according to certain business objectives. 08GetCRAFT.com Unchanged / by 0%21% 48% 24% 7% To increase by <25% To increase between 25-50% To increase by over 50%

10. “Increased availability of data and tools for sharper targeting are the main drivers for increase in budget on digital. B2C marketers are more knowledgeable and aware of the role of digital for their brands and this has created more confidence in using digital channels. On the other hand consumers are actively looking for information and transacting online that are forcing marketers to build digital capabilities.” - Pradeep Harikrishnan, CEO / Technical Advisor at IPG Mediabrands The rising role of digital in the marketing mix today is inevitable. Many companies are starting to shift away from traditional media to eventually focus solely on digital as it is considered more cost-effective. Another reason is also because marketers are relying heavily on the market behaviour. People spend more time on digital devices today and depend on the information being showcased across platforms to make a variety of decisions; marketers are leveraging this digital prowess to affect their targeted audience’s purchasing decisions. Digital allows detailed measurements and optimisation for better marketing performance, along with the ability to facili- tatereal-timeinteractionwithtargetedaudience.Manyother newtechnologiesarealsodrivingbrandstokeepexperiment- ing and investing more to improve their digital excellence. Moreover, digital marketing generally focuses on netting long-term returns. More marketers are starting to become more aware of this: as they add more permanent content and attract or retain more followers, their results will start to compound. Over time, this is a more significantly cost-efficient investment than any other traditional marketing 0% 5% 10% 15% 20% 25% 30% 35% Shares of Digital in Annual Marketing Spending in 2017 09GetCRAFT.com Digital gains momentum in marketing methods, proving a higher ROI when optimised properly, no matter the industry. The digital landscape is always changing and will continue to do so. However, no matter the channel, customers will always stay as the focal point of all marketing strategies. Digital offers a bright future for marketers because as technology improves, there will be more innovative, effective, and greater ways to serve the customers’ needs. 13.80% 25.64% 22.64% 31.03% 6.90% > 40% 31 - 40% 21 - 30% 11 - 20% 0 - 10%

11. The growing role of digital in today’s marketing practice is reflected in the increase of brands’ digital spending. Our survey reveals that in terms of the amount being spent on digital this year of 2017, the biggest chunk of respondents (almost25%)admitthattheywillspendIDR251–500million this year only for digital marketing initiatives. The second highest rank (covering inputs from 20.69% of the total respondents) of annual digital budget is in the range of IDR 1 – 3 billion. It’simportanttonote,however,that thedata being showcased here is based solely on our market survey and may relatively differ in the reality of each marketer, depending on the size *Average digital marketing budgets are calculated with exclusion of outliers (IDR >30 billion) in the market FINDING 3 AVERAGE* AND MEDIAN DIGITAL BUDGET IN INDONESIA ARE IDR 1.9 BILLION/YEAR* AND IDR 875 MILLION/YEAR, RESPECTIVELY Amount of Digital Marketing Spending by Brands in 2017 (IDR) of the company, their spending interpretation, as well as the definition of each digital marketing initiative they are carrying out. The numbers shown here are sourced from a variety of industries, which may have different standpoints and investment priority. Companies that are reliant significantly on digital as part of their business by nature would skew higher on this scale. It is also highly possible that over time the average number of digital spending will ascend across the industries as technology advances and available skills in the market improve. 10GetCRAFT.com 3.45% 11.34% 9.34% 20.69% 20.35% 24.14 % 6.90 % 10.34 % > 10 billion 5 - 10 billion 3 - 5 billion 1 - 3 billion 501 million - 1 billion 251 - 500 million 50 - 250 million < 50 million

