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March 20, 2017The World of Wearables – Disruption is Underway
ReportsAustralians are willing to adopt wearable technology though high price points and perceived value are limiting purchases. To date, uptake of wearables has been predominantly by early adopters and spurred by niche uses in the health and fitness industry. Industries are yet to capitalise on the full potential of wearables. Some industries have begun to adopt basic functions, such as the finance industry, using it to personalise products and increase payment efficiency. The next growth phase of wearables will be fuelled by artificial intelligence, the Internet of Things and virtual and augmented reality. Significant disruption is expected as use-cases are identified across new and major industries.
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March 7, 2017Mobile World Congress: a look at tech & media
ReportsSmartphone hardware did not take centre stage at the year’s premier mobile industry event in Barcelona, with license-built Nokias generating as much excitement as flagship smartphones from HTC, Sony and Samsung. In VR, AR and IoT, the most impressive signs of progress were under the hood rather than in flashy device announcements – as the actual use cases become more specific, so does hardware and software. Concrete business applications around the personal data generated by connected mobile devices was a major theme, with new types of automation and personalisation in services and media – and a growing market for security.
Sector AI, Augmented Reality, Internet, Media, Mobile, Mobile and Wireless Technology, Technology, TV. -
February 28, 2017Fashion’s new look: digital sets new trends
ReportsFashion underpins the growth of ecommerce; online took a 14% share of all fashion retail in the UK last year and is set to rise further, challenging the economics of physical retail. Mobile is a key driver, it is changing research and shopping habits, and in turn affecting supplier product cycles, merchandising and marketing strategies. Social media has disrupted the traditional shopping funnel, changing how trends and styles proliferate and shifting the sites of authority and influence in a £66 billion sector. -
February 6, 2017Enterprise cloud on the horizon
ReportsEnterprise cloud computing democratises access to IT capacity ranging from specialised software to platforms to infrastructure, transforming cost structures in sectors like media and retail. Cloud enables unprecedented scalability of bandwidth for digital media services like Pokémon Go and Netflix, while also hosting the back-end for advertisers and retailers. As the industry consolidates quickly, intense competition among Amazon, Microsoft and Google is delivering value to customers and boosting adoption.
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January 27, 2017Netflix at 10: still growing, still spending
ReportsNetflix celebrated the 10-year anniversary of its streaming service by posting its largest quarterly rate of subscriber growth, adding just over 7m new subscribers in Q4 2016, smashing its own forecast for the period of 5.2m.
5.12m of the new subscribers were for its international services, attributed to acceptance of its growing suite of English language original programs. But growth is just as likely related to the bolstering of overseas offerings with acquired programming, after launching worldwide with relatively small libraries.
While re-establishing confidence after a period of doubt when missing targets in Q2, challenges await; most notably concerns around net neutrality, diversifying content genres, and the open question as to how effectively original programming will be able to carry the service.
Sector Digital Media, Digital Video, Internet, Media, online video, OTT Video, TV, Video Entertainment. -
December 13, 2016Internet Trends – Consumer behaviours driving market trends
ReportsAs smartphone ownership nears saturation in almost all consumer groups, the base for the UK digital economy is widening: media consumption continues to move to connected devices and use of consumer services on mobile grows. Ecommerce is now responsible for 75% of retail growth, steady even during periods of decline for the overall market. Google and Facebook take up almost 90% of gross online advertising growth this year, and the ecommerce and mobile service markets show early signs of platform concentration. -
December 6, 2016European digital news models
ReportsPay access now predominates in print-rooted national digital news across Europe, with meters the most popular model. Reliance on digital advertising is retreating. Best of class Continental publishers have roughly stabilised revenue, and the risk of print ad decline acceleration looms – as in the UK. Digital is still typically below 20% of revenue as online advertising CPMs decrease and newsstand buyers are reluctant to migrate to digital subscriptions – on current trends digital revenues will be insufficient to sustain a full-scale newsroom. Emerging innovations include aggregation, bundling (with broadcast, music, telecoms), and youth-skewed spin offs, but execution is uneven. Profitable native digital news sites provide templates for focused coverage at a fraction of traditional newspapers’ costs. -
December 6, 2016The Internet of All Things – Towards the Hyper-connected Wo [...]
