Market revenue growth fell in Q3 to below 1%, and may drop below zero next quarter as existing customer pricing comes under more pressure
New customer pricing is however rising, and average pricing should rise much further as ultrafast increases in availability and popularity
Political enthusiasm for full fibre should be welcomed, although some specific plans are likely to do more harm than good if implemented literally
With elections in the UK in December, and in the US in 2020, online political advertising is receiving intense scrutiny. Google has announced limits on targeting, while Twitter has banned politicians from buying ads
Facebook is the big player in online political ads, and it continues to allow targeted political ads, and to carve them out as exempt from fact-checking
Facebook wants to keep Republicans on side and surf the revenue opportunity, but pressure will increase with US elections, and we expect Facebook to bring in restrictions
Mobile sector returns are low, particularly for smaller-scale operators, with H3G earning less than its cost of capital. Regulatory initiatives, spectrum auctions and 5G look set to worsen this picture as H3G strives to gain viable scale
Back-book pricing is crucial to the returns of fixed challengers. Regulatory intervention is likely to lead to a waterbed effect in the fixed sector and exacerbate challenges in mobile
New entrant business case in full fibre is limited to de facto monopoly opportunities. There is the potential for BT’s returns to increase markedly if it gets full fibre right but new entrants’ inferior economics are unlikely to offer sufficient investor appeal
The UK TV advertising market, in decline since mid-2016, could benefit from a liberalisation of advertising minutage if Ofcom reviews COSTA and decides to make changes
Broadcasters could gain from the flexibility to devote up to 20% of peaktime minutes to advertising under the EU’s revised Audiovisual Media Services Directive (AVMSD)
Ofcom could also level the playing field between PSB and non-PSB channels, although more minutes of advertising on TV is unlikely to inverse the medium’s decline
The Information Commissioner’s Office reported on the UK online advertising sector, finding common industry practices unlawful under a strict interpretation of the GDPR and UK privacy law
The ICO focused on problems around transparency, consent and data sharing in the Real-Time-Bidding ecosystem, which comprises 16% of UK online ad spend, but most of publisher online ad revenue. The ICO is giving the industry six months to shape up, with the next steps still unclear
The Competition and Markets Authority has had under consideration an investigation into the entire online advertising sector, but is hampered by Brexit-related considerations
The UK government is now consulting on a wider TV advertising ban until 9pm for food and drink high in fat, salt and sugar (HFSS), to combat childhood obesity
TV and TV advertising are not the cause of children being overweight or obese (O+O). Policy change in this area should inform and educate parents and young children, as they have in Leeds and Amsterdam
With 64% of the UK population being O+O, obesity is a complex societal issue requiring a multifaceted approach. The evidence from existing rules, and plummeting TV viewing amongst children, says that further restrictions on TV advertising will be ineffective in curbing the rise of obesity in the UK
After the most challenging period in its history since 2012, Facebook has been able to stabilise its fundamental metrics and announce a major product overhaul
Despite talk of a business model pivot, Facebook’s focus remains on advertising, whose growth will remain concentrated in developed markets
News publishers wishing to stay relevant on the upgraded product set need to target exclusive layers of social interaction, with groups particularly important
Sky made a surprisingly weak start to 2019, with revenue growth decelerating to 1.9% (the first time below 4% since the European businesses merged in 2015), due to weaker ARPU trends.
However, Sky expects improvement to follow, blaming one-off factors in the quarter. The ARPU weakness drove EBITDA down 11.3%, but this should bounce back across the rest of 2019 as football rights costs turn from a drag to a positive.
Comcast highlighted collaborations with Sky across tech, advertising, content distribution and even news, stating it is on track to achieve the anticipated $500 million in annual synergies over the next couple of years.
Out of Home (OOH) is bucking the trend in UK traditional media and continues to grow, driven by the digitisation of inventory as the paper estate recedes
Digital OOH now accounts for 50% of total OOH ad spend. Soon digitisation will slow, as much OOH inventory cannot be converted from posters to digital screens; sustained growth will require a different form of change
The industry is amidst structural shift – driven by consolidation and automation – which could be wholly positive, but a lack of cooperation between major players risks stifling innovation and the medium’s growth
UK online advertising spend continued its double-digit growth in 2018, up 11% to reach nearly £13bn in annual spend or 58% of the total advertising market, but a no-deal consumer downturn could nearly stop growth this year
Google, Facebook, Amazon, professional services firms and the largest marketing cloud companies are the biggest winners, while content media, media agencies and independent advertising technology firms languish
Self-regulation has improved as pressure mounts on advertising technology firms, but interventions by both privacy and competition authorities are now inevitable