12. As marketers are getting better at learning from their previous year’s marketing performance through different quantifiable metrics, they now have better grasp of what is working or not, and how much they should spend to achieve certain objectives. They are willing to spend more not only because of the potentials they are clearly seeing in the market, but also because of the confidence in digital based on its effectiveness that can be more clearly measured in comparison to the traditional medias. Across industries, marketing spending eventually is primarily determined by the revenue and company size, the market’s competitive landscape, the nature of the business, marketing objectives, capacity of resources, and their own target demographics – as to how they behave along the purchasing journey. On a macro level, the rising budget for digital in Indonesia is driven mainly by market condition such as intensive social media activities, high use of mobile, improved internet and telecommunication infrastructure, as well as technology-driven customers’ purchasing journey. An evolving digital landscape in Indonesia is also driving digital marketing spending across other industries. E-commerce, financial technology, fast moving consumer goods (FMCG) and gaming, are namely some main industries driving the growth of digital advertisement spending in the country. This is also made possible by the government support, as they recently announced to invest as much as USD 1.5 billion in high-speed internet connection, pushing further the development of telecommunication infrastucture towards LTE. Last but not least, the millenials’ buying power is also driving this digital budget increase. As these digital natives are entering high-spend life and settling down through careers, starting families and homes, they become the key targeted consumers. Being digital savvy as they are, brands are beef- ing up digital campaigns to reach this audience group and this will only grow because over time brands will get better and more efficient in performing digital campaigns. A foreseeable trend is, a shift towards quality over quantity when it comes to what the digital spending increase would mean. Many marketers in Indonesia today are still primarily allocating digital budget for volume-based advertising and marketing strategies, but this is starting to change as they arerealizingthatthesevolume-basedmetrics(e.g.impressions) can potentially annoy or spam the audience. The growing prevalence of consumers data is also progressively transforming how marketers do digital marketing in Indonesia. Continuous technology advancement will only make it easier for everyone to attain data - and this will not be the issue in the coming future. Marketers will be required to develop more advanced and meticulous strategies to reach a new level of personalised customer experience (CX). It is expected that companies will spend more money on higher level of data intelligence technology or stacking up on more data analysts for better understanding on customer behavior and what they need. It will not be about ‘how much’ one spends for digital marketing, but ‘how’ they spend it. Despite some current concerns such as digital effectiveness, ROI, and rising trend of ad blocking, digital investment will remain a strong highlighted area, and will grow even stronger in the upcoming future. Annual Digital Marketing spending in Indonesia: what are the drivers? What the future may hold “Digital marketing budgets in Indonesia generally range from IDR 1 - 2 billion, with most brands spending 11-20% out of their total marketing budget. This said, there are some outliers who are investing heavily into digital due to the fact that they can measure, optimise, and see overall better results - and this trend will only continue to rise.” - Patrick Searle, Co-founder and CEO at GetCRAFT 11GetCRAFT.com

13. FINDING 4 DIGITAL MARKETERS’ KEY PROBLEMS ARE AROUND BUDGET RESTRAINTS AND SKILLS/RESOURCES GAPS More than half (51.72%) of the brands surveyed admit that budget restraint is the main factor hindering their Digital Marketing initiatives, followed by skills and resources gaps to make these initiatives happen (44.83%). Our survey also revealed other issues including establish- ing and sustaining customer engagements, lack of proper trackingandmeasurements,andweakdataanalyticalskills. Thelattertwoproblemsarehighlyassociatedwiththesecond biggest challenge, which is skills and resources gaps. Without proper talents and capability, tasks such as digital marketing tracking and data analysis would be affected, which may result in campaign ineffectiveness. Furthermore, many marketers are finding it difficult in moving past descriptive analysis (how much/many/often), towards predictive anal- Brands’ Biggest Challenges in Digital Marketing 12GetCRAFT.com Budget restraint Customer engagement Skills & resources gaps No tracking / proper measurements Weak data analytical skills No clear ROI Dependency on third parties / agency Lack of tools to help my digital marketing invitatives No clearly defined goals Misalignment between in-house team and third parties (agency) ysis (big data use to optimise marketing campaigns, foresee customer behaviors, and leverage opportunities). Interestingly enough, no clarity of ROI scored rather low in the survey regardless of the fact that there are significant skills and resources gaps. To some extent, this reflects a positive possibility that some marketers have already proven the ROI through numerous digital experiments and optimisation. Closing these gaps are not easy and challenges will surely take time to overcome, but some strategic actions can be taken to start addressing these problems starting in an organisational level, namely by focusing on content marketing and investing more in education or knowledge trans- fers.

