Industry figures share their views on the latest issues. If you have an idea for a guest column, email firstname.lastname@example.org
Why partnerships are crucial when navigating the e-commerce market in Indonesia
It’s no secret that Indonesia has become a huge digital commerce market and that the business opportunity continues to grow at a rapid rate. CEIC reports that average incomes in Indonesia have risen 28% in the last three years alone, and data compiled by Hootsuite attests to the size of the digital marketing opportunity in Indonesia.
With 265 million people and 133 million internet users, there are lots of potential consumers reachable within this market. Mobile digital penetration is almost three times higher than desktop penetration, so clearly small screens can mean big revenue in this country.
In 2018, Statista estimates that total e-commerce in Indonesia hit almost US $10bn, up more than 23% versus the previous year. Naturally, this means many brands are interested in getting a share of sales in this fast-growing region. One key (and low-risk) strategy for brands is performance marketing arrangements through affiliates and other types of partners, in which the brands pay a commission for every sale driven by an online publisher or influencer.
A partnership is a highly effective strategy for entering and accelerating growth in a region because it operates on a pay-for-performance basis. In other words, brands only pay after they verify a purchase. That eliminates risk and leverages the trust that partner publishers have established in a region to give their own products and services more credibility. Further, brands can tailor featured products and offers to maximize new users, incremental purchases, high-margin sales and even lifetime value.
Because partnerships can be very lucrative for publishers, it's no mystery why this channel has shown double-digit growth for as long as anyone can remember. But partner marketing is not without challenges. Lack of transparency, fraud risks, and other snags can hurt your performance if you aren’t careful.
If you’re looking to establish and grow a partner program in Indonesia, consider these four strategies for success:
Do your homework on the competitive landscape
You cannot establish an effective partner marketing program without understanding what’s already out there in your category. For the best results, you must deliver competitive offers and support that help ensure your partners derive significant revenue and profit from your programs. You can start your research by looking for affiliate and partner marketing programs from competitors using Google. Since most brands want to make it easy for partners to discover their partner programs, they are usually easy to find. On top of this, remember that there’s no substitute for a seasoned partnerships pro that is well-versed in the market nuances of a new region. In markets like Indonesia where demand outstrips supply, you may be able to find a full-time employee, or instead leverage a good consultant to manage your efforts while you are getting your partnerships efforts established.
Local experts give you a head start because they likely have the intel and relationships to get you up and running faster.
Collaborate directly with the largest partners
Focus attention on the largest partners in Indonesia. Some brands partner with thousands or tens of thousands of publishers and influencers. Others have fewer than a dozen partners. While “long tail” partnerships can eventually total significant sales for your brand, remember that it can be a lot easier to move the needle if you optimise your efforts with the largest regional partners first. This is particularly important in Indonesia, where a handful of publishers and influencers drive a disproportionate share of total partner marketing volume.
Given this, it makes sense to establish direct relationships with such partners instead of always working through a middleman network. Major partners generally leverage the best technology and have their fingers of the pulse of the industry’s biggest trends. Further, they have rich insights into their own audiences and can help you create bespoke programs to drive even more sales from their customer footprints.
Demand transparency from partners and platforms
Many of the service providers in Southeast Asia -- often referred to as “blind networks” -- are not transparent, meaning their brand partners don’t know which partners are driving which sales, and from which domains. This can pose the risk of fraud or brand damage if products are promoted by the wrong people. By leveraging a robust data strategy and tracking technology, brands can see granular information about which partners and web properties are driving each sale. Look for ways to understand the complete buyer journey, not just the vendor that drives the last click. These insights can be invaluable for optimization.
Understand why fraud in the partnerships channel is different
Partnership is an industry that drives tens of billions of dollars in digital commerce globally. All that revenue and the associated commissions are enticing to would-be fraudsters. While the pay-for-performance partnerships industry generally sees less fraud than digital marketing tactics that rely on “soft” performance metrics like impressions or clicks, there is still fraud out there. Given this, it makes sense to equip yourself with good fraud tools and experts to help you identify problems before they significantly affect your business.
Ask your potential solutions providers about how they can help you prevent, recognize and address fraud as you move into the Indonesian market. The most successful marketers in Indonesia focus on fraud in three ways:
a) Preventing fraudulent traffic from ever reaching your website, utilising fraud prevention tools as part of your partner management platform.
b) Recognizing anomalies in performance and the associated fraud risk, ensuring that if fraud hits your website it doesn’t result in a transaction.
c) Taking action by protecting potential commission payments with stringent sales approval rules, on the chance that a fraudulent transaction occurs.
The Indonesian commerce market is booming, and partnerships can be an extremely effective tool to capitalize on all this revenue and growth. Furthermore, partner marketing can deliver great results over the long haul if you keep focused on identifying and capitalising on its opportunities.
Ultimately, partnership success in Indonesia will go to the brands that take a strategic approach and focus their resources on the most proven and effective approaches.
Daniel Keegan is the senior business development director for Asia Pacific at Partnerize.
Have your say
Do you have a strong opinion on a topical industry issue? To submit a comment piece, please send a short summary of your idea to email@example.com. Views of writers are not necessarily those of The Drum.