Marketing in The Digital Age 2012

Market Assessment 2012
Fourth Edition June 2012

Edited by Katie Hughes
ISBN 978-1-84729-872-0
Marketing in the Digital Age

Marketing in the Digital Age Foreword
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Marketing in the Digital Age Contents
Contents
Executive Summary 1
1. Introduction 3
OVERVIEW.....................................................................................................................................3
DEFINITION....................................................................................................................................3
2. Strategic Overview 5
BACKGROUND..............................................................................................................................5
MARKET DYNAMICS AND SEGMENTATION.......................................................................6
Convergence and Crossovers.......................................................................................................6
Total Market...................................................................................................................................6
Table 2.1: Total UK Advertising Expenditure (£m),
Years Ending September 2007-2011..........................................................................................6
Figure 2.1: Total UK Advertising Expenditure (£m),
Market Share by Sector.................................................................................................................7
Table 2.2: Total UK Advertising Expenditure by Media Sector by Market Share (%),
Figure 2.2: Total UK Advertising Expenditure by Media Sector by Market Share
(%), Year Ending September 2011.............................................................................................8
Broadcast Media.............................................................................................................................9
Table 2.3: Total UK Broadcast Media Advertising Expenditure by Format (£m), Years
Ending September 2007-2011.....................................................................................................9
Figure 2.3: Total UK Broadcast Media Advertising Expenditure by Format (£m),
Years Ending September 2007-2011........................................................................................10
The Internet .................................................................................................................................10
Table 2.4: Total UK Internet Advertising Expenditure (£m), Years Ending September
2007-2011......................................................................................................................................10
Figure 2.4: Total UK Internet Advertising Expenditure (£m),
Print Media....................................................................................................................................11
Table 2.5: Total UK Print Media Advertising Expenditure by Format (£m), Years
Ending September 2007-2011...................................................................................................12
Figure 2.5: Total UK Print Media Advertising Expenditure by Format (£m), Years

Direct Mail.....................................................................................................................................13
Table 2.6: Total UK Direct Mail Advertising Expenditure (£m),
Figure 2.6: Total UK Direct Mail Advertising Expenditure (£m),
Outdoor and Cinema..................................................................................................................14
Table 2.7: Total UK Outdoor and Cinema Advertising Expenditure by Format (£m),
Figure 2.7: Total UK Outdoor and Cinema Advertising Expenditure by Format
(£m), Years Ending September 2007-2011..............................................................................15
THE CONSUMER.........................................................................................................................15
Demographic Data.......................................................................................................................15
Table 2.8: UK Communications Take-Up by Type (% of adults), 2008 and 2011............16
Table 2.9: Take-Up of Bundled Communications Services (%), Quarter 1
2007-2011......................................................................................................................................17
COMPETITIVE STRUCTURE......................................................................................................17
Broadband Providers...................................................................................................................17
3.......................................................................................................................................................17
AOL.................................................................................................................................................18
Be Unlimited.................................................................................................................................18
BT Broadband...............................................................................................................................18
O2....................................................................................................................................................18
Orange...........................................................................................................................................18
PlusNet...........................................................................................................................................18
Sky Broadband..............................................................................................................................18
TalkTalk..........................................................................................................................................18
Virgin Media.................................................................................................................................18
Agencies.........................................................................................................................................19
Marketing......................................................................................................................................19
Table 2.10: The Leading UK Marketing Agencies by UK Fee Income (£), 2012...............19
Technology....................................................................................................................................20
Table 2.11: The Leading UK Technology Agencies by UK Fee Income (£), 2012.............20
Design and Build..........................................................................................................................20
Table 2.12: The Leading UK Design and Build Agencies by UK Fee Income (£),
2012................................................................................................................................................20
Media..............................................................................................................................................21
Table 2.13: The Leading UK Media Agencies by UK Fee Income (£), 2012......................21
INDUSTRY ISSUES.......................................................................................................................21
Growth of Consumer Technology............................................................................................21
Eurozone Issues............................................................................................................................22
Evolution of Social Network Advertising................................................................................22
MARKET FORECASTS................................................................................................................23

3. Digital Television 24
BACKGROUND............................................................................................................................24
Digital Switchover........................................................................................................................24
Channels.........................................................................................................................................24
Table 3.1: Channels Broadcasting on Freeview by Broadcasting Period, April
2012................................................................................................................................................24
Sales Networks and In-House Advertising..............................................................................28
Radio Stations Available on Television Services....................................................................29
Table 3.2: Channels Broadcasting on Freeview by Broadcasting Period, April
2012................................................................................................................................................29
INDUSTRY DEVELOPMENTS...................................................................................................30
Smart Televisions..........................................................................................................................30
Social Television...........................................................................................................................30
On-Demand on Various Platforms............................................................................................31
MARKET SIZE...............................................................................................................................31
Digital Television Uptake ..........................................................................................................31
Table 3.3: Ownership of Digital Devices and Capabilities in the UK
(% of households), 2008 and 2011...........................................................................................31
CONSUMER TRENDS.................................................................................................................32
Table 3.4: Weekly, Monthly and Quarterly Reach of the Leading Television Channels
in the UK (%), Quarter 1 2012...................................................................................................32
ADVERTISING..............................................................................................................................33
Main Media Advertising Expenditure......................................................................................33
Table 3.5: Main Media Advertising Expenditure by the Top Digital Channels
(£000), Year Ending December 2011........................................................................................33
Advertising Revenues..................................................................................................................35
Table 3.6: Commercial Advertising Revenue in Leading UK Television Stations
(£m), 2007-2011............................................................................................................................36
Figure 3.1: Commercial Advertising Revenue in Leading UK Television Stations
(£m), 2007-2011............................................................................................................................36