14. Coping with budget restraints through Content Marketing One possible solution to cope with the budget issue here is through content marketing and sponsored content. The traffic of content marketing campaigns compounds over time, making them highly cost-effective. In Indonesia, running large high quality content marketing campaigns is generally 2-5 times more cost efficient than paid media. And if desired, content marketing content can break-even or become profitable by letting third party brands run sponsored content across different media platforms. Content marketing in Indonesia also makes it easier for startups and small and medium enterprises (SMEs) to com- pete in the same landscape with bigger players via social media, of which costs are nearly zero. Content marketing is actually so cheap that it is highly suggested that all kind of companies (startups to SMEs to big, global brands) include it in the marketing mix. One single article, for example, is reusable for social media posts (across channels), blog post, email marketing, and effective driver for organic SEO. Another way to address this issue is by making an informed financial decisions across different fronts, from determining how to do the digital campaigns (in-house vs. outsource via agencies),toprioritisinginitiativesaccordingtotheobjectives andneeds,etc.Itisalsofeasibleforhighupfrontinvestmentsto result in high ROI, if done properly with optimisations. It is clear to see that the industry critically requires some solutions to close these gaps. In some cases, the problem is rootedoninadequateorganisationalsupporttoinvest in digital developments via tools and training, or lack of properstruc- ture that enables quick knowledge transfer among each other. Each brand is encouraged to closely assess their weak points and start identifying the best ways to address them. In order to achieve optimum digital literacy through knowledge transfer, a streamlined, effective system has to be es- tablished : from hiring an internal resources with relevant capacity to continue growth, documenting all the marketing processes and its results, to eventually facilitating hands-on training from past projects and best cases. The system also goes a long way and has to be expertise-fo- cused. A non-traditional method such as “reverse-mento- ring”, where younger employees introduces and teaches new technology to an older colleague, can work well in the digital landscape, as this practice implies reciprocity and generates cross-generational trust. In the macro level, conference, seminars or other sharing sessions are needed to be more often facilitated in the industry. Transparency in best practices can also be enabled much more easily across the industry stakeholders with the technology advancement. Facilitating an unbiased platform to share insights, for instance, would help information distribution more fairly and efficiently. “In Indonesia, digital talents are very scarce - not because we are lacking great local talents, but due to the explosion of demands for digital marketing professionals from many companies wanting to go online. Meanwhile, budget restraints is a result of the lack of knowledge on utilising digital marketing channels.” - Timothius Martin, Head of Performance & Branding at Matahari Mall 13GetCRAFT.com Knowledge transfer to close skills and resources gaps

15. FINDING 5 55% OF MARKETERS STILL LACK CLARITY ABOUT HOW THEIR DIGITAL MARKETING CAMPAIGNS DRIVE BUSINESS OBJECTIVES There is a knowledge gap among marketers in understanding proper digital marketing measurements – and this is partly due to lack of relevant skills and talents as shown on our previous finding. Whilst the majority of them have clear marketing goals, almost half of them cannot really measure how their digital campaigns contribute to the business goals. Lack of agility to adopt new technology can also be the reason why brandsfinditdifficulttogaugetheirdigitalmarketingstrategy. Successful digital marketers anywhere start with proper understanding of both objectives and their performance measurements. In Indonesia, sadly, marketers are still struggling tocomplywithboth,resultinginineffectivedigitalcampaigns. Inordertoresolvethis,marketersneedtofirstlyidentifywhat goals they want to achieve for each of their digital campaigns: Is it brandawareness?Isitcustomerengagement? Brands’ Clarity on Digital Marketing Strategy Lead generation? Subscription or web visit growth? Many can be explored according to the unique nature of each business and its needs. In an ideal condition, both marketing and business objectives are the same – say, increasing sales, and this happens rather often in the e-commerce business. The purchase journey is rather short and clearly quantifiable. On the other hand, in some cases such as in most of the B2B industry, marketing objective may be capturing leads, while the actual business goalissalesincrease–andhereagapexists. However, minimizing this gap is possible through smarter an- alytics which entails identification of different touch points along the customer journey. Once identified, it would then be easier for marketers to understand how they can convert leads totheactualbusinessgoals and optimise it over time. 14GetCRAFT.com No Clarity 45% 7% 48% Clarity on both goals and measurement metrics Clarity on both goals, but NOT on how to measure

