Google Goes Local
    Category: E-Gang By : Gloria Haraito Read : 2131 Date : Monday, February 17, 2014 - 01:03:31

    Ahmad Zamroni / Forbes Indonesia

    Google arrived in Indonesia almost two years ago, opening the doors of PT Google Indonesia in March 2012. Its timing was good. Today, one-third of Indonesians have access to the Internet and this figure is predicted increase to two-thirds in 2016. “The big increase in Internet users was triggered by the trend of social media and e-commerce,” says Meriska Elfiarini, senior market analyst for telecommunications for market researcher IDC Indonesia.

    Thus a virtuous circle is being formed by local content creation, which attracts more local users, which in turn leads to more content, according to the analyst. As a result, the quality of local content can improve.

    This theory appears to be coming to fruition. Over the past three years, Indonesian users have started to favor local websites. In 2011, only 12 of the 50 most-visited sites in Indonesia were local sites. Today, that figure has risen to 22, almost half of the list.

    “This trend is a great opportunity for a wide range industries,” says Rudy Ramawy, country head of Google Indonesia. Rudy, 43, has deep experience in media, as he was formerly the director of programming and production at RCTI, which he first joined in 2008 as a director of sales and marketing. Before that, he was the director of sales and marketing at Sony Music Entertainment Indonesia.

    As more people use the Internet on a daily basis, it is becoming a major part of the economy. For Google, the reported attraction in having a local presence is in developing its advertising apps and other tools for the country's users, both individuals and companies, notably its AdSense and AdWords. Online advertising is the largest contributor to Google's global revenue.

    Though Google is a publicly traded company, it doesn't break out revenues by geography except for the U.S. and U.K. markets. The rest of global revenues are lumped together in one figure. Thus Rudy declines to discuss revenues or other financial figures specifically for Indonesia.

    Currently advertising on the Internet was about 5% of the total advertising spending of Rp 124 trillion last year, and total spend is expected to rise to Rp 144 trillion this year, according to Harris Thajeb, chairman of the Indonesian Association of Advertising Agencies. Of that 5%, Forbes Indonesia estimates that Google Indonesia may be getting around 2%, which would give Google Indonesia advertising revenues of about Rp 2.5 trillion.

    As Google is still relatively new to the market, Rudy says such discussions about revenue and profits are premature anyways. “We are investing in developing the Internet ecosystem. When it is better established, more revenue will follow,” Rudy says.