Internet advertising grew 15% YoY to €17.7 billion across Western and Central & Eastern Europe in 2010, according to provisional figures from IAB Europe
As in the US, growth in display, increasingly powered by social media, outpaced that of search, with display accounting for 33% of spend (up 3 ppts YoY)
We have updated our forecasts for 5 key markets – UK, Germany, France, Italy and Spain – and now project aggregated growth of 10% in 2011 and 13% in 2012
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.
Facebook's audience and consumption growth is now generating substantial and rising display advertising revenue, with consensus estimates of $2 billion in 2010, up 160% YoY, and it will overtake Google on this count this year
The social network's growing position as the centre of the internet experience is enabling it to become a platform for other services, such as e-commerce, making it an increasing strategic threat to Google, as well as other players in the digital media
More importantly, like Google before it, Facebook’s scale and function has the power to disrupt the digital e-commerce and marketing models built over the past decade
European mobile revenue growth improved very slightly in Q4 2010, up by 0.1ppt in reported and 0.2ppts in underlying terms, but remained negative
While the improvement is welcome, growth remains very subdued compared to pre-recession levels, especially in Italy and Spain, which continue to lag the growth of the UK, Germany and France
The outlook for mobile revenue growth is bleak, with severe MTR cuts in Germany and the UK likely to drive growth down again over the next six months
French ISPs are about to enter a disruptive four month window of penalty-free broadband subscriber churn, triggered by the VAT rise on IPTV
SFR has followed Iliad’s Free by offering unmetered fixed-to-mobile calls at the risk of ARPU decline
We expect Free’s market share to stabilise, whilst those of SFR and Bouygues should rise to the detriment of Orange
Facebook Messaging adds email, IM and SMS to Facebook messages. Some portion of the social network’s 600+ million users will switch to Facebook for an all in one text-based communications service
Switchers to Facebook Messaging in the US will reduce the display ad revenues of traditional portals, like Yahoo! and Microsoft, which use such tools to drive traffic
Less affected is Google. Some Gmail users will switch, but Google’s core business model is selling search advertising, where it is not challenged by Facebook (yet)
European mobile revenue growth improved by 0.8ppts in Q3 to reach -0.3%, but all of this improvement and more was due to easing regulatory pressures, with underlying growth actually declining marginally
GDP growth continues to improve year-on-year, but in the current low confidence environment underlying mobile revenue growth is not (yet) responding. Smartphone sales are surging, but their net impact on revenue is hard to discern
Looking forward, the regulatory impact is likely to turn negative again for the next few quarters, so some underlying growth catch-up is required for revenue growth to stay at around zero
Vivendi is close to being in a cash position to buy out minority shareholdings in SFR and Canal+, shedding the image of a ‘conglomerate’ of partly owned and diverse assets, which has weighed on valuation Acquiring Vodafone’s 44% stake in SFR (now only a question of price) would allow Vivendi to rebrand itself as a telecoms story, serving France, with Maroc Télécom and mainly Brazil’s GVT supplying the upside To fully acquire Canal+, Vivendi’s offer will need to consider Lagardère’s option of floating its 20% stake. Owning 100% of Canal+ and SFR opens the narrative of a ‘French media/telecoms champion’ – which we find less credible
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