INSIGHTanalysis: Media Healthcheck – October 2006
In October, Merrill Lynch lowered its global ad forecast from 4.9% growth for the year to 4.3%. The financial analyst also said that Europe is seeing weakness in the UK, Germany, and Spain, although online continues to perform strongly.
Focusing on online, a report from ZenithOptimedia released at the start of the month said that internet advertising will take a double-digit share of total advertising expenditure in two countries this year, and in eight countries by 2008. It added that in the UK internet advertising will take than 10% of all ad expenditure in 2008 (see Internet Ad Share To Break Double Digit Barrier).
Meanwhile, research from the Internet Advertising Bureau (IAB UK), PricewaterhouseCoopers (PwC) and the World Advertising Research Centre (WARC) said that in the first six months of 2006, online advertising expenditure in the UK reached almost £1 billion and looks set to overtake spending on national press advertising before the end of the year (see UK Online Adspend Nears £1 Billion).
However, Point Topic revealed that broadband’s quarterly growth rate in Q2 2006 was the lowest ever, just 7.1% worldwide, and a large drop from the 8.5% at the end of 2005 (see Lowest Quarterly Growth Rate In Broadband History).
The report said that Western Europe was suffering from the effect of saturation, managing just a 5.6% quarterly growth rate.
Later on in the month though, Point Topic delivered some better news, forecasting that 64% of UK households will have a broadband connection by 2008, up from 34% at the end of 2005, with the highest take-up continuing to be in the South East of England (see 64% Of UK Households On Broadband By 2008).
Following that, the Organization for Economic Co-operation and Development (OECD) said that the number of broadband subscribers in the 30 countries it tracks reached 181 million in June, a 33% increase over the previous year (see Broadband Subscribers Increase 33%).
According to the OECD, broadband now reaches an average 15.5 subscribers per 100 inhabitants globally, compared to 11.7 subscribers per 100 in 2005. DSL (63%) leads over cable modems (29%) and other technologies (8%), like satellite, fibre, and fixed wireless, in 28 of the 30 countries.
Of course, broadband is not the only way to go online, and comScore Networks’ Mobile Tracking Study, designed to analyse how consumers across six countries go online on their mobile phones, showed that 29% of European internet users regularly go online on their mobiles, compared to just 19% in the US (see Europeans More Likely Than Americans To Go Online Via Mobiles).
Staying with mobile phones, global sales of handsets are predicted to top 1.2 billion by 2011 (see Ofcom Plans New Public Service Channel To Rival BBC), although 2006 will be the last year of massive overall worldwide growth, predicted Informa Telecoms & Media.
With the increase in handsets will come an increase in advertiser spend on the platform, with JupiterResearch claiming that total global advertiser spend on messaging and display advertising will grow from $1.4 billion in 2006 to $2.9 billion in 2011 (see Spending On Mobile Advertising Could Reach $2.9 Billion).
Julie Ask, research director and senior analyst at JupiterResearch, said: “Educating consumers, protecting their privacy, and mitigating their concerns about the cost of commercial text messages and spam, will be key to driving consumer interest and adoption of mobile marketing executed with SMS.”