16. Why do B2B marketers struggle more on digital marketing? Area of understanding in Digital Marketing, B2B vs B2C Our survey revealed that there is a relatively fair split among the B2C marketers when it comes to the understanding of digital marketing. 52.17% of them admit to have clarity on both goals and measurement metrics, and the remaining 47.83% have a difficulty in measurements. B2B brands, however, appear to struggle more with only 16.67% of them are able to fully grasp both digital marketing goals and its success measures. A third of the total B2B marketers surveyed have no clarity on either objectives or measurements,and the remaining50%admitdifficultiesonly in gauging their digital marketing performance. By nature, the B2B companies deal with other businesses whosebuyingcycletendstobelongandrequiresmoreparties’ consideration. Not all the touch points in the buying jour- neycanbeenhancedviadigital,andtheytry to generate leads hoping that their campaigns are closer to the end of the marketing funnel to help them make sales – and this makes digital seem hard to prove its ROI as quickly as expected. In order to address this issue, B2B marketers have to realise that digital marketing, especially in their case, cannot be “There is a lack of industry-wide knowledge transfer when it comes to digital marketing best practices, as it is now done exclusively amongst group of companies or within clients-vendor relationship, resulting in lack of knowledge, confusion of practices and measurement metrics. Hence, education initiatives are needed to help marketers learn and refer to the best practices. Digital media companies also need to start standardising their metrics, so results can be more clearly measured and compared.” - Anthony Reza, Co-founder and CEO Indonesia at GetCRAFT 15GetCRAFT.com ultimately tied to complete revenue attribution. Instead, they can measure conversion rate or customer satisfac- tion rate that could contribute to the company’s business objectives. Some B2B companies even choose to have bigger control in the buying process by digitizing it, for instance by providing a self-service platform to help customers manage and customise their own inquiries, and enable the company to track each touch point, collect more data, and optimise it for their marketing purposes, among others. Clarity on goals, BUT not on how to measure Clarity on both goals and measurement metrics No clarity 52.17% 16.67% 50% 33.33% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% B2C B2B 47.83%

17. According to our survey, brands in Indonesia believe that customer experience, content marketing, and mobile platform hold the top 3 exciting opportunities to explore in the digital marketing space this year. The three areas are interconnected with each other and can be leveraged with proper integration. The improvement ofcustomerexperiencecanbedoneviagreat,relevantcon- tent that helps customers make purchasing decisions along their journey through mobile devices. Given the potential growth of mobile use in the country, brands can then focus on the betterment of our customer experience through dif- ferenttypesofcontentmadeaccessibleonmobile across the different touch points. FINDING 6 CUSTOMER EXPERIENCE AND CONTENT MARKETING, THE MOST EXCITING GROWTH OPPORTUNITIES Most Exciting Growth opportunities in Indonesia’s Digital Marketing in 2017 16GetCRAFT.com Customer experience Content marketing Mobile Social media Personalisation Big data Automation Omnichannel campaigns Native advertising SEO / SEM Webinar Social media does not score primarily high in the rank as the channel is relatively getting saturated. Although there are new apps / features rolling in and growing popularity such as Snapchat, the market is not yet ready to consider this as one of their significant touch point in the customer journey. The different opportunity areas which are identified and ranked here are not only based on the marketers’ perception on potential effectiveness and benefit consideration, but also on the market’s habit and its readiness. Brandsalign their strategies to match the audience’s receptiveness, ensuring that they are using the relevant channels or familiar with theinitiatives,andwhethertheyhaveasufficientadoptionlev- eltomakethisviable.

