Property is the second category in our annual series of reports on UK classified advertising, following UK classifieds overview and recruitment outlook [2014-094] and with autos to follow. Our property market report analyses the key drivers in the communications marketplace for UK domestic property, notably transaction rates and house prices, but also substantial developments in government policy. We analyse the estate agent marketplace and drill down into expenditure patterns for property advertising across all media, and provide five year forecasts. We also look at the online property advertising markets in Australia and the USA to gain a broader perspective on potential developments in the UK. Here, the competitive battle between Rightmove and Zoopla continues; estate agents' plans to stem the duopoly’s pricing power with the launch of a new portal in January will struggle to achieve consumer momentum unless there is a huge marketing investment.

Our annual series of reports on expenditure on advertising in the classified verticals of jobs, property and autos, kicks off with an overview of the print-to-digital transition that lifted the share of digital to over 50% in 2013. In summary, digital consumers are becoming more sophisticated and mobile traffic growth is accelerating. We thus expect classified services to be under pressure to innovate more in the next two to three years, particularly with improved mobile offerings. Zoopla Property Group, Rightmove’s rival in the UK online property duopoly, floated on the LSE in early 2014; both companies retain healthy growth prospects with pricing power stemming from a lack of credible competitors. In contrast, Guardian Media Group announced the sale of its 50.1% stake in Auto Trader to private equity group Apax in January. However, as the used car market starts to recover, the timing could be right in 2015 for Auto Trader to come back to the market in some form.

Our recruitment segment analysis focuses on the UK labour market’s continued improvement in 2014 while the outlook for 2015 and 2016 is still broadly positive. At the same time, the online recruitment market remains highly fragmented. On the advertiser side, the myriad of companies and positions being filled splinters the online market across a number of job boards while aggregator Indeed and professional network LinkedIn continue to grow market share. On the jobseekers side, professionals are increasingly being drawn to LinkedIn. We also see significant potential for category specific professional networks in certain recruitment verticals to continue building audiences and start attracting employer expenditure on recruitment advertising. LinkedIn has emerged as the biggest online supplier in the UK and exercises a degree of pricing power due to its audience scale, although competition remains intense. We project annual growth in online expenditure on recruitment to range between 4-8% to 2017, returning the total recruitment advertising market to low single digit growth as online gains gradually start to outstrip decline in print.

Recently we attended the inaugural IABUK Digital Upfronts, in which 11 digital media companies pitched their wares to advertising agencies and advertisers.

UK growth in internet advertising is now powered by mobile, social and video, and these three areas were the focus of the Upfronts.

The Upfronts are symbolic of the rising importance of digital media in the UK and worldwide; while broadcast television remains the king of brand advertising, marketing and advertising are becoming less TV-centric.

In the last few days we have spoken to key authorities in advertising in the US, UK and Europe.

We have been exploring the critical debate: the degree to which TV consumption and TV advertising are shifting and will shift to digital. Recent media coverage has argued traditional TV business models could start to unravel in the medium term. We disagree.

Apple has fulfilled its promise to roll out innovative new products this year, launching Apple Watch into the nascent wearables market and Apple Pay, a new mobile payments service, as well as moving the iPhone into ‘phablet’ territory.

The larger-screened 6 and 6 Plus should revive growth in iPhone sales and ASP, as well as providing another variable to compete in the mid-tier handset segment; Apple Pay further enhances Apple’s lock on its customer base.

Apple Watch’s likely impact is harder to discern; to date sales of smartwatches have been lacklustre but although Apple’s offering is the most commercially viable yet, it still feels like a solution in need of a problem.

Older adults have always watched more TV than younger adults, and even more TV news. The gap has widened over the last five years following the rapid rise in online news consumption via websites or apps among the under 35s, where online is now used as widely as TV for getting news.

Recently published survey data by Ofcom (UK) and Reuters (10 countries) highlight the importance of online as a tool for accessing breaking news, whether search engines, news websites or social networks, along with an expanding field of news content.

Online, with its emphasis on reading rather than watching news stories is no direct substitute for TV. The BBC is by a large margin the most widely accessed online source in the UK, while the challenge for the other TV news providers is to develop commercial models that successfully integrate broadcast with online.

Netflix has always been highly secretive and released very few details about its international streaming performance in individual countries beyond the general statement that it is seeing encouraging progress everywhere

Now at last we can assess Netflix growth trends in the UK with a high degree of confidence as a result of a question added to the BARB ES questionnaire at the beginning of 2014, which is administered to large quarterly samples of 13,500 respondents

On the basis of BARB ES results for Q1 2014, we have revised our UK growth estimates upwards, believing Netflix paid for subscriptions to be above the 3 million mark as it heads into central Europe. Also most striking is Netflix’s popularity among younger households – clearly the cool thing to have

The UK population is ageing, with over-40s in the majority for the first time in 2014/15. Since 2002, Baby boomers (young in the 1960s) and Gen X (1970s) have increased their shares of the UK’s wealth, disposable income and consumer expenditure.

Baby boomers and Gen X remain very firmly engaged with traditional media alongside the internet – older demographics are much more multimedia than younger demographics, who are disengaged with traditional media to the benefit of digital media.

Baby boomers and Gen X are engaged consumers, inclined to switch brands and adopt technology, and brands that optimise exposure to them through traditional media will gain share.

The UK’s love affair with mobile devices continued in Q1 2014, with four times as many smartphones and tablets as PCs shipped during the quarter. Smartphones now account for three quarters of mobile phone sales, and shipments of tablets exceed sales of PCs, though the latter improved during the quarter

The device mix for internet access is changing rapidly: more people now have a smartphone than have a laptop in the home, though the overall PC audience (including desktop) is still larger. For many people, smartphones are becoming the core device to get online, and almost half of all households have a tablet

Commercial revenues derived from mobile devices still trail their share of internet usage but the gap is closing: in Q1, smartphones and tablets generated a third of e-retail sales, while mobile ads represented a fifth of internet search and display advertising

The British Video Association has released full year figures for 2013 for the UK home video market, which reveal that growth in digital video, especially in over-the-top subscription services e.g. Netflix, offset the fall in spend on physical media last year, reversing the previous downward trend

The bad news is that DVD’s decline is set to quicken, as the number of households with stand-alone players has begun to fall, though there should be some respite this year from sales of huge box office hits such as Disney's Frozen and Warner Bros.' Gravity

Ultimately, we see rising penetration of high speed broadband and connected devices including the TV set as a net positive, as more people have more ways to spend money on video, but the shift from purchase to rental and subscription options will mitigate the benefits