4. Digital Radio 37
BACKGROUND............................................................................................................................37
Digital Radio Switchover Problems..........................................................................................37
Licensing........................................................................................................................................37
National Commercial Multiplex Operator and National Radio Owners...........................38
MARKET SIZE...............................................................................................................................39
Table 4.1: Weekly Reach, Average Weekly Hours Per Capita, BBC Share of Listening
and Digital Take-Up for Radio in the UK (% and hours), 2007-2011................................40
CONSUMER TRENDS.................................................................................................................40
Table 4.2: Digital Radio’s Methods of Listening (%), Q1 2010-Q1 2011...........................41
Table 4.3: BBC iPlayer Quarterly Radio Requests (million), Q1 2010-Q1 2011.................41
ADVERTISING..............................................................................................................................42
Table 4.4: Main Media Advertising Expenditure by Radio Companies (£000), Year
Ending December 2011...............................................................................................................42
5. Marketing on the Internet 43

BACKGROUND............................................................................................................................43
Increasing Market Share.............................................................................................................43
Table 5.1: UK Internet Share of Total Advertising Expenditure (£m and %), Years
Social Networking........................................................................................................................44
Table 5.2: Top 10 Social Networking Websites Based on Market Share of Visits
in the UK and the US, May 2012...............................................................................................44
Google+ Hits the Ropes..............................................................................................................45
Increasing Broadband Speeds...................................................................................................46
Table 5.3: Average UK Broadband Speeds (megabits per second [Mbit/s]), November
2011................................................................................................................................................46
MARKET SIZE...............................................................................................................................46
By Advertising Expenditure.......................................................................................................46
Table 5.4: Total UK Internet Advertising Expenditure (£m), Years Ending September
2007-2011......................................................................................................................................47
Table 5.5: Top Five Sectors by Share of Display Spend in the UK (%), 2011....................47
By Internet Access........................................................................................................................47
Table 5.6: Household Internet Access in the UK (%), 2007-2011.......................................48
Table 5.7: Places for Accessing the Internet (%), 2008-2011...............................................48

Table 5.8: Reasons for Not Having Internet at Home (%), 2010 and 2011......................49
CONSUMER TRENDS.................................................................................................................49
Table 5.9: Internet Activities of Internet Users in the UK by Sex and Age (%),
2011................................................................................................................................................50
2011................................................................................................................................................51
2011................................................................................................................................................52
2011................................................................................................................................................53
Top Social Media Brands............................................................................................................54
Table 5.13: Top Five Brands Engaged in Social Media, 2011..............................................54
6. Mobile Marketing 55
BACKGROUND............................................................................................................................55
Impending 4G Auction................................................................................................................55
Near Field Communication........................................................................................................55
Increase in Internet-Enabled Mobile Phones.........................................................................55
Table 6.1: Mobile 3G Connections by Service Provider (million), 2007-2011...................56
MARKET SIZE...............................................................................................................................56
Table 6.2: Mobile Advertisement Requests by Manufacturer (%), May 2010.................57
Table 6.3: Mobile Advertisement Requests by Country (%), May 2010............................57
CONSUMER TRENDS.................................................................................................................58
Table 6.3: The Role of Mobile Phones in Consumers’ Lifestyles
(% of adults), March 2012..........................................................................................................59
7. An International Perspective 60
MARKET PENETRATION...........................................................................................................60
Table 7.1: Market Penetration for Digital Technology in Selected Countries (%),
December 2011.............................................................................................................................61
ADVERTISING ENVIRONMENT...............................................................................................61
Table 7.2: Change in Advertising Expenditure in Global Regions (%), Quarter 2
2010-Quarter 2 2011 ..................................................................................................................62
CONSUMER BEHAVIOUR.........................................................................................................62
Table 7.3: Reach of Social Networking Sites in Selected Countries Among Internet
Users (%), October 2011.............................................................................................................62

8. PEST Analysis 66
POLITICAL.....................................................................................................................................66
Improving Rural Broadband......................................................................................................66
Impending 4G Auction................................................................................................................66
Adult Content Internet Filters...................................................................................................66
ECONOMIC...................................................................................................................................67
Table 8.1: Economic Forecasts (000, % and million), 2012-2016........................................68
SOCIAL...........................................................................................................................................68
Digital Radio Switchover Problems..........................................................................................68
Social Media Evolution...............................................................................................................69
Table 8.2: Average Minutes Spent on Selected Social Network Sites per Visitor
(minutes and %), October 2011 ...............................................................................................69
Shift in Mobile Phone Usages....................................................................................................69
TECHNOLOGICAL.......................................................................................................................70
iPad Leads the Tablet Market....................................................................................................70
Media Convergence.....................................................................................................................70
9. Industry Dynamics 71
TELEVISION..................................................................................................................................71
RADIO ...........................................................................................................................................72
INTERNET......................................................................................................................................72
MOBILE.........................................................................................................................................73
10. Company Profiles 75

BACKGROUND............................................................................................................................75
LEADING DIGITAL MARKETING COMPANIES...................................................................75
Table 9.1: The Leading 25 UK Digital Marketing Agencies by UK Fee Income (£),
2012................................................................................................................................................75
LEADING TECHNOLOGICAL COMPANIES..........................................................................76
Apple (UK) Ltd..............................................................................................................................76
Company Structure......................................................................................................................76
Current and Future Developments...........................................................................................77
Financial Results...........................................................................................................................77
Google UK Ltd..............................................................................................................................78

