At the recent World Conference on Creative Economy in Bali, the country has committed itself to developing the global creative economy through multi-stakeholder cooperation. According to Jakarta Globe, chairman Triawan Munaf of creative economy agency of Republic of Indonesia said that he hopes the conference would contribute to a "better and more inclusive" global economy.
As part of its efforts to develop creative economy in Indonesia, Indonesia’s Creative Economy Agency BEKRAF, aims to provide facilitation and assistance to creative players in the form of funding, domestic and foreign marketing, education and workshops, as well as other facilitation and assistance. According to the results of a joint research between Statistics Indonesia and BEKRAF conducted in 2016, the creative economy sector contributed 7.38% of GDP towards the total GDP of the country. Value-wise, the creative economy sector is projected to exceed 1,000 trillion rupiahs in 2017 and increased to 1,102 trillion rupiahs in 2018.
However, a report by Indonesia's global business guide said that Indonesia's creative industry faces challenges due to the lack of access to financing. This comes as majority of the creative players in the sector are small and medium businesses (SME) with limited capital. In addition, other challenges cited in the report that hamper the growth of Indonesia's creative industry are product development and marketing.
What role does the creative advertising industry play in the big picture?
Marketing Interactive spoke to several industry players about the issue. Anish Daryani, founder, president director of M&C Saatchi explained that given BEKRAF considers the entire start-up ecosystem as the “creative economy”, the advertising industry's role is much smaller.
As per PwC's report published in August 2017, the revenue in the Indonesian media and entertainment industry will reach US$ 8.1 billion by 2021. Meanwhile, according to a Nielsen data, the total ad spend in Indonesia grew by 14% YoY in 2016, which was double the growth in 2015. The positive growth momentum continued at around 7% in 2017, and is forecast to close at 8% in 2018.
Daryani highlighted that the industry has to focus on touchpoints such as talent, competition and pitches to better the current state of the creative economy. "The industry currently is facing the paucity of talent across levels," he said, adding that it fails to attract entry-level talents as it offers the lowest entry-level remuneration.
"At the mid and senior management levels, the industry is losing talent to emerging start-ups at an alarming rate. Recently, a ride-hailing app set up an internal creative agency, poaching talent from several agencies. When strongly funded start-ups are in a position to throw attractive remuneration packages at good talent, there’s very little the industry can do to hold them back," Daryani said.
He explained that devising a plan to attract and retain talent is the first step the industry has to take to change for the better.
Meanwhile, Peter Haarmark, chief executive officer, Ydigital Asia said that it is a challenge in Indonesia as "too few companies embrace failure, too many play it safe". But ‘safe’ rarely brings much progress as creativity involves trying new things and taking risks, while failing sometimes.
According to Haarmark, educating the creative industry to understand business metrics and integrate it into solutions, tactics and design would be a solution to the current challenges.
If creatives speak the language of C-level, they could charge a higher price.
"Currently, too many companies work in silos, including the creative companies," Haarmark said. He explained that creatives require more exposure to understand the challenge given to them. In addition, having flexible and agile teams is important, while having a committed management for resources. Haarmark added that the creative people themselves have an obligation to learn beyond creativity and that C-level must have patience and put investment behind the shift too.
Stop with the undercutting
Moreover, Daryani highlighted that with the "cut-throat" competition in the industry, agencies create new-lows as benchmarks to under-cut one another. As such, agencies struggle to make money as well as ruin the market for the industry as a whole. He said:
This suicidal move does good to nobody, other than getting the client the same service at lower costs.
Daryani also said that for an unified front, the industry has to prevent indulgent clients from leading pitches to no results. If a pitch fee was agreed upon, he said that "habitual offenders" would be more careful of putting agencies through speculative work.