ReportsThe Internet of Things offers enormous opportunities for Australian organisations to be pioneers in the convergence of operational and information technology. Many organisations across different industries are now realising value in a hyper-connected world. We discuss the nature of the Internet of Things, the current and future adoption rates amongst both consumers and industries, the challenges and issues associated with device uptake as well as the future of the Internet of Things. -
December 5, 2016Property classified marketplace
ReportsThis is the second of three reports in our annual review of vertical marketplaces (classifieds), focused on property, and follows Vertical marketplaces overview and recruitment classified outlook [2016-116]. Stamp duty reforms and the impact of the Brexit referendum triggered a -10% fall in UK residential property sales between April and October 2016 and the consensus among estate agents and commentators is that the property slowdown will continue into 2016/17 as buyer confidence recedes. As a result, we expect UK property classified advertising to slip into decline in 2016/17 driven by losses in print, while online advertising growth will slow to low single digitsIn the online market, while Rightmove continues to deliver outstanding financial results from its simple listings model, we believe that a new phase of innovation is imminent. Consumers are demanding enhanced services through data and personalisation, and there is clear potential for virtual/augmented reality and artificial intelligence to disrupt the market in the longer term. -
November 30, 2016UK digital ad forecast 2016-2018
ReportsThe UK digital ad market has been resilient in the immediate aftermath of the Brexit vote, and set to reach £10 billion in annual value by early next year. Growth is likely to remain strong even in the face of a possible economic slowdown next year, thanks to continuing growth of ecommerce and online media consumption. We expect media budgets to come under pressure, and this could be to the advantage of digital, which often provides better attribution of short term return on investment; we could see a “flight to attributability”. Within digital, growth is concentrated on video, social in-feed and search advertising on mobile, while desktop display is in decline: 2016 will be the first full calendar year when digital desktop ad spend is down year-on-year in the UK. Of this growth, Google and Facebook account for close to 90%, thanks to their leading offerings in the fastest-growing categories.
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November 28, 2016Vertical marketplaces overview and recruitment classified outlook
ReportsOur annual review of vertical marketplaces (classifieds) is presented in three reports, with the first providing a summary of the key macro trends, technological developments and spending outlook for the total UK classified advertising market followed by a detailed analysis of recruitment marketing; we will look at the property and auto verticals separately in two upcoming publications. Overall, we believe that the UK classified market is poised for a period of sustained innovation as the print to digital transition matures and incumbents search for new revenue streams induced by slowing digital revenue growth and consumer and client demand coupled with increasingly applicable emerging technologies. Across the three verticals we identify voice, video, virtual and augmented reality, user-generated content; and, critically, Artificial Intelligence as potentially disruptive forces. In terms of macroeconomic drivers, we observe that the Brexit referendum has had a minimal impact thus far but believe that economic uncertainty around the terms of the UK’s departure from the EU will prove a significant dampener on revenue growth in the next two years. In recruitment, the jobs market remains in growth despite the initial shock from the referendum and the recruitment industry continues to grow its revenues, up 2% in 2016 by our estimates. However, recruitment advertising spend itself was down -1% in the first half of this year reflecting the saturation of the online market as the print to digital transition reaches its latter stages; online now accounts for 76% of recruitment spend. The pay per listings model of traditional job boards appears increasingly outdated and in the future we believe that recruitment advertising services’ main value will lie in collecting and organising job seeker data rather than charging for advertising space, a view corroborated by Microsoft’s $22.6bn acquisition of LinkedIn announced in June. Meanwhile, the online jobs aggregator Indeed continues to build its revenue share while print brands’ digital revenues fell in both 2015 and H1 2016.
November 18, 2016Snappy birthday: Snapchat’s IPO
ReportsSnap’s IPO is reportedly pressing ahead as expected, suggesting a remarkably early maturity for the company’s advertising business model. Snapchat creatively adapts the tried and true TV advertising formula, focusing on content, context and audience affinity – this goes against the grain of digital advertising and could unlock new brand budgets for online. After an IPO, Snap’s founders would have the freedom to expand their platform with new content, distribution channels and even devices.
November 16, 2016Marketing and measurement in the digital era
ReportsDigital consumption has generated a lot of data in marketing and media and a huge variety of new opportunities for marketers—but insights and intelligence are not growing as much as data points, as a culture of short termism prevails. We recommend the linking of audience measurement and consumer behaviour data, but the industry lacks both standards and trust, while the still-immature digital marketing supply chain poses problems for data integrity. The new data economy has also precipitated a new war for talent, with marketing, media and publishing competing with technology, finance and other industries to attract the best quant and science brains to transition the creative sectors.
November 16, 2016The changing face of the data centre – Enabling digital tra [...]
ReportsDriven by digital disruption, service innovation is going into overdrive as global and local players compete for a share in Australia’s fast growing data centre market. As Australia’s appetite for everything digital grows, the role of the data centre undergoes transformation from a passive hub to an enabler of innovation. We discuss the key areas of growth within the data centre market and how they are likely to change amidst continual disruption.
