Jakarta. In years past, political campaign seasons profited domestic television networks -- unrivaled by nascent digital services -- greatly as they covered the ins and outs of developing stories and campaign trail drama.
However, analysts are signaling that a new trend might be evolving: online services attracting more and younger audiences, posing a direct threat to TV's dominance.
Moreover, political entities are beginning to rethink old strategies, now preferring to put a bulk of their money into digital advertisements, such as those featured on Facebook and YouTube, according to Adrian Joezer, an equity analyst at state-controlled brokerage firm Mandiri Sekuritas.
"Now the trend has been shifted. People now automatically share news through their social media or chat platforms, like through Whatsapp or Facebook," he said.Shares of Media Nusantara Citra — which operates free-to-air TV channels like MNCTV, Rajawali Citra Televisi (RCTI) and Global TV (GTV) — have fallen 28 percent so far this year and are traded at less than half of their price just three years ago, as revenue and net profit stagnate.
Rivals Surya Citra Media — which operates free-to-air TV channels Indosiar and SCTV — and Visi Media Asia — which operates free-to-air channels TV One and ANTV — have also seen double-digit declines in their share prices.
For political parties, the decision to buy ads on television or digital media platforms eventually come down to cost and regulation.
"We think [political] ads on social media platforms will increase. Besides attracting a growing base of users, the cost to advertise on those modes is relatively cheap," said Eddy Soeparno, secretary general of the National Mandate Party (PAN).
According to a General Elections Commission (KPU) regulation issued in 2016, political parties that advertise on mass media outlets need to get approval from the commission beforehand. KPU decides how many commercial ads are allowed on such outlets and their duration.
Political parties only able to place a maximum of 10 ads per day on TV, each not allowed to exceed 30 seconds. To advertise on social media platforms, political parties must first register with the commission and deactivate any ads at least one day prior to voting day.
"There are limitations set by the KPU, but there are opportunities on social media, so we will spend more on the latter," said Mardani Ali Sera, the deputy secretary general of the Justice and Prosperity Party (PKS)
Still, many analysts agree that TV networks are undervalued and there is some room for growth in the next 12 months. Analysts' median estimate for Surya Citra Media's share price is Rp 2,610 ($0.18) a piece, 15 percent higher than its closing price on Wednesday (29/11). For Media Nusantara Citra, the median estimate is Rp 1,850 a piece, or 35 percent higher than today's closing price.
Wawan Hendrayana, a senior researcher and investment analyst at brokerage firm Infovesta, said that historically, campaign funds have typically targeted traditional media outlets and consumer goods, while incumbent governments pump funds into infrastructure developments to show off tangible progress to the electorate.
For consumer goods companies, that means they need to "put more ads on TV and to try to capture and maintain a market share amid the rise of purchasing power," Mirae Asset Sekuritas analyst Christine Natasya said.
Television ad spending grew to Rp 85.7 trillion in the first nine months this year, up 12 percent from the same period a year ago, according to data from market research firm Nielsen. That growth was driven by ads from online services, mobile gadgets and consumer goods. However, government and political ads, despite shrinking by about 9 percent in the same period, remain the largest contributor to TV ad spending.
"We do not have any projections for the upcoming 2019 election year, but we see that TV still dominates political ad spending, especially in advanced countries," said Hellen Katherina, the executive director and head of media monitoring business at Nielsen Indonesia.
PAN's Eddy said that television remains the most popular form of mass media in the country and added that political parties may need to reallocate funds to place ads on TV channels to reach a wider audience in the run-up to next year's regional elections and 2019's presidential election.
"Citizens of big cities are avid users of technology, but Indonesia is vast and people in smaller cities still prefer watching TV over using smartphones," said Mirae's Christine.