Virgin Media’s subscriber boom continued into 2021, despite a marked price rise in Q1, benefiting from lockdown and continued demand for higher speed broadband.

ARPU remained weak in Q1, suppressing revenue growth, but this will recover (somewhat) in Q2 as the price rise takes effect, countering the current disconnect between volume and revenue growth.

The merger with O2 is set to complete in June, with much operational pre-merger preparation already done, but the key strategic questions appear yet to be decided.

Market revenue growth sunk back to -3% in Q4 from -2% in Q3, with further backbook pricing and lockdown effects to blame .

Backbook pricing will improve with numerous price increases announced, but these will only start to take effect in Q2 2021.

Demand for broadband and ultrafast looks promising, but will also take time to filter through to revenue, with Q1 again lockdown-affected.

Goods ecommerce accelerated in 2020 by four years above trend to reach 28% of retail sales (excl. fuels) from 19% in 2019. We anticipate that ecommerce in 2021 will remain in the same share range of 27-29%. 

Food and drink grew faster than any online category in 2020, doubling to over 10% of associated sales. Aside from food and drink, the agony of zero sales on the shuttered high street continued, with over half of all sales being online in 2020, likely persisting in Q1 2021.

Offline retailing will recover due to deconfinement and the share of ecommerce will edge down in Q2 2021 and thereafter, but these new shopping habits will be sticky and anchored by persistent work-from-home, driving all retailers that are left standing to massively adopt online channels and associated advertising media.

Facebook emerged from 2020 reporting record revenue growth of 22% over the year, built on its huge volume of usage, its simple buying tools and its trove of first-party data.

Facebook’s ability to match third-party data for targeting and attribution is also central to its success. However, Apple and Google are restricting data-matching tools like third-party cookies and mobile IDs, and Facebook is moving to minimise the damage.

Facebook is trying to turn its sites into storefronts by launching ‘Facebook Shops’. It is also taking public stands on the use of data for advertising, and on the need for brand-building in marketing plans. These are conversations all advertisers and media owners should be engaged with.

Virgin Media’s subscriber growth continues to be very strong, and it looks like next quarter’s price rise will (at worst) only stall, not stop, the renaissance.

ARPU was hit in Q4 by the postponed price rise, and it will likely remain in decline in 2021, with regulatory pricing pressure and lockdown effects still weighing, despite firm new customer pricing.

Nonetheless, accelerating subscriber growth is expected to drive group revenue growth positive again (helped by B2B growth), and Virgin Media’s main strategic problem—its fibre trilemma—looks like it will be dealt with after the merger with O2, expected to close mid-year.

Amazon advertising grew by 52% in 2020, growing at a faster rate than Google and Facebook, with even more headroom to expand in 2021.

Amazon is poised to benefit from another pandemic year after investing heavily in warehouse safety and aggressively expanding its logistics capabilities.

Expansion in groceries is likely in 2021, while Amazon's brand-focused strategy takes a back seat. Clarity over regulations in India will drive long-awaited expansion.

The Consumer Electronics Show (CES) this year was held virtually, with announcements revolving almost exclusively around the pandemic and addressing changing consumer needs. The evolving use of tech at home was a particular focus for brands as consumers are now demanding more of their homes than ever before.

Following a record 2020, ecommerce was a topic that garnered a lot of attention, with retailers emphasising the importance of a consumer centric 'digital first' strategy, accepting the fact that ecommerce is going to be bigger than it ever has been.

Amid increased tech use at home, moves to ban third-party cookies and impending regulatory changes to data collection in the US, the conversation around data and privacy was more prominent than ever before. First-party data is going to be more valuable, even if tracking restrictions limit what can be done with that data.

TalkTalk’s latest results were mixed at best, with ARPU and revenue growth improving off a low last quarter, but net adds worsening, EBITDA falling sharply and full year EBITDA guidance suspended.

Its outlook remains challenging, with the move to high speed still a drag on EBITDA, and the migration to ultrafast a further (even greater) challenge, although this brings opportunity as well, especially if the company can move away from its discount brand focus.

Its prospective new owners highlight the need to invest in brand, systems, and full fibre capabilities to meet this challenge, but it is not clear where the money to do this is coming from, and it is also not clear if the desire to ‘reposition the brand’ includes a move upmarket.

Market revenue growth improved to -2%, after the sport-affected -6% last quarter, but was still low by historic standards.

Backbook pricing pressure is still hitting the market, and this will not improve until 2021 at the earliest.

Demand however looks strong; broadband adoption has re-accelerated, and the early signs of ultrafast adoption are encouraging.

On 1 October, Google CEO Sundar Pichai announced $1 billion for worldwide news publisher partnerships for a novel News Showcase product, helping them to distribute their content to a new audience.

It is an important milestone: for the first time Google will pay publishers to curate content in the Google News app (initially), and to provide unpaywalled access to articles on publishers’ websites that users can click through to.

In so doing, Google is defusing the simmering conflict with publishers in major markets, and showing policy-makers its willingness to collaborate with a news industry facing existential threats.