18. Customer experience: more than just marketing objectives When it comes to customer experience, brands can look at the overall customer experience as digital touch points which they can optimise to improve through, for example, different kinds of engagements. Marketers’ focus are now back on customers and how to improve their experience with the brand. They realise that this is critical because better customer experience can either strengthen or weaken purchasing intent, customers’ loyalty, engagement, and brand advocacy. There are many ways that marketers can use to improve customer experience. For instance, leveraging digital tools by enabling automation, utilising customer data to provide unique customisation, and even using mobile-first strategy to delight the customers with high phone activities rate. Practically marketers could go the extra miles by creating compelling contents to lure visitors (or prospects) to brand’s website, specialised microsite, or social media account. Visitors will be eventually asked to supply information that will later be used to market more directly to them. This is when content marketing meets marketing automation technology in customer acquisition. Content marketing attracts visitors then marketing automation move them through the buying journey. Marketers could also mine marketing insights from the data gathered through digital tools by diligently listening to their voices on social media, you can even understand their behavioral pattern, changes in lifestyle, or even understanding deeply what they really need to create new stories to engage them, or even develop new services and products to meet their demands. What is also critical but is unfortunately often overlooked is creating and nurturing the right culture for customer experience-centric business. Organisational and operational improvement in transparency, more seamless technology, the culture of empathy and colectiveness or a sense of being as part of an entity, would make it easier for the team to always prioritise customer experience above other things. Content marketing holds promise as storytelling becomes increasingly pivotal in any marketing strategies nowadays, given that over time the cost per view for doing content marketing is cheaper than doing paid and programmatic media. Marketers are also realising that content marketing also allows brands to communicate in much more ways to the audience compared to paid media, hence there’s higher efficiency to bring them closer to the business objectives. Unlike other types of marketing, almost every opportunity is a content opportunity – from new product release, hot marketissue,toevencustomerdata,whichcanallbeleveraged through content. The opportunities are also existing across numerous channels, from social media, news platform, email, paid media, to offline events – all of which are sought after by marketers in today’s digital era. Marketers’ ability to incorporate customer journey with their content marketing strategy will be crucial. By understanding every moment of the funnel to target the right audience with the right story at the right moment, then it will be able to turn audiences into customers, and further nurture them into brand advocates. It is about creating the right story for the right audience, when to inform or educate and when to entertain. “Customer experience is one thing that should allow the company to genuinely differentiate itself, and that in itself makes an exciting opportunity. Although customer experience professionals have been around forever, but as a profession, less so. Finding genuine customer experience professionals is still quite hard here, but at least it is growing in importance.” - Colin McDougall, Chief Marketing Officer at AXA Indonesia 17GetCRAFT.com Why and how to take advantage of content marketing opportunities?

19. CONTENT MARKETING DEEP-DIVE 18GetCRAFT.com

20. Oursurveyrevealedthatthemostprioritisedcontentmarketing goal is customer engagement, with almost 60% of our total survey respondents putting this on their list. The idea of using contenttoincreaseuserengagementstartswithunderstanding the customers’ needs and their pain points, then deliver it through insightful content. Marketers nowadays realise that relevant content helps them to influence their customers’ behaviour through useful information wherever they are within their purchasing journey. The fact that social media activities are particularly high in In- donesia is game-changing, as the use of content helps shift marketing from ‘all about the company’ to ‘all about the customer’, encouraging them to interact with the brand. The second most prioritised goal of content marketing is brand awareness, shown by 55% of our surveyed marketers. Clearly,relevantqualitycontentisimperativetohelpproperly defineabrand’sidentityandcorrelateitwiththeircustomers. Brand awareness is imperative in any kind of marketing, as FINDING 1 CONTENT MARKETING IS GENERALLY BEING USED FOR ENGAGEMENT & AWARENESS, NOT YET SALES/LEAD GENERATION it helps customers recognise and distinguish brands in a competitive landscape. In the chart, the first two content marketing objectives also show that marketers are focusing on invoking brand loyalty in the eye of their customers, proving that content marketing focuses on long-term instead of immediate results. However, web traffic, although related to brand awareness measure, is not scored as high. This shows that marketers havestartedtoshifttowardsvalue-basedmarketingobjectives with more personalized and higher business impacts, rather than tricky numbers like web traffic that lacks context and provides less meaning in the whole marketing strategy. Itisalsoworthnotingthatengagement,however,isonelay- er closer to the end of the marketing funnel, bringing audience or potential customers towards the purchasing point. It enable marketers to measure and sometimes predict the conversion rate from awareness to targeted actions. Content Marketing : Brands’ Main Goal 19GetCRAFT.com Customer engagement Lead generation Brand awareness Customer retention Lead nurturing Web traffic Improve search engine rankings

