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
Vodafone Europe’s revenue growth again notched up, increasing by 0.7ppts as reported or 0.3ppts in underlying terms, with minutes volume growth accelerating by 1.8ppts
This is a little disappointing in the context of the rate of reported GDP recovery, but consumer confidence, particularly in Southern Europe, has re-dipped in the last few months, making raw GDP figures less relevant than they once were
Data revenue is forging ahead, but voice pricing is steadily weakening, and with many offers linking voice, text and data into an inseparable bundle the former may be causing the later, implying that data’s contribution to overall revenue is easy to overestimate
Subject to BBC Trust approval, Canvas looks almost certain to launch in spring 2011 after the OFT decided that it did not have the jurisdiction to review Canvas under the merger provisions of the Enterprise Act 2002. The OFT decision does not rule out complaints on other grounds, but the chances of persuading the regulators look very small
The launch of Canvas promises to strengthen significantly the free-to-air digital terrestrial platform, otherwise very limited compared with satellite and cable platforms in terms of bandwidth, but mass adoption poses numerous challenges and it is open to question whether Canvas will ever extend to more than half the DTT base
In the long term, it is hard not to see Canvas as an interim step in the growing convergence between the TV screen and the internet, raising the question of how successfully its PSB TV-centric approach can adapt to the coming challenges of the full blown digital age
Vodafone Europe’s organic revenue growth improved again, from -3.2% to -2.4%, with it enjoying a fair share of the improvement in mobile market growth driven by improving economies across Europe
EBITDA margin fell, partly as a result of weak cost control but mainly because SAC/SRCs rose as Vodafone subsidised consumers getting more expensive handsets, which involves a short term (but not long term) profitability hit
Vodafone Europe could move back into positive revenue growth this year as it rides the wave of market recovery, but short term margin targets will be hard to hit as handset subsidies continue to rise
Facebook CEO Mark Zuckerberg has set out a vision of the social network as the hub of a personalised internet based on real identities and connections – the so called ‘Social Graph’, with Facebook providing the infrastructure
Simplified tools for apps and new social plug-ins for third party sites will increase Facebook’s influence both on and off the core platform, but raise some privacy concerns
These initiatives should help to drive Facebook’s user growth and engagement and ultimately improve monetisation, which we estimate on a per user basis is now more than half that of Microsoft’s online properties
Internet advertising rose 4.2% YoY in 2009 on a like-for-like basis in the UK, according to IABUK/PwC, due to growth in search, with classified and display down; however, previously unreported spend, including Facebook, pushed the total to £3.54 billion
Last year, for the first time, Google accounted for over half of spend (versus one third in the US) and 12% of UK ad revenue, a market presence that is significantly larger than in the US
Including Facebook, now No.1 for display, and increased spend on search, our 2010 growth forecast is 11%, pushing total spend to £3.82 billion or 25% of UK advertising
Mobile content is moving to the centre of strategies for online
media. At MWC, the world’s biggest mobile conference, Google announced it now develops
all products ‘mobile first’ and Facebook reported a quarter of its 400m users access
the service through mobile
Three years after the iPhone
launched, the handset industry is catching up, adding decent user interfaces
and mobile apps to colour touch screens and taking easy access to mobile content
beyond the iPhone
Beyond the self-selecting early adopter iPhone base, we found
real evidence of companies already successfully providing mobile content to much
wider segments of the population
The internet continues to gain share of media consumption and advertising at the expense of traditional media in the UK. This report highlights key online trends in the UK and our current forecasts for internet advertising in 2010 (we will address mobile advertising separately)
Recent news flow – including Google UK’s Q4 2009 results and reports of facebook’s rapid revenue growth – points to a better than expected recovery in internet advertising. On a like-for-like basis, we estimate that online ad spend grew 2.2% last year to £3,425 million or 23.5% share of total advertising
We have raised our 2010 UK forecasts and now predict that Google’s UK gross revenue will grow 12.5% YoY, helping to drive online advertising spend up 7.6% to £3,685 million (excluding sites currently not reported by IABUK/PwC)
The economy remains an issue, with the potential impact of tax rises and cuts in Government spending in H2 threatening the already anaemic recovery. In our view, the balance of risk is still on the downside
Vodafone’s European revenue growth improved by 1.4 percentage points in the December 2009 quarter to reach -3.2%, the first improvement since the start of the economic slowdown in 2008
While data revenue is growing fast in absolute terms, its contribution to growth is flat to slightly down, with the main driver being more traditional services improving due to the recovery in year-on-year GDP growth
We expect revenue growth to continue to improve as economic comparables improve, with a return to positive growth likely by the end of 2010