HIGH-STREET RETAILER...........................................................................................................79
The Carphone Warehouse Ltd...................................................................................................79
11. The Future 80

MARKET SIZE...............................................................................................................................80
Table 10.1: Forecast Total UK Advertising Expenditure by Media Sector (£m), Years
MARKET GROWTH....................................................................................................................80
Figure 10.1: Growth in Total UK Advertising Expenditure (£m), Years Ending
September 2007-2016.................................................................................................................81
FUTURE TRENDS.........................................................................................................................81
Internet Affirms Its Dominant Position...................................................................................81
Mobile Becomes a Major Player................................................................................................82
12. Further Sources 83

Publications.................................................................................................................................83
General Sources.........................................................................................................................84
Government Publications ......................................................................................................84
Other Sources.............................................................................................................................85
Key Note Sources ......................................................................................................................86
Understanding Consumer Survey Data 88

Number, Profile, Penetration................................................................................................88
Social Grade.................................................................................................................................89
Standard Region........................................................................................................................89
Key Note Research 90
The Key Note Range of Reports 91

Marketing in the Digital Age Executive Summary
Executive Summary
Digital marketing is undoubtedly the major sector that is showing growth in
an industry which has struggled with the recession and resulting financial
problems. Traditional roadside billboards, print advertisements and direct mail
have all suffered, but digital alternatives are starting to become more
prevalent, such as digital billboards and transport advertisements, and
advertisements in digital editions of print media, such as mobile applications
for traditional publications.
A rise in personal technologies such as smartphones and tablet computers has

led to an increase in interactive and immersive advertising. Some of the
advancements include near field communications (NFC), which is about to
become much more common in mobile phones in the UK. Already in select
areas bus shelters and large poster sites have NFC compatibility, where
members of the public can find out more information about a product or
service.
Despite these developments, the real growth in advertising expenditure can

be found for the Internet advertising sector. There has been something of a
boom in Internet browsing in recent years due to tablet computers gaining
popularity and smartphones becoming more prevalent. This resulted in
Internet advertising overtaking the television advertising sector for the first
time in 2011, enforcing the fact that it is now the biggest and most lucrative
advertising sector in the UK.
The television sector is another medium that has found another new
advertising stream induced by technology in the form of on-demand (OD)
television. The leading on-demand services such as ITV Player, 4 OD and 5
On-Demand all have the capability of showing advertisements before and
during content. However, as it stands, only a handful of advertisements are
played before or during content; more advertisements are expected to be
played with on-demand content in the future, owing to the fact that the
number of users of on-demand services is rising and, in turn, the demand from
advertisers is to increase.
The problem child of the digital industry has been radio. A plan was in place
to impose a total digital radio switchover by 2015. However, this has seemingly
been abandoned and the digital radio switchover will have to be delayed
considerably to be achieved. This is perhaps one of the only setbacks of the
industry as a whole, but uptake of digital radio is still growing, just not as
quickly as first hoped.
© Key Note Ltd 2012 1

Marketing in the Digital Age Executive Summary
Looking to the future, it is highly likely that two sectors in the marketing in
the digital age industry will show considerable growth. Firstly, Internet
advertising space is bound to command a higher price and thus bring in higher
revenues as more people are able to access the Internet through devices such
as tablet computers, which make browsing the Internet more easy and
user-friendly. Further to this, the mobile phone advertising industry is forecast
to see monumental growth in the next 5 years. This is purely due to
technological advancements and, as a result, consumer uptake for
smartphones is increasing rapidly. Still in its infancy, advertisers are clamouring
to fully understand how users interact with mobile phone advertising.

Marketing in the Digital Age Introduction
1. Introduction
OVERVIEW
There have been many developments in the technological sector since the
previous edition of this Key Note Market Assessment was written (March 2009).
As a result, convergence is probably the key aspect in this rapidly changing
market, which is seeing the lines between mobile phones, computers,
television and radio increasingly blurred.
Mobile phones and tablet computers are providing consumers with new ways
of consuming television and radio content while surfing the Internet. This
ultimately means that both computers and mobile phones are becoming
devices for all types of entertainment, not just for calling people and producing
spreadsheets. On top of this, consumers can now browse the web on their
televisions and on video games consoles, adding to the current state of media
convergence.
The emergence of new technologies means that broadcasters have new

opportunities to deliver content to the public, but they also have new ways to
sell advertising. This could be through videos on new on-demand players or
through advertising in mobile phone applications. On top of this, it offers
advertisers the chance to be seen through a variety of mediums.
The evolution and variety of digital marketing has led to several smaller and
independent agencies offering a specific service on a dedicated medium. These
smaller agencies are developing a speciality in the digital arena and have
performed very well in recent years.
On top of this, the innovation has come from a mix of the independent
agencies and technology developers, and the media owners themselves.
Furthermore, the development of mobile phone applications (‘apps’) in recent
years has encouraged growth in the industry, especially as users are
understanding what apps they like and use, while industry experts are starting
to understand how consumers react to mobile phone advertising and what
they might expect from free and paid apps.
Looking towards the future, the industry is focusing on integrating

advertisements rather than placing them at the start of content, when viewers
can skip them. This essentially means that there is a much more captive
audience.
DEFINITION
Under the grouping of digital technology, the following technologies are
included:
• digital television
• digital radio

Marketing in the Digital Age Introduction
• the Internet
• mobile phones.
All marketing concerned with any of these technologies is not included in this
report. On top of this, traditional analogue television and radio are not
included in this Market Assessment, and traditional poster advertisements
using a television display or projector are also excluded.