21. Content marketing for B2B and B2C: goals VS measurements When it comes to measuring success, brands in Indonesia align their metrics with the objectives that they are trying to achieve. B2C companies are prioritising metrics such as social media engagement rate (likes, shares, retweets, etc) and website traffic that can reflect how high their customer engagement quantifies. For B2B brands, however, customer engagement rate does not rank as high in their content marketing measures scheme, but specific call-to-action such as leads generation rate and subscription are on top of the list. The reason behind different tendencies between B2C and B2B marketers in terms of measurements is rooted in the nature of their business. Whilst B2C firms are targeting general audience with relatively short purchasing cycle, B2B companies are targeting businesses which tend to take more thoroughly informed decisions and have longer purchasing cycle. B2C therefore uses content to gain customer engagement that can increase brand loyalty and put them on top of their customers’ minds. B2B companies, on the other hand, leverages content to help their customers make an informed decision and shorten their purchasing cycle. “Lead generation is closer to sales and more suitable for B2B. In the case of B2C, the sales conversion on digital platforms are yet to be developed fully and hence the preference for awareness & engagement using content.” - Pradeep Harikrishnan, CEO / Technical Advisor at IPG Mediabrands Content Marketing success measures / KPIs B2B B2C 20GetCRAFT.com Today’s marketers are leveraging interactive content in order to increase customer engagement. We have also observed that interactive content tends to gain message involvement and customers’ purchase intent than the static ones. In such case, some are even measuring the depth of user interaction with the website to see how engaged and explorative a person is with a brand’s website content. Lead generation, however, can be measured by specific call-to-action that is included in the content. For B2B case in particular, greatcontentcanbetterguidepotentialcustomertoaspecific landing page, which entails specific action that can eventually be nurtured and converted into a quality lead. 0%0% 10%10% 20%20% 30%30% 40%40% 50%50% 60%60% 70%70% Number of leads generated Customer engagement rate Quality of leads Subscription growth rate Website Traffic Sales revenue Lead conversion rate Search engine ranking

22. Whilst the utmost idea of great content marketing is the ability to do better storytelling, many formats are being put intoconsiderationbymarketersinIndonesiawhenitcomes to communicating to their targeted audience. According to our survey, written article is the most favorable type of content they are using within their marketing strategies based on its effectiveness. Our respondents rate written articles with average score of nearly 4 out of 5 (with 5 being the most effective). Types of written articles here can be a news or feature article, sponsored article, blog post, how-to or instructive content, and more. Video scores the second highest on the content marketing rank in our survey. The definition of a video here is now not as narrow as advertisement video being put up on Youtube or Facebook – but instead an extensive range of other video formats. From creative campaign videos that bring light to pain points, to customer testimonials and personalized FINDING 2 WRITTEN ARTICLES AND VIDEOS ARE THE MOST EFFECTIVE CONTENT MARKETING TYPES Content Marketing Initiatives : Level of Effectiveness 21GetCRAFT.com Written articles Videos E-newsletters Infographics Case studies White papers and reports Webinars Least effective product demos, video will play a starring role at all stages of the marketing and sales funnel in 2017. In the future, video will account massively of all online traffic, it is not only considered as the most effective way to convey messages, but also key differentiator between brands and their competitors. The lowest ranked format in terms of marketing effectiveness here is webinar, and this leaves so much room for growth. As stated by many other studies, webinars can be very effective as it offers very immersive content experience, real time content delivery, live interaction, and more. It is important to note that however each marketer may identify effectiveness differently, as they are measuring content marketing metrics according to their own specific needs, goals and business objectives. Most effective