October 13, 2016Brexit and UK internet privacy
ReportsPersonal data is the fuel of the digital age and the UK is a top producer due to deep internet and ecommerce usage. The EU’s General Data Protection Regulation (GDPR), a key plank of the Digital Single Market (DSM), will directly apply in May 2018, before the date of Brexit in 2019. Upon Brexit, GDPR adoption would ensure easy certification by the Commission for data transfers outside the EU, giving companies another reason to stay in the UK.
October 12, 2016Google devices: leading the charge to consumer AI
ReportsGoogle’s recent hardware launch event was a confident assertion of an AI-led future where Google’s services are present for everyone, everywhere With Google’s Assistant central to them, devices like the Pixel phone and Google Home smart speaker put pressure on Samsung, Apple and Amazon. If Google’s AI push is successful, it will evolve and strengthen the company’s role as a gatekeeper to content and services, fundamentally reshaping search marketing.
September 29, 2016A Room With A Vui: Voice and Amazon Alexa
ReportsAmazon’s smart Echo speakers are coming to Europe, powered by a voice-controlled intelligent assistant, Alexa. Echo is thought to have found surprise success in the US. Alexa is best thought of as the most complete Voice User Interface (VUI) on the market. We expect VUIs to supplant graphical user interfaces for a variety of use-cases, in the home, on the move and in the car. Competition in this area is increasing. Alexa is being positioned as the Android for voice, moving beyond devices made by Amazon in an attempt to jumpstart adoption, and with developers building services on top of Alexa’s core voice platform.
September 28, 2016Clash of the retail titans: Amazon vs Walmart
ReportsThe battle in the US between Amazon, ecommerce giant, and Walmart, the retail titan, reflects the changing face of US retail as online drives growth. Amazon, the everything store, innovates on marketplace, warehouse and logistics, and customer tools like Prime, while Walmart fortifies in-store and builds on its strengths. Walmart cannot overtake Amazon online, but it can defend its position as the largest US retailer as Amazon drives an ecommerce future for retailing.
September 14, 2016Untapped not tapped out -The over 50s - systemic consumption an [...]
ReportsMore than one third of the UK population is over 50 (over 23.6 million people) and this cohort is projected to keep growing. They account for substantial wealth, assets and expenditure. Over 50 consumers are more urban, educated, and tech-‐savvy than the over 50s of previous generations. Given their outsize impact on the economy, influence on social trends and opportunity for brands, we believe the marketing industry underappreciates the diversity of over 50s, and their differentiated requirements. The key group in terms of potential in growth, wealth, expenditure and digital adoption are the 50-‐65s: they are neither their children nor their parents.
August 4, 2016BT Q1 2016/17 results: Not shabby
ReportsBT Group’s revenue growth was roughly unchanged in the quarter at 0.4%, with continued strong consumer growth mitigated by regulated and structural challenges in the rest of the Group.
Both broadband and superfast broadband adoption is slowing, but BT is compensating with improving market share for the former, and the prospect of further uplifts from ultrafast for the latter.
Regulatory uncertainties are likely to continue to weigh, with the current Openreach debate to be closely followed by the not-exactly-unimportant issue of copper and fibre pricing/regulation from April 2017.
July 18, 2016Mobile Google: beyond the smartphone
ReportsGoogle’s recent product updates and upcoming features aim for as many users on as many platforms and devices as possible – a return to strategic form. The company has a dual approach: using Android as a mobile trend-setter while also devising new ways for users and developers on other platforms to use Google services. The reach provided by these initiatives will help Google’s machine learning algorithms to better understand and predict user intent – the cornerstone of the company’s ad business.
June 27, 2016Parents and their children online
ReportsCinema, TV and VOD services share the same ratings regime in the UK, giving parents confidence they can discern content unsuitable for their children. Risks to children of being exposed to unsuitable content and advertising multiply on the ‘open’ internet.June 22, 2016Consumers and digital marketing – Challenges and tensions a [...]
ReportsUK digital advertising will grow beyond £10 billion by 2018 by our estimates, representing more than half of all advertising spend and delivering the most advanced large advertising market in the world on a per capita basis. Nevertheless, we see critical issues in digital marketing that are frequently acknowledged, but hard to fix. At the heart of our hypothesis is the view that the marketing industry – brands, agencies and media – has focused on technology and efficiencies at the expense of consumer experience and distinctiveness.
June 6, 2016UK broadband, telephony and pay TV trends Q1 2016
ReportsTV viewing has one reliable, long term trend: programme genres are watched by consumers at predictable life stages and ages.At a high level, there has been little manipulation of the balance of genres being broadcast. But amongst the sub-genres, editorial optimisation has resulted in an uptick in actual viewing. As the core viewing age of linear television rises, there is an opportunity for broadcasters to leverage this to create the most desirable schedule for their available audience by daypart; with genres that transcend demographics when younger viewers tune in.
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