Marketing in the Digital Age Strategic Overview
2. Strategic Overview
BACKGROUND
Since the recession in 2008, advertisers have cut their spending levels in line
with the fall in consumer spending. However, in recent years, advertisers have
started to increase expenditure levels on advertising in some major sectors and,
after a drop in market value in 2008 and 2009, the industry has grown overall
in 2010 and 2011.
There is still a difference in opinion as to the effectiveness of advertising during

a recession or economic downturn. Some argue that advertising during the
recession would ultimately be less lucrative, as consumers are spending less
money and are ultimately less likely to spend on the product a company is
promoting. However, some individuals involved in the advertising industry
have argued that advertising in a recession is likely to increase a favourable
image for a brand and gain an advantage over competitors. However, many
companies may find themselves unable to advertise regardless because of
budget cuts.
Putting aside the economic downturn, in the advertising world, technology

and digital mediums have enjoyed significant market share increases in the
past 5 years. While traditional advertising mediums such as newspapers have
seen their market share shrink significantly, digital mediums have prospered;
for example, the share of the market accounted for by the Internet rose from
15.3% in 2007 to 27.5% in 2011.
In recent years digital television has grown in size due to the Digital Switchover.
From October 2012, there will be no more analogue television in the UK. This
will mean that all advertising revenues in this sector will be gained from digital
and not analogue television.
However, all is not well for a potential switchover to digital radio. Problems
have plagued any potential switchover since 2009, when the Department for
Culture, Media and Sport (DCMS) published a report entitled Digital Britain,
written by Lord Carter. The report recommended that the digital radio upgrade
in the UK should be completed by 2015. However, this target is now in major
doubt and William Rogers, the Chief Executive (CE) of local radio operator
UKRD Group, said in March 2011 that the target was ‘dead in the water’.
The Internet and computers are continually creating new potential revenue
streams in the industry. New technology such as Sky Go on mobile phones and
tablet computers means that content and therefore advertisements are
appearing in new mediums and apps constantly. Furthermore, on-demand
(OD) players started to appear on the XBox 360 games console at the start of
2012, thus helping to bring content to viewers in many different ways.
Further to these developments to traditional channels, international websites

that host videos and interactive content, such as YouTube, use advertisements
in a variety of ways and this has contributed to one of the reasons that Internet
advertising has increased so much recently.

MARKET DYNAMICS AND SEGMENTATION
Convergence and Crossovers

The development of technology in recent years has inevitably led to a blurring
between the lines for the Internet, television and mobile sectors. Although the
sectors are becoming increasingly interlinked there is still a distinction to be
made.
Total Market
The overall industry has seen a rise in market value in the last 2 years, with a
year-on-year increase of 3.8% in 2010 and 2.6% in 2011, showing that the
industry has performed well since it saw a fall in value of 0.1% in 2008 and a
huge 12.0% in 2009 in the wake of the recession. The fall in the rate of
year-on-year growth for 2011 was almost certainly as a result of scares in the
Eurozone in the final quarter of 2011. Despite showing signs of growth in the
last 2 years, the industry is still far from the £17.27bn seen in 2007.
Table 2.1: Total UK Advertising Expenditure (£m),

Years Ending September 2007-2011
2007 2008 2009 2010 2011
Total 17,270.2 17,257.2 15,189.4 15,773.3 16,181.8

% change
year-on-year - -0.1 -12.0 3.8 2.6
Source: The Advertising Association/Warc Expenditure Report 2011

Figure 2.1: Total UK Advertising Expenditure (£m),

17,500
17,250
17,000
16,750
16,500
16,250
16,000
15,750
15,500
15,250
15,000
14,750
2007 2008 2009 2010 2011
Source: The Advertising Association/Warc Expenditure Report 2011/Key Note
Market Share by Sector

Table 2.2 shows how each market sector has seen its share of the total market
change over the past 5 years.
The Internet sector has seen a very big rise in market share in recent years. In
2007 it only had a 15.3% market share, but this increased to 27.5% in 2011 and
it is now the biggest sector in the industry. Just behind this is television with a
26.9% market share; this sector has seen modest increases in market share
recently, mainly because it is a much more established industry.
When some markets see a large increase in market share, others suffer a
decline, and this is most common in the print market. Newspapers have seen
their share dwindle from 27.1% in 2007 to 18.8% in 2011, while the share of
the market accounted for by magazines has fallen from 10.2% to just 6.1%.
Further to this, direct mail has also seen its market share shrink.

Table 2.2: Total UK Advertising Expenditure by Media Sector

by Market Share (%), Years Ending September 2007-2011
2007 2008 2009 2010 2011
Internet 15.3 18.9 22.8 25.0 27.5

Television 24.6 24.2 25.2 26.8 26.9
Newspapers 27.1 25.2 21.9 20.7 18.8
Direct mail 12.7 12.1 11.9 10.5 10.7
Outdoor and cinema 6.6 6.4 6.5 6.6 6.6
Magazines 10.2 9.7 8.1 6.9 6.1
Radio 3.5 3.4 3.5 3.4 3.4
Total 100.0 100.0 100.0 100.0 100.0
Note: totals may not sum due to rounding.
Figure 2.2: Total UK Advertising Expenditure by Media Sector

by Market Share (%), Year Ending September 2011
Radio 3.4%
Magazines 6.1%
Internet 27.5%
Outdoor and
cinema 6.6%
Direct mail
10.7%
Newspapers
18.8%
Television 26.9%
Note: percentages do not sum to 100 due to rounding.