23. Video is gaining its power and is getting increasingly popular within Indonesia’s digital landscape – especially among youth. Video is considered to be more visually engaging, ex- pressive, and easier to invoke to the emotions of the audience. Although the initial production cost can be relatively higher than written content, a series of videos with consistent publication frequency can build loyalty and engagement, which increases viewership over time and can progressively bring down the cost per view. In another term, the return on investment can be proven over time, with stronger branding and engagement as a result. The internet has always been dominated by text, but now with technology advancement (and its continuous development), video is getting more accessible to more people, and it is becoming one of the most effective media in conveying brand messages to audience. It is not only attention-grab- “Video is getting increasingly popular among the marketers and consumers themselves. By nature, the ability of video to show specifically how to use products or its services, and its engaging visual are making it vital in customers’ buying decision process. To top it off, as the infrastructure provides more stable internet connections, video consumption continues to rise. Best cases of video production and distribution have also shown that this method gets very cost-efficient over time.” - Patrick Searle, Co-founder and CEO at GetCRAFT Video marketing : building momentum in Indonesia The power of written content 22GetCRAFT.com The tendency towards written articles when it comes to contentmarketingtypeisprimarilybasedonthemulti-purposes and advantages it serves. When budget and affordability are taken into consideration, written article can serve its marketing purpose rather well as its production cost is relatively lower than, for instance, video. Written content can also help increase web page rank through search engine optimisation (SEO) by using relevant, valuable tags and keywords. It can definitely help boost brand awareness if combined with strategic distribution plan, e.g. via integrated channels such as news platform, owned media, and social networks. Written article also tends to be more recyclable over time without much effort, some content can be updated and re- published to convey messages to the audience. In Indonesia, particularly, written content may be more effective to deliver a message to a targeted audience as it is more easily accessible, and quickly loaded, and simpler in comparison to video and other marketing formats. bing, video is reliable in conveying factors that text cannot: emotion and personality. Opportunities for video marketing is inevitably growing as internet infrastructure in Indonesia is getting stronger, more solid and stable. Growth of mobile and smart phones allowing fast online video display is also driving the marketers’ intent to focus more on this format. With a highly visual content, video is becoming more preferred to media consumption during tedious times, including commute. We are also seeing exciting potentials for the video marketing as there are more portals enabling easier video consumption in Indonesia, combined with relatively affordableconnectionschemesprovidedbytelecommunication providers in the market. Influencer marketing is also playing its role when it comes to video. Non-celebrities who like to share their interests and make appealing content can now even gain their own audience, creating a market which previously was non-exis- tent. Brandsrealizethepowerofthisformat,andareleveraging it through partnerships and professional contracts to improve brand exposure and customer engagement. Brands have to be able to create video contents that reso- nate with Indonesian culture, understanding how they con- sume information when your main objective is to inform and what make them laugh or touched when your objective is to engage with entertainment.

24. Itisanongoingdebateinanymarketastowhetheritisbetter to do content marketing in-house or via external sources with stronger strategic and execution capabilities. Apart from skills and available resources, some other factors are also typically taken into consideration, such as budget, nature of the business, and its general marketing objectives. Our survey revealed that a striking 83.3% out of the total B2B marketers choose to do content marketing internally via specific in-house content team. On another hand, more than half of B2C brands tend to rely more on relevant agencies to help them execute their content marketing initiatives. The rest however, have started to internalize the process and own their dedicated team to do it – inde- pendent from the support of external agencies. Producing content is not only a matter of writing (or filming or designing, in this matter). Ideally, it goes a long way: FINDING 3 B2B BRANDS INVEST IN DEDICATED IN-HOUSE CONTENT TEAM, WHILST B2C RELIES MORE ON AGENCIES How Brands do Content Marketing B2B vs B2C 23GetCRAFT.com from having the operational and general knowledge, understanding of the objectives, proper collaboration, and setting the right measures. This notion will then show itself what the chart aims to showcase and what reflective means it offers to the industry. It is fair to underline that this chart represents resourcing propensity by brands from different types of industry in Indonesia, across a variety of company size: from startups and small-medium enterprises (SMEs) to big, global corpo- rates. Thus some determining factors e.g. financial capability, team capacity, market maturity, and audience may vary. This finding calls for further assessment and industry attention: will market dynamics outpace the agency model – and if so, what needs to be done? Is there a critical neces- sity to streamline the work and processes involved? What move is right for both parties to spur growth? And more... Outsource via agencies In-house by specific content team 39.13% 60.87% 83.33% 16.67% B2C B2B

