Barely heard of a decade ago, “media influencer” has become a household term and a promising profession among Indonesian millennials.
Unlike conventional jobs, making it big in this one requires the new media proficiency of business-minded kids from the smartphone generation.
When she started posting travel articles and photos on her social media accounts four years ago, Kadek Arini didn’t imagine that her new hobby would become a rewarding profession.
Now, the 25-year-old is proud to present herself as a professional travel blogger.
Unlike the “conventional” writer or journalist, her title is “social media influencer,” a catchphrase unknown 10 years ago, when social media were in their infancy.
The new profession was born out of the growing popularity of the social media.
As users spend more time in social media, advertisers started to spot social media users who have huge numbers of followers or “friends.”
These users – who could be a traveller, a makeup artist, a stay-at-home mom who loves cooking, a teenager or an office worker who likes to make parody videos – upload their works to social media platforms like Instagram, YouTube, Facebook or Twitter.
Their large following is the result of regular postings and interesting content that viewers outside their close social circle.
Once the good stories, nice photos and funny videos have attracted many followers, then comes the law of attraction; brands will naturally also come to advertise their products.
Unlike in the conventional media, where celebrities are hired to promote certain products, in the new media advertisers need the influencers to give their promotional testimonies and favourable personal opinions about the products.
Kadek decided to quit her regular job as an interior designer in 2013 and shifted career to a media influencer, knowing she could earn enough with her hobby.
Recommendations and testimonials as a way of promotion are, in fact, a traditional method of advertising. Influencers are hired because they can represent the opinions and recommendations usually given by our close social circle.
According to sproutsocial.com, an online social media management specialist, 74 per cent of consumers rely on social networks to guide purchase decisions.
Some influencers diversify their business after achieving social media celebrity status.
Elizabeth Christina, a makeup artist and beauty blogger who owns @bylizzieparra with 122,000 Instagram followers, for example, launched her own beauty brand called By Lizzie Parra (BLP) last year. A signature product is lipstick.
“I rarely found lipsticks that fully satisfy me. Sometimes, I like the colour but not the texture and vice versa,” she said.
With her legion of followers and the reputation she commands, BLP lipstick sells like hotcakes.
Her company reached the breakeven point only three months after it was launched.
However, it turns out that the number of followers is not the only thing that makes the account owner a media influencer and thus attracts advertisements.
Baskoro Adiwiyono, the communications head of low-cost carrier Indonesia AirAsia, said the following size was important, but other factors, such as the owner’s engagement with followers, was equally determining.
“We sometimes pick an influencer who does not have many followers but they have a really good engagement with their followers,” he said.
AirAsia usually focuses on stories that can inspire their readers when hiring influencers to promote its products.
Besides posting pictures or videos, many influencers also reply to questions asked by their followers or take their advice to maintain good relations.
Such gestures are rarely done by celebrities groomed by traditional media like film or television.
The business continues to grow rapidly, along with the rising number of people who have smartphones, which are increasingly affordable, too. Indonesia AirAsia, for example, started to pay attention to social media in 2000 for its promotion but it only began to involve influencers in its marketing strategy three years ago.
“Regarding the portion of commercial programs, it is already fifty-fifty with conventional media,” Baskoro said.
However, he predicts that it will take time for social media influencers to take a bigger chunk of the commercials market from the more established industry, because they serve different purposes, and thus different audiences.
Many companies still spend most of their advertising budget on television.
Data analyst Nielsen reported that ad spending for TV and print media increased 24 per cent in the first quarter of 2016 to Rp 31.5 trillion from Rp 25.5 trillion a year earlier. And the main contributor to growth was television.
Ade Putri Paramadita, a consultant-cum-social media influencer, has the same prediction.
She said that, although social media influencers’ share keeps growing, they earn much less than the conventional media from ads.
For example, Kadek’s price tags range from Rp 1.5 million (US$112) to Rp 2 million per Instagram post. Her clients usually pay more than Rp 4 million for a three-minute video on YouTube.
Meanwhile, Lizzie charges between Rp 5 million and Rp 10 million per Instagram post. “I will ask for a makeup tutorial,” she said.
Many influencers who already have national celebrity status set much higher rates of Rp 10 million to Rp 20 million per post.
A more common way of making money in the digital era is running online shops.
Twenty-three-year-old Reva Nadya set up her online store @meinewelstore on Instagram instead of taking one of the 9-to-5 office jobs offered to her upon her graduation from Tarumanagara University, Jakarta.
“At first, I sold pocket bags from Bath and Body Works, but then, I finally decided to focus on selling Disney products,” she told The Jakarta Post.
Reva imports the products from various Disneyland stores in the US, Hong Kong and Japan. She purchases the items either from Indonesians living abroad or directly through the store websites.
“I also travel to Disneyland myself to buy things that are not available on the websites,” she said.
Although it usually takes more than a month before customers can get the products they fancy, people from across Indonesia are still keen to purchase from her virtual store.
Meanwhile, Lizzie charges between Rp 5 million and Rp 10 million per Instagram post. “I will ask for a makeup tutorial,” she said.
Many influencers who already have national celebrity status set much higher rates of Rp 10 million to Rp 20 million per post.
A more common way of making money in the digital era is running online shops.
Twenty-three-year-old Reva Nadya set up her online store @meinewelstore on Instagram instead of taking one of the 9-to-5 office jobs offered to her upon her graduation from Tarumanagara University, Jakarta.
“At first, I sold pocket bags from Bath and Body Works, but then, I finally decided to focus on selling Disney products,” she told The Jakarta Post.
Reva imports the products from various Disneyland stores in the US, Hong Kong and Japan. She purchases the items either from Indonesians living abroad or directly through the store websites.
