Google has confirmed the first content partners for the US version of Google TV – including Turner, HBO and Netflix – which is expected to launch within the next 2 weeks

No new distribution partners have been announced and rumoured pricing for enabled Sony TV sets suggests that Google TV will initially be a premium product

At present, Google TV’s main selling point appears to be providing a decent web surfing experience to the TV set – in our view, better content is needed if it is to compete with Apple TV and other internet TV devices

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

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

A newspaper pay wall subscriber is worth only a quarter to a third of a print buyer: even if every single print buyer is successfully converted to the pay wall, newspapers will still face a basic problem of scale

Pay walls will not be able to compensate for lower revenue per reader by expanding the audience for paid news, due to the long term decline of circulation, free online news, 24-hour broadcast news and free-sheets

Future change will be radical: publishers may need to consider producing a newspaper its loyal readers recognise and value with just 200 rather than 500 journalists

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

Classifieds generated £5 billion in 2009, down 13.3% on 2008, accounting for one-third of UK advertising spend

The migration of classifieds from print media to online media accelerated during the recession, with no prospect of a ‘bounce back’ -recruitment has fallen 65% from its peak of £1.5 billion in 2004 to (our estimates) about £649 million in 2009 and down to £538 million in 2010

Key players do not charge on a performance basis, so online and print media retain similar charging models

Digital revenues on a like-for-like basis are discounted by 60-70% of print, with online players offering services, such as display for branding purposes or web marketing to SMEs, to add to core advertising income

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

On 2 July News International switched Times online from a free to a subscription service, probably losing at least 90% of its traffic and shifting its strategy from reach and scale to a more traditional targeted brand and loyalty model

The challenges are substantial: while the Times is competitively advantaged with a strong roster of star writers and columnists, NI knows news itself is more commoditised than other content types, and most newspaper and broadcaster sites have been giving away news for a decade

News Corp may well realise the most benefits from the Times subscription service in a larger convergence play, aggregating audiences across group services such as Sky pay-TV and broadband, Sky News and the Wall Street Journal

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