Broadcast Media
Like the rest of the market, television and radio advertising suffered a drop in
market expenditure during the recession, with the lowest point coming in 2009
when expenditure on television totalled £3.82bn and radio stood at £535.3m.
However, since 2009 advertisers have been spending more freely and increases
in both sectors in 2010 and 2009 have returned the market value to well above
that seen in 2007.
These two sectors have performed well and are among the only traditional
means of advertising to have seen an almost-continuous increase in market
value, putting aside the recession. However, looking to the future, they will
face increased competition from OD players available on the Internet and this
is one of the reasons why television advertising is no longer the biggest sector
by expenditure and has been surpassed by the Internet.
Table 2.3: Total UK Broadcast Media Advertising Expenditure

by Format (£m), Years Ending September 2007-2011
2007 2008 2009 2010 2011
Television 4,247.7 4,175.5 3,820.6 4,229.4 4,347.8

Radio 610.5 589.2 535.3 543.9 557.3
Total 4,858.2 4,764.7 4,355.9 4,773.3 4,905.1
Source: Key Note

Figure 2.3: Total UK Broadcast Media Advertising Expenditure

5,000 Television
Radio
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
20
20
20
20
20
07
08
09
10
11
Source: Key Note
The Internet
The biggest growth in terms of expenditure has undoubtedly come from the
Internet sector. This is mainly because developments in technology have
allowed the public to use the Internet on the go and it has ultimately become
more convenient to use. Tablet computers have helped to make using a
computer easier on the go with their added portability and touch screen.
This sector is the only one that did not see a fall in revenues through the
recession, thus showing how strongly it is growing. However, growth was
affected in the Internet sector in 2009 when its year-on-year growth slumped
to just 6.1% after it experienced growth of 23.8% in the previous year.
Table 2.4: Total UK Internet Advertising Expenditure (£m),

2007 2008 2009 2010 2011
Internet 2,642.2 3,270.0 3,468.3 3,944.6 4,448.2

Figure 2.4: Total UK Internet Advertising Expenditure (£m),

5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
20
20
20
20
20
07
08
09
10
11
Print Media
The print media sector has had a disastrous 5 years, arguably brought about
by the growth of the digital marketing sector. Advertisers are increasingly
diverting expenditure that they traditionally spent on the traditional mediums
to digital and innovative methods, such as mobile advertising. By doing this
brands could reach new consumers and increase their profits if they target the
market correctly.
The biggest losses for the sector were seen in 2009, after smaller losses were
recorded in 2008. An example of this is the regional newspaper sector, which
saw its expenditure levels tumble from £2.48bn in 2008 to just £1.78bn in 2009.
Perhaps more worrying is that the overall industry has not seen its expenditure
levels increase in the last 2 years, with all four subsectors seeing their value
decrease in 2011.

Table 2.5: Total UK Print Media Advertising Expenditure

2007 2008 2009 2010 2011
Press
National newspapers 1,922.2 1,870.5 1,555.0 1,625.9 1,557.8
Regional newspapers 2,749.7 2,477.8 1,776.5 1,642.5 1,482.4
Consumer magazines 793.4 772.3 625.2 596.6 580.7
Business magazines 974.5 903.2 610.9 490.9 413.6
Total press 6,439.8 6,023.8 4,567.6 4,355.9 4,034.5
Figure 2.5: Total UK Print Media Advertising Expenditure

3,000
National newspapers
2,750 Regional newspapers
2,500 Consumer magazines

Business magazines
2,250
2,000
1,750
1,500
1,250
1,000
750
500
250
0
2007 2008 2009 2010 2011

Direct Mail
The direct mail industry is another traditional medium that has suffered at the
hands of the recession. It lost a considerable amount of expenditure in 2009 as
a reaction to the recession. However, it has seen a very small recovery in its
expenditure levels, thus showing that it might not be in the trouble that the
print media sector is in.
Table 2.6: Total UK Direct Mail Advertising Expenditure (£m),

2007 2008 2009 2010 2011
Direct mail 2,187.3 2,089.5 1,809.1 1,652.9 1,730.8
Figure 2.6: Total UK Direct Mail Advertising Expenditure (£m),

2,200
2,150
2,100
2,050
2,000
1,950
1,900
1,850
1,800
1,750
1,700
1,650
2007 2008 2009 2010 2011

Outdoor and Cinema

The outdoor and cinema sectors are some of the promising sectors in the
traditional advertising market. Although fairly small scale in terms of
expenditure, the outdoor advertising sector has seen a resurgence since
disappointing figures seen in 2009. However, it has yet to see figures on a par
with the £975.7m seen in 2007 and currently stands at £879.9m. The cinema
sector stayed strong throughout the recession but saw a small decline in
expenditure levels in 2011.
Table 2.7: Total UK Outdoor and Cinema Advertising

Expenditure by Format (£m), Years Ending September
2007-2011
2007 2008 2009 2010 2011
Outdoor 975.7 936.7 807.2 859.9 879.9

Cinema 167.0 172.5 181.3 186.7 183.3
Total 1,142.7 1,109.2 988.5 1,046.6 1,063.2
Source: Key Note

Figure 2.7: Total UK Outdoor and Cinema Advertising

Expenditure by Format (£m), Years Ending September
2007-2011
Outdoor
1,100
Cinema
1,000
900
800
700
600
500
400
300
200
100
0
20
20
20
20
20
07
08
09
10
11
Source: Key Note
THE CONSUMER
Demographic Data
Ofcom’s annual report, The Communications Market, gives an insight into
consumer habits and technology ownership. Its 2011 edition was published in
August of that year, and it contained several key findings which were relevant
to this particular report, which can be found in Table 2.8.