25. By nature, B2B content marketing tends to focus more on shortening their customers’ purchasing cycle. It therefore aims to enlighten their customers with insightful content and proper call-to-action to better help generate leads. With this idea in mind, it is considerably more effective for them to involve sales/business development team in their marketing projects to help deliver the message and accom- plish their business objectives. Among the majority of marketers we surveyed, indepen- dence and internalization of marketing processes may be a result of this situation. However, this does not always come with adequate skills and resources. Reverting to our finding about clarity on digital marketing, some B2B have admitted that although they have set clear goals, they are still struggling when it comes to measuring their marketing initiatives in this digital era. Whilst there is no absolute correct answer to every marketing maneuver, the key suggestion is to have a complete realisation on existing gaps and capabilities within the company itself, andhowtoreactuponit.Investinginin-housecontentteam for example, is not always easy. The risk of hiring wrong talents and bad hire could be costly for the company, but if done properly the company could operate their content initiatives effectively and efficiently. To minimise the risks, companies often hire some experts to conduct trainings for their in-house team, ensuring they are well-equipped. Workingwithanagency,ontheotherside,offersanin-depth experience, advisory services to address possible knowledge gaps, and objectively a set of expertise across the required niche fields. Whilst the costs required may vary when compared to hiring in-house content team depending on the company’ssizeandmarketingneeds,hiringanagencycanbe highly cost effective as their existing structure diminishes thecostlyrisksofbadhireinanin-houseteam.Agenciesalso offer a longer-term consistency as it eliminates the element of employee turnover. In the end, solutions may differ for each marketer depending on the company’s affordability, needs and objectives – but the confusion is addressable through smart, informed decisions. In our survey we have discovered that B2C brands are prioritising customer engagement when it comes to the objectives of their digital marketing initiatives – and this requires them to be highly innovative and captivating in terms of content and how it is being delivered. Agencies, having a forte on this specific area, gets into the frame and have so far been able to capitalise in the market through their creative approaches. It has also been observed that brands working with agencies on content creation (among others) can be more cost-effective rather than they do it internally. Great and clear commu- nication on content objectives and channels between both brands’ and agencies’ sides can result in an actual effective content marketing. Over time, this would result in higher return on investment and less spending in comparison to repetitive trials and errors that may come as the cost of doing it in-house without the required expertise and direction. “B2Bs’ tendency to rely on 3rd party is due to the nature of the job: for lead generation, it can be better to have the sales or account representative involved, but overall we see that there is a trend that companies do not handle their social and content media in-house anymore. It is becoming more difficult to bring an engaging campaign - more experience, knowledge and facilities are needed - and running that all in-house becomes too much. ” - Matt Wiggers, CEO at Havas Jakarta Why do B2B brands internalize content marketing process? In which direction should I go? B2C’s reliance on agencies 24GetCRAFT.com

26. About About this White Paper GetCRAFT is Southeast Asia’s premier content marketing network. The company helps connects brands with 2,000+ vetted content creators and sponsored content channels for their content marketing, influencer marketing & bespoke native advertising needs. This white paper is developed independently by GetCRAFT based on the market survey conducted in 2016 - 2017 across big cities in Indonesia: Jakarta, Bandung, Yogyakarta, and Surabaya. The sample size of the respondents is 150 coming from brands, agencies, and media. The demography of respondents encompasses managers, directors, VP and C-level marketers, withbrandcategoriesspreadingacrossthefollowingindustries:FMCG, retail, technology, e-commerce, tourism & hospi- tality, banking & finance, energy, manufacturing, and more. For more information, visit our website : http://getcraft.com Or contact us at hello@getcraft.com. 25GetCRAFT.com Matt Wiggers CEO Havas Jakarta Colin McDougall Chief Marketing Officer AXA Indonesia Pradeep Harikrishnan Technical Advisor IPG Mediabrands Timothius Martin Head of Performance & Branding Matahari Mall Patrick Searle Co-founder and Group CEO GetCRAFT Anthony Reza Co-founder and CEO Indonesia GetCRAFT Patrick has spent the last 10 years in 3 different countries helping some of the world’s largest brands with digital. He is now on a mission to help Indonesian brands and agencies tell amazing stories that both educate and inspire people to take action. Passionate in helping brands and companies to tell meaningful stories and give real impact to people’s lives, Reza has had 7 years marketing and advertising experience where he set up and led teams in McCann Erickson, McCann Digital, Sampo- erna Foundation, and Social@Ogilvy. We are thankful for the valuable contribution to this white paper from :

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