“I also travel to Disneyland myself to buy things that are not available on the websites,” she said.
Although it usually takes more than a month before customers can get the products they fancy, people from across Indonesia are still keen to purchase from her virtual store.
Currently, @meineweltstore has approximately 28,000 followers on Instagram. She serves around 10 customers a day, booking average sales of about Rp 70 million (US$5,250) per month, or Rp 15 million in net profit.
As the social media sphere keeps developing, professional influencers may use multiple platforms to maximise their income. They generally earn more than employees of conventional companies.
Kadek, for example, says she can save between Rp 15 million and Rp 20 million per month, which is meager compared to more established online entrepreneurs.
According to socialblade.com, comedian Raditya Dika earns anywhere between S$3,200 ($2,288) and S$50,800 per month from his YouTube channel, a lot more than the salary of a mid-level manager.
Raditya, who has made a name for himself as a blogger and writer, touches various topics in his YouTube channel to entertain his 2.26 million subscribers, ranging from dining, video games, film reviews to small talk about trivialities like his kittens.
He regularly tops socialblade’s list of big earners.
YouTubers like Raditya rely on large numbers of views and subscribers to attract commercials.
But despite the large following, advertisers are reluctant to hire well-known YouTubers as media influencers and place ads on the platform’s videos the way they do on TV, because making a truly attractive video is way more complicated than creating still pictures.
“Video costs a lot more than still pictures,” Ade said. “Usually they prefer to hire a professional production house to produce commercials.”
This all may sound easy for the technology-savvy millennials, but obviously it’s no bed of roses. It requires a whole lot of dedication, skills and tenacity to be a successful influencer. There is no shortcut to success.
Buying followers or plagiarizing other people’s work are common in social media, but in the end, only the genuinely creative will make it. “We can tell who wins followers with good work from those who buy them,” Ade said.
Taxing media influencers is timely
Imagine a sponsored trip to Paris on a maiden flight, or to Hong Kong to thrill oneself gliding on an aerial tramway from the top of one hill to another in the famed Ngong Ping 360, or attending the launch of a beauty product before leaving home. These are just the kind of privileges that social media influencers, or endorsers, frequently enjoy.
Their job is to spread the word to their massive following about the virtue of the sponsors’ products or services. Some are so successful they become social media celebrities in their own right and fortunes follow.
After years of pondering, it has been decided that tax officials will someday be knocking on their doors. Since last year, the Finance Ministry’s Directorate General for Taxation has been busy readying the necessary legislation and infrastructure, although it stops short of setting a timeframe.
Once the regulation is in place, both monetary and in-kind benefits will be taxable. Hopefully, this will create a sense of justice among the millennial and traditional income earners – both individuals and legal entities.
The temptation is just too fat for the government to ignore. The Directorate General of Taxation has predicted that tax revenue potential from the endorsers could reach up to US$1.2 billion annually.
“We’re are still working on the database because without a powerful system, it will be hard to digitally administer the taxation,” the ministry’s revenue and compliance director, Yon Arsal, told The Jakarta Post.
The government has been seriously considering the plan since last year, considering the establishment of a task force on e-commerce, with media influencers being one of its targets.
It is also strengthening its human resources to handle the online business. “The business scheme will be totally different from conventional ones. We need a new approach to solicit taxpayer compliance,” he said.
The complex collection system has resulted from a lack of legislation. Most online businesses, especially those run by individuals, occur without proper government supervision. They may be shut down today but can reappear the next day, usually under a different name.
Benefits that media endorsers earn are not always in the form of cash but can be in kind. In that case it will require a more sophisticated system to assess and determine monetary values.
Ade Putri, an influencer on travelling and social activity, acknowledges that she often receives rewards in kind “worth a lot” in monetary terms. Often, it’s the sponsors who pay tax, which is deducted from the payments.
Although many endorsers admit that they do not pay income tax, they have expressed their willingness to comply with the future law.
Diwantara Anugrah Putra, better-known as Tara, and his younger brother Gema Cita Andika, who have been building their fame and fortune with their short movies and video tutorials on YouTube, support the government’s plan because all citizens’ income is basically taxable.
“I have no problem with that,” Tara, who once created an endorsement video for Hollywood film producer Steven Spielberg.
The brothers claim that they have paid all their taxes directly deducted from the advertisers who place ads on their YouTube channels called Tara Arts Movie, Tara Arts Game Indonesia, Tara Arts Network and Gema Show Indo, each offering different themes.
As an established online venture, their steady income comes from multiple sources, primarily YouTube ads and brand deals.
“Our income ranges from tens of millions of rupiah to hundreds of millions of rupiah a month,” Tara said.
But not everyone is happy with the government’s tax plan. Owner of Instagram store @mieneweltstore, Reva Ayu Nadya, argued that the policy would unnecessarily burden small businesses like hers that the state should support instead.
“I import merchandise from overseas; I have already paid import duties and taxes,” the 23-year-old woman, who sells products she buys from Disneyland theme parks across the globe, said.
Legislator Dave Laksono is an advocate for the tax plans. Although theoretically the government can use the existing income tax laws, the legislation lacks specifics when applied to online businesses.
“The future law should not only regulate taxation, but also other aspects, such as legal protection for the entrepreneurs,” he said.
While the online business seems lucrative, it has its own risks. Some have reported substantial losses after their accounts were irreparably hacked and had to create new ones and start their business practically all over again.
Perhaps next time Dave and his fellow lawmakers could conduct their notoriously extravagant comparative studies overseas, they could go to Singapore, which introduced similar taxes for media endorsers last year.