Table 2.8: UK Communications Take-Up by Type

(% of adults), 2008 and 2011
2008 2011
Digital television 85 93
DAB radio 22 37
Mobile telephone 84 91
3G telephone 17 32
Broadband at home 57 74
Mobile broadband - 17
DAB — digital audio broadcasting

3G — third generation
Source: The Communications Market 2008 and 2011, Ofcom
The advancement of digital technology is the major trend in the industry and
every single type of digital technology in the survey had higher consumer
penetration levels in 2011 than in 2008. Digital television has almost reached
the level where it has the same as all television and, in late 2012 when all
terrestrial television signals are terminated, all television in the UK will be
digital.
Although DAB radio’s switchover for 2015 has seemingly been abandoned, the
take-up of DAB radio has grown from 22% in 2008 to 37% in 2011. The
category still has some way to go for full integration but is showing promising
signs of growth. Like digital television, digital radio offers consumers more
stations and a better signal. However, many individuals have standard radios
in cars and this could be hampering any wide-scale move to digital radio.
Unsurprisingly, mobile phone ownership has continued to increase and stood

at 91% in 2011. Although it is unlikely that mobile phone ownership will hit
100% in the next 5 years, numbers will only continue to increase in the future.
Furthermore, 3G telephone usage has almost doubled in 3 years and currently
stands at 32%. In the future it will continue to increase in consumer base but
will slow down in its growth when consumers start to switch to 4G in late 2012
and 2013.
Broadband usage has increased across the board, with usage of broadband in
the home increasing from 57% in 2008 to 74% in 2011. On top of this, mobile
broadband was a new category for Ofcom in 2011 and had a penetration level
of 17%, meaning that it is a serious emerging market for the industry.

The usage of digital media relies heavily on a user’s geographical location.

There are still large areas of the UK with little or no access to broadband, and
in August 2011 it was announced that the Government had allocated £362m
to improve broadband access in rural areas. The culture secretary, Jeremy Hunt,
said that the fund would ensure that 90% of hard-to-reach communities with
‘painfully slow’ Internet speeds could have access to superfast broadband by
2015.
Bundled communications services are becoming more common in the UK, as

Table 2.9 demonstrates. It is becoming commonplace to see consumers buy
their services in an all-in-one package and 53% of households in the UK now
receive two or more of their communications services in a package, with fixed
voice landline services and broadband proving the most popular.
Table 2.9: Take-Up of Bundled Communications Services (%),

Quarter 1 2007-2011
2007 2008 2009 2010 2011
Fixed voice and broadband 19 17 16 22 24

Fixed voice, broadband and
multi-channel television 7 12 20 17 16
Fixed voice and multi-channel television 3 3 2 2 2
Fixed voice and dial-up 5 1 - - -
Fixed voice, dial-up and multi-channel
television 1 - - - -
Other 5 6 7 10 11
Source: The Communications Market 2011, Ofcom
COMPETITIVE STRUCTURE
Broadband Providers
Since the last edition of this report was written (March 2009), there has been
a period of consolidation in the industry and many of the minor companies
have either been acquired or ceased trading.
3
3 UK was originally formed as a mobile phone carrier and has recently entered
the broadband sector through a range of wireless, portable broadband
dongles.

AOL
The UK Internet Service Provider (ISP) subsidiary of AOL was bought by The
Carphone Warehouse in October 2006 for $688m. It is one of the more
established ISPs and has been providing Internet services, including broadband
and dial-up, for well over 10 years.
Be Unlimited
Be Unlimited is owned by Telefónica Europe, which also owns O2. It was
formed in 2004 and has since carved out a niche market as it became renowned
for high-speed broadband packages based on ADSL 2+ technology.
BT Broadband
BT is arguably the biggest supplier of broadband in the UK and offers
consumers a range of broadband, fixed-line and digital television services.
O2
O2 is perhaps most well-known for its mobile phone services in the UK, but it
has seen growth in the number of its customers in the broadband market
recently. The company is owned by Telefónica.
Orange
Orange broadband services are currently not under the Everywhere Everything
brand, as T-Mobile does not offer broadband services to consumers. However,
the company’s primary revenue stream is still mobile phones.
PlusNet
The PlusNet brand is a subsidiary of BT and has been since 2007. The brand is
marketed on a price point and its tagline is ‘good honest broadband from
Yorkshire’.
Sky Broadband
Sky has capitalised on its successful digital television services and encouraged
consumers to purchase bundles of television services, fixed-line services and
Internet connections.
TalkTalk
Originally owned by The Carphone Warehouse, but demerged in 2010,
TalkTalk offers consumers cheap landline and Internet connections.
Virgin Media
Virgin Media has been offering consumers broadband on its fibre-optic
network. This network has the capabilities to provide high-speed broadband
and, as a result, Virgin generally offers high Internet speeds to consumers.

