beyondbrics

Little-known fact: Indonesia is home to the world’s second-largest Facebook user base.  It’s also the No.3 most active on Twitter.  So Mark Zuckerberg, not to mention the social networking world’s other fresh-faced moguls, must be licking their lips, right?

Well, no. Despite a booming economy, Indonesia’s social networks are struggling to make a profit – primarily because of the way Indonesians use the internet.

The problem for social media companies is not how to get Indonesians online and using their sites, but how to make money off them.

For example, online advertising – a traditional source of strength for sites like Facebook – is being squeezed out as floods of cheap handsets shift eyes away from computer screens.

Facebook’s social ads receive clicks from only 10-20 per cent of its 35m Indonesian users, according to SalingSilang.com, a local data mining website, because most users access the social network through mobile devices where ads don’t show up at all.

Then there’s the payment issue, which can be chalked up to an overwhelming dependence on cash. Most Indonesians – especially those who work in the informal economy – don’t have credit cards or even bank account. This means that Indonesia has few online shopaholics, and a look at the 20 most “liked” Facebook pages shows only four are linked to consumer goods, while the rest belong to celebrities or bands.

“Advertising is just not working in places like India and Indonesia. Clearly, alternative marketing strategies are needed in these emerging markets,” says Steven Goh, CEO of mig33, which, according to the Economist, has been the only company to successfully monetise its social network in Indonesia.

The company has cashed in on Indonesian consumer habits by letting users tap into the network by purchasing pre-paid scratch cards from designated vendors that allow them to exchange virtual gifts, play online games, and create communities of avatars [no, not the blue kind].

Goh, who credits China’s QQ and Bangladesh’s Grameen Phone with the inspiration for mig33, also notes potential for software, app, and marketing innovation in places like Indonesia, India and the Philippines. With almost half of its total 47m users in Indonesia, mig33 is set to expand its operation in the country.

“It’s a leading market for mobile-led social networking, and it’s likely to set an example for other emerging markets,” Goh says.

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