Startups counting on TV ads to drive traffic

JAKARTA. E-commerce websites have to turn to relatively high-cost television advertisements to drive traffic, indicating not only the staying power of television in reaching the masses, but also the stronger finance of e-commerce startups.

Jullian Gafar, director of Berniaga.com, said that the online shop decided on television advertisements primarily to garner users beyond the Internet community who have been exposed to online advertisements.

“Originally, we had no plans to place advertisements on television. As time passed, however, we felt that if we advertised through online media only, our reach was limited to the online community,” he said.

Television penetration reaches 60 percent of Indonesia’s population of more than 240 million people. Internet penetration is only a third of that of television.

He added that like any product, a television campaign was necessary for promotion as well as educating people regarding online shopping.

Jullian added that although Berniaga had always done heavy campaigns online, the television campaign, coupled with the radio campaign, now absorbs around two-thirds of the marketing budget.

“Media buying is ridiculously expensive. However, we are spending large amounts of money on the potential of having people spend on our website,” he said while declining to reveal the budget spent on buying television advertisement spots.

In one month, the company buys almost 1,000 mostly prime time spots spread across six channels, especially channels and programs focused on young audiences.

Certain television channels charge at least Rp 30 million for a 30 second television spot. However, the production of a 30 second television advertisement could cost Rp 500 million, or more.

He pointed out that the television campaign, which started early this year, had increased traffic to the website.

“At the end of December, we had, let’s say, around 2 million visits, with 1.8 million unique visitors,” he said.

Visits went up by about 50 percent after the television campaign, prompting him to say that “traditional media, especially television, works”.

However, Arnold Sebastian Egg, the co-founder of another e-commerce site Tokobagus.com, said that websites had to consider their size before deciding to pour money into a television campaign.

Tokobagus had been around roughly six years before it decided to conduct a television campaign, which started late last year.

According to Arnold, the company measured their performance, such as visitor analytics and growth targets, before deciding that television was a way of achieving these targets.

“The timing should be precise because moving to television advertisements too fast could ruin the company,” he said, adding that smaller e-commerce websites could increase traffic through better online campaigns.

He added that they adjusted the volume of their television campaign based on fluctuations on business conditions.

“We are now getting a good return [from television campaigns] so we will continue with it. But we do not know when we will do this,” he said.

William Tanuwijaya, the co-founder of Tokopedia.com, said that they had no plans for a television campaign because their budget was not heavily allocated toward marketing.

“Over the last two years, we have still been focusing on developing our product,” he said regarding his website, which was launched in 2009.

Andi S. Boediman, a venture capitalist at IdeoSource, pointed out that e-commerce websites that did television campaigns were those that needed to attract people to place advertisements on the website.

Both Tokobagus and Berniaga act as meeting places between buyers and sellers, whereby sellers could place small advertisements of the merchandise they sell.

The websites currently do not charge sellers for the advertisements, but plan to do so after they reach a certain mass of both sellers and buyers visiting the sites.

“They [sites] are competing with newspapers and other print media, so they have to build a strong awareness [for their sites],” he said. (Mariel Grazella/ The Jakarta Post)