Agencies
New Media Age (owned by Centaur Media PLC) produces an annual list of the
top 100 interactive agencies in the UK, ranked by the income that they
received. Furthermore, these are then divided into sub-categories: marketing,
design and build, technical and media.
Marketing
Table 2.10: The Leading UK Marketing Agencies

by UK Fee Income (£), 2012
UK Fee
Income
from Digital
Agency (£) Year To UK Staff
Rank
1 SapientNitro 916,449,882 Dec 2010 815
2 LBi 57,047,000 Dec 2011 605
3 AKQA 46,503,102 Dec 2010 350
4 Engine 39,600,000 Dec 2011 348
5 Iris Worldwide 24,000,000 Dec 2011 120
6 Wunderman Network UK 23,520,000 Dec 2010 209
7 Dare 23,040,000 Dec 2010 192
8 RAPP 22,062,469 Dec 2010 371
9 TBWA 19,114,361 Dec 2011 197
10 EHS 4D 18,028,967 Dec 2010 260
Source: NMA Top 100 Interactive Agencies 2012

Technology
Table 2.11: The Leading UK Technology Agencies

UK Fee Income
Agency from Digital (£) Year To UK Staff
Rank
1 EMC Consulting 16,600,000 Dec 2010 -
2 Endava 14,530,000 June 2011 60
3 Valtech 5,414,703 Dec 2010 40
4 Cognifide 3,500,000 Dec 2011 13
March
5 Unboxed Consulting 2,885,987 2011 25
Design and Build
Table 2.12: The Leading UK Design and Build Agencies

UK Fee Income
Rank
1 Dectica 33,429,930 Dec 2011 336
2 CACI 20,700,000 June 2011 100
3 Amaze 14,330,149 Dec 2011 200
4 Grass Roots UK 11,063,372 Dec 2011 95
5 Reading Room 9,995,204 March 2011 183
6 Fortune Cookie 9,555,605 Aug 2011 109
7 Rufus Leonard 9,388,594 April 2011 77
8 TH_NK 9,100,000 Oct 2011 93
9 HealthWallace 8,300,000 Dec 2011 62
10 Realise 8,000,000 Sept 2011 104

Media
Table 2.13: The Leading UK Media Agencies

UK Fee Income
Rank
1 Aegis Meida UK 243,000,000 Dec 2011 429
2 MediaCom 221,126,480 Dec 2011 187
3 Mindshare Media 171,822,116 Dec 2010 100
4 MEC 108,365,159 Dec 2010 107
5 Essence 106,494,000 March 2011 119
6 Media Contacts 92,031,000 Dec 2011 101
7 NEO@Ogilvy 77,400,000 Dec 2010 107
8 Steak 23,894,000 Feb 2011 75
9 Agenda21 Digital 20,372,354 Dec 2011 33
10 Harvest Digital 18,716,012 July 2011 36
INDUSTRY ISSUES
Growth of Consumer Technology

As it stands, consumer technology is growing on a wide scale over a variety of
sectors, including:
• smartphones
• tablet computers
• HD and 3D television
• mobile and fixed broadband connections
• digital television and radio.
The advancement of technology is helping consumers to be able to afford some

technology on a mass scale. An example of this is that HD television is now
accepted as the norm among the majority of consumers, mainly because such
equipment was made available at cheap prices by the manufacturers and
distributers as demand increased.

Unsurprisingly, the number of 3G connections in the UK is still increasing on a

considerable scale, meaning that more consumers are open to mobile
marketing opportunities. In the past year the number of 3G connections has
increased by 3.1 million to a total of 83.3 million, according to figures from
Ofcom. This growth has been spurred on by the fact that consumers are
becoming increasingly interested in having a faster Internet connection on
their mobile phone as smartphone sales continue to rise.
Eurozone Issues
Since 2009, it has been apparent that the financial state of the Eurozone is in
trouble. In December 2009, Greece announced that its debts had reached
€300bn, and denied reports that it was about to default on its debts. In early
2010, concerns were raised about the financial state of Portugal, the Republic
of Ireland and Spain and, in November 2010, it was announced that the
Republic of Ireland would receive a bailout package from the International
Monetary Fund (IMF) and the EU worth €85bn. 6 months later, the EU and the
IMF approved a €78bn bailout for Portugal. Finally, in late 2011 it became
apparent that Italy was struggling to keep up with its debts and had its debt
rating cut.
All in all, the uncertainty surrounding the Eurozone is causing some fear for
the executives of leading companies in the UK. Many companies are choosing
to stockpile cash in the event of another financial meltdown and as a
consequence some advertising budgets are being slashed or cut, especially in
new, technology-based mediums such as social networking.
Evolution of Social Network Advertising

One major area of advertising on the Internet is through social networking
sites, which have snowballed in popularity in the last decade.
As well as offering traditional advertising, social networks also offer advertisers

a chance to connect with consumers. As it stands, companies have the chance
to push their brand through advertisements on the side of Facebook’s
homepage, while offering consumers a chance to be a ‘fan’ of their brand and
go to events organised by the brand. The final two services can be organised
at no cost at all.
A social network is defined as a place that facilitates interaction between two

or more people; Facebook does this through creating friendships, while
YouTube does this through sharing and creating videos. Twitter gives
businesses the chance to communicate with customers through micro-blogging
(messages of 140 characters or less).

MARKET FORECASTS
The market is in shape to see a large amount of growth in the future, with
many traditional marketing avenues stalling and digital mediums showing
signs of considerable growth. However, technology is constantly blurring the
boundaries between sectors. As a result, it is becoming increasingly difficult to
define and outline the value of technology-dominated sectors.
Despite these growing similarities it is easy to point out two main sectors in
the digital market that will almost certainly see growth in the future. Firstly,
advertisers are still understanding how consumers use the Internet and how
they interact with advertisements in features such as OD television. Further to
this, mobile advertising has the potential to see very high levels of growth in
the coming years.
With this technological convergence in mind, it would be impossible to give a

clearly defined forecast for the market. However, it is very likely that the sector
will see strong levels of growth in the next 5 years. On top of this, growth will
be subject to the economic climate, with a poor economic performance leading
to smaller levels for growth. With a double-dip recession provisionally
announced in the second quarter 2012, the market could see slightly muted
growth, but traditional advertising mediums are likely to bear the brunt of it.

