What is the state of the affiliate marketing landscape in Indonesia?
The adoption of affiliate marketing in Indonesia is fueled by the country’s growing internet penetration rate and the proliferation of social media platforms. With over 270 million internet users and a high engagement rate on platforms such as Instagram, Facebook, and YouTube, Indonesia provides a fertile ground for affiliate marketing. In Indonesia, affiliate marketing platforms have provided businesses and affiliates with innovative ways to monetize online traffic. Capitalizing on their large follower bases, many local influencers and content creators utilize affiliate marketing to promote products and earn commissions. Businesses also benefit from this marketing model as it allows them to pay for actual performance, reducing the risk of ineffective ad spending.Additionally, affiliate marketing helps in reaching niche audiences and building brand trust through endorsements by popular personalities. Among prominent platforms for affiliate programs in Indonesia, Shopee, one of the largest e-commerce platforms in Southeast Asia, stands out. With the Shopee Affiliate Program, Shopee leverages its massive user base in Indonesia to drive sales through personal affiliate links. Other top-of-mind platforms for affiliate programs in Indonesia include TikTok, Tokopedia, and Lazada.
Navigating the challenges and prospects of affiliate marketing in Indonesia
Despite its rapid growth, affiliate marketing in Indonesia has faced hurdles such as regulatory issues. In a bid to protect domestic e-commerce platforms, micro, small, and medium enterprises (MSMEs), and consumer data, the Indonesian government introduced stricter regulations on e-commerce transactions in late September 2023. The policy aimed to ban e-commerce activities on social media platforms and to prohibit foreign vendors from operating on domestic e-commerce sites. This protectionist policy had a direct impact on TikTok, one of the most popular platforms for affiliate programs in Indonesia, putting the livelihood of millions of affiliate creators on the platform at stake. TikTok was finally able to resolve this issue after they acquired a 75 percent stake in Tokopedia and integrated TikTok Shop Indonesia as part of Tokopedia’s business. Another glaring problem that affiliate marketing still faces is the potential for fraud. Instances of fraud, such as the practice of buying and selling creator accounts, fake traffic, and false conversions, have prompted the need for stricter monitoring and verification processes.Nevertheless, as businesses continue to recognize the value of affiliate marketing, the industry is expected to evolve. More importantly, this marketing strategy also seems to have been well accepted by Indonesian consumers, especially by those who rely on reviews from expert bloggers or recommendations on social media as a means to discover brands. By including more personalized and targeted marketing efforts, as well as incorporating more sophisticated tools and strategies to maximize effectiveness and transaction safety, affiliate marketing can further drive e-commerce growth in Indonesia.
