H3G’s European operations accelerated their underlying service revenue growth to 7.8% in H1 2012, and EBIT margin improved slightly from 3% to 4%, but the growth appeared to be significantly helped by aggressive handset subsidies in Italy, with the company’s unconventional accounting policy disguising the impact on EBIT The UK business continued to perform very well, with contract net additions strong again helped by falling churn, and service revenue growth accelerating from 13% to 14%. H2 will be tougher with more pressure on churn, but we still expect growth to exceed 10% The Italian business significantly slowed its revenue decline, from -14% to -4%, but it appeared to do this through very aggressive contract SACs, and the effects of this on EBIT are likely to be felt over the coming year
In this report we show the findings of our 2012 UK mobile user survey. The report is a wide ranging analysis of the mobile market based on our consumer research, focusing on the competitive landscape among the mobile operators and smartphone manufacturers, and the changing consumer behaviour that has and will continue to impact the market
Recent news flow and feedback from media buyers indicates that growth in UK internet advertising is slowing due to the ongoing weakness in the economy
Paid search, buttressed by its link to e-commerce and measurable ROI, is suffering less than internet display, with growth in spend on social media slowing and price deflation especially for non-premium inventory
Online classifieds are also being hit by the economic woe, resulting in some sectors growing more slowly and non-advertising communications taking a larger share of spend; the secular shift to the internet continues
Analysis of comScore data suggests that ad volumes fell in April on Facebook’s PC-based website in the US and UK, which we estimate account for 60% of ad revenue Seasonal effects may account for some of the decline, but increasing pressure on ad performance and pricing, due to the tough economic climate, and slowing growth in PC usage of Facebook are other probable factors As a result we expect Facebook’s ad revenue growth slowdown to continue in Q2, with audience saturation in key internet markets and increasing mobile substitution limiting future growth potential from display advertising
In this presentation we show our analysis of revenue growth trends for mobile operators in the top five European markets (UK, Germany, France, Italy and Spain). The historical analysis is based on the published results of the operators, although they include our estimates where their data is inconsistent or not complete. A copy of the underlying data in spreadsheet format is available to our subscription clients on request.
Facebook will confirm its status as an internet superpower on 18 May when it goes public at a valuation now expected to be between $93-104 billion
The social network’s revenue fell quarter-on-quarter for the first time in Q1 2012, partly due to seasonal effects, amidst a broader slowdown in annual revenue growth on the shift to mobile consumption
Investor interest is being fuelled less by current performance than longer term potential for growing Facebook’s audience of 901 million and improving monetisation
On 9 April Facebook bought the 547-day-old Instagram for about $1 billion in cash and shares, acquiring 40 million users, strengthening its positioning in mobile and photo sharing and preventing anyone else from buying it first
That Instagram could grow to be so big, so quickly, and with just 13 staff and $7 million of funding shows how precarious Facebook’s market leadership might still be. This is not a one-off – many more companies will use cloud services, mobile and social to achieve similar growth in future
This acquisition comes in the context of explosive growth in mobile and social and an accompanying land grab by Facebook, Amazon, Apple, Google and many others. More eye-catching deals are likely to follow
According to IABUK/PwC, internet advertising grew 14.4% like-for-like in 2011 to £4.8 billion, overtaking press to become the single largest advertising medium
Search was again the main growth driver, surging 17.5% to £2.7 billion last year, while display rose 13.4% and classifieds increased just 5.2% on the weak economy
We now forecast internet advertising will increase 14% in 2012 and 12% in 2013, taking spend to £6.1 billion or 36% of UK advertising, up from 30% in 2011
H3G’s European operations slightly improved underlying service revenue growth, and EBIT margin improved from 0% to 3%, but the latter figure was flattered by a change in handset subsidy accounting; without this change, EBIT would likely have been negative
The UK and Italian performances further diverged, with UK growth accelerating in H2 to +13%, and Italy decelerating to -14%, despite a renewed (and expensive) push for contract subscribers in Italy
The UK business has positioned itself well for the smartphone revolution, with its all-you-can-eat data plans particularly popular, although the resulting traffic surge may cause service quality problems in the future
Google+, the social network, has around 100 million users worldwide, although user growth appears to have stalled and usage is low on weak network effects
Facebook users, now 70% of the adult internet audience (excluding China), have no incentive to switch to Google+, starving the social network of vital momentum
Facebook is likely to dominate socially enhanced search, unless Google+ takes off, which seems unlikely