We forecast UK online advertising to grow by 8% CAGR to £5.1 billion by 2014, representing approx. 33% of total advertising spend, overtaking press

Search is the main growth engine, which we predict will reach £3.1 billion in 2014, due to its appeal and value to advertisers as a sales and lead generation tool

Growth in spend on social media and video networks will push online display to just over £1 billion by 2014; whilst classifieds will grow to £840 million

Late entrant Bouygues Telecom is gaining broadband market share via the quad play. Orange and SFR have now also launched quad plays, but Iliad’s mobile offers will be ready only in 2012

Iliad hopes to use its new Freebox to energise recruitment around new IPTV services in Q4 2010. SFR will also launch a new box

Led by a likely VAT hike for triple play bundled IPTV services in 2011, triple play pricing is set to rise after many years, from €30 to €35/month. FTTH upgrades in urban areas will be gaining visibility this winter

Google’s new Google Instant displays and updates results in real time as users type in queries, shaving an estimated 2-5 seconds off the average 9 seconds taken to carry out a search

Available in the US and UK now and key European markets shortly with other territories and mobile to follow in 2011, Instant will help Google to differentiate its search engine in an increasingly competitive market

Google Instant should stabilise, if not boost, the company’s share of queries, which has fallen both in the US and globally since February, and may also enhance the value of ads on Google

Part Two of our annual report on classifieds covers property, auto (used) and directories

As with recruitment, covered in Part One, a step change downwards has occurred in the underlying volumes of transactions driving classifieds in property, autos and directories

Publishers of commercially-run classified sites must contend to different degrees with the presence of Google

Advertiser interest in print editions of directories will remain as these continue to attract mainly older consumers and households outside urban areas

Advertisers face a fragmented marketplace online for directory services, as desktops are used for in-home services, while smartphone apps supply the destination services prized by the affluent, young urban dweller

Germany, the UK and France are the three largest advertising markets in Europe, worth €40.3 billion in 2009, of which €8.9 billion was spent on internet ads, 65% of the total across the continent (based on IAB Europe survey of 19 countries)

In per capita terms, the UK and Germany spend the most on advertising: in 2009, roughly €200 per head was spent in the UK and Germany, 40% more than in France

Google’s UK results and other key indicators for the first half of the year confirm that online advertising increased in line with our overall forecast for 2010

We anticipate that deteriorating consumer confidence in H2 2010 will lead to deceleration of advertising growth, including the internet – confirmed by early anecdotal feedback from agencies and ad networks

Our revised forecast for Google’s UK ad revenue is 15% YoY growth in 2010 and 11% YoY growth for UK internet ad spend to £3,800 million

There were approximately 19 million fixed broadband lines in the UK at the end of June 2010 including those used by small and medium enterprises (SMEs)

Year-on-year subscriber growth in Q2 increased by half a percentage point, following stabilisation in Q1, the first material since the early years of UK broadband

Looking at net additions in the quarter, Q2 saw a sequential drop of 23%, the lowest Q1 to Q2 sequential decline since 2005 . Year-on-year growth in net adds, at 51%, continued to accelerate rapidly

The Apple ‘antennagate scandal’ has received massive press attention, reflecting perhaps more the extent of Apple’s smartphone incumbency than the extent of the reception issues with the iPhone 4

The problem may be greater than Apple publicly admits to, but it is less than it first appeared to be. The resulting consumer confusion will not help unit sales, but we still expect them to grow, supported by a number of feature set advances in the iPhone 4

Android handset sales are growing very rapidly, and are in a sense ‘catching up’ with the iPhone; while Android may end up dominating the mid-range, the iPhone can still enjoy an (enlarged) position at the top end, provided it can maintain a premium price justification

FT has put majority stakes in Orange Sport and Orange Cinéma Séries on the block, and claims to have held discussions with News Corp. We think it unlikely that an investor would be interested in entering the French pay-TV market, dominated by Vivendi’s Canal+

We believe FT could find a buyer for Orange Sport in Disney’s ESPN, which could prove viable if a cross-retailing deal is reached with Canal+. A Eurosport merger is another option. Orange Cinéma Séries could be viable under a new owner, if it widens it distribution to other platforms

Now officially on the way out of the pay-TV production business, a welcome decision in our view, Orange can focus on improving the consumer value of the basic TV offering on the triple play marketplace

Launching in the US this autumn, with international rollout due in 2011, Google TV uses enhanced versions of the Android mobile OS and Chrome browser to deliver full access to the internet via ‘Smart TV’ sets and devices

Google TV extends the company’s vision of the open internet to the living room, beyond the PC and mobile, where internet-enabled TV sets will take increasing share, raising search revenues, with potential to take a piece of the $150 billion global TV ad market

Pay TV platform operators’ are unlikely to embrace Google TV to avoid cannibalising their own business models, limiting adoption to free-to-air TV homes, at least initially, and direct revenues are likely to be slow to develop