Marketing in the Digital Age Digital Television
3. Digital Television
BACKGROUND
Digital Switchover
The digital switchover started in October 2007 in Cumbria and has been
running since. However, it is scheduled to finish in 2012, with the following
regions yet to complete their switch to digital television:
• Meridian
• Northern Ireland
• Tyne Tees.
All other regions in the UK have completed the digital switchover and can now
only receive a digital signal as terrestrial output has been decommissioned.
Channels
Table 3.1 lists all of the channels that are available on the free-to-air digital
network in the UK. The majority of these channels are free to anyone with a
digital set-top box or television with an in-built digital receiver, but some are
only available on a subscription or pay-per-view basis.
Table 3.1: Channels Broadcasting on Freeview

by Broadcasting Period, April 2012
Channel Name Free-to-Air?

Channel Number
1 BBC One Yes
2 BBC Two Yes
3 ITV Yes
4 Channle 4/S4C Yes
5 Channel 5 Yes
6 ITV2 Yes
7 BBC Three Yes
8 Channel 4/BBC Alba Yes
9 BBC Four Yes
Table continues...


...table continued

Channel Number
10 ITV3 Yes
11 Pick TV Yes
12 Yesterday Yes
13 Channel 4+1 Yes
14 More4 Yes
15 Film4 Yes
16 QVC Yes
17 GOLD No
18 4Music Yes
19 Dave Yes
20 Really Yes
21 Viva Yes
22 Ideal World Yes
23 Bid Yes
24 ITV4 Yes
25 Dave ja vu Yes
26 Home No
27 ITV2+1 Yes
28 E4 Yes
29 E4+1 Yes
30 5* Yes
31 5USA Yes
32 The Big deal Yes
33 ITV1+1 Yes
34 ESPN No
35 QVC Beauty Yes
36 Create and Craft Yes
37 Price Drop Yes
38 Quest Yes
Table continues...


...table continued

Channel Number
39 The Zone Yes
40 Rocks & Co 1 Yes
41 Sky Sports 1 No
42 Sky Sports 2 No
43 Gems TV Yes
44 Channel 5+1 Yes
46 Challenge Yes
47 4seven Yes
49 Food Network Yes
50 BBC One HD Yes
51 ITV HD Yes
52 Channel 4 HD Yes
53 S4C Clirlun Yes
54 BBC HD Yes
60 The Jewellery Channel Yes
62 TV Stars Yes
70 CBBC Yes
71 Cbeebies Yes
72 CITV Yes
80 BBC News Yes
81 BBC Parliament Yes
82 Sky News Yes
85 RT Yes
87 Community Channel Yes
89 Al Jazeera English Yes
90 TV News Yes
91 Adult Selection Yes
92 Television X No
93 Smile TV2 Yes
Table continues...


...table continued

Channel Number
94 Smile TV3 Yes
95 Babestation No
96 Party Yes
97 Blue Kiss TV Yes
98 Babestation 2 Yes
99 Playboy Yes
100 Adult Selection Yes
101 Teletex Holidays Yes
102 Rabbit Yes
103 Gay Rabbit Yes
104 1-2-1 Dating Yes
105 BBC Red Button Yes
108 Sky Text Yes
110 Vision Yes
111 CCTV Yes
112 Sports tonight Live Yes
113 Connect 1 Yes
114 Connect 2 Yes
115 Connect 3 Yes
116 Racing UK Yes
193 Babestation 2 Yes
194 Playboy Yes
301 301 Yes
302 302 Yes
303 303 Yes
306 Channel Zero Yes
Table continues...


...table continued

Channel Number
307 TopUp Anytime 1 No
Source: Key Note
Subscribers to additional digital television services such as Sky or Virgin Media

could receive hundreds more channels. However, these channels come at a high
monthly cost, especially if a consumer wants sports and film channels. The
following providers offer consumers a way of watching digital television:
• Sky Digital
• Virgin Media
• Freeview
• Freesat
• BT Vision
• Freesat from Sky
• Top Up TV
• Wight Cable.
Sales Networks and In-House Advertising

Many channel owners choose to outsource their digital sales to specialist
advertising sales networks. These networks then negotiate between
advertisers and channel and network owners. Some media owners choose to
have their own in-house sales teams to perform this operation but many feel
that outsourcing is the best option.
An example of an in-house sales team is Channel 4 Sales, which offers

advertisers a range of services and case studies to consider. It has a wide range
of platforms for advertisers to utilise and target their audience. Finally,
Channel 4 Sales has a variety of facts and figures that advertisers can access to
make informed decisions.

Radio Stations Available on Television Services

A number of radio stations are also available to people who have digital
television services. As it stands there are 29 radio stations broadcasting on
Freeview and more on paid-for digital services.

Station Name
Channel
Number
700 BBC Radio 1
701 BBC Radio 1Xtra
702 BBC Radio 2
703 BBC Radio 3
704 BBC Radio 4
705 BBC Radio 5 Live
706 BBC Radio 5 Live Sports Extra
707 BBC 6 Music
708 BBC Radio 4 Extra
709 BBC Asian Network
710 BBC World Service
711 The Hits Radio
712 Smash Hits
713 Kiss 100
714 Heat
715 Magic 105.4
716 Q
718 Smooth Radio
719 BBC Radio Scotland/Ulster/Wales
720 BBC Radio Cymru/Radio nan Gàidheal/Foyle
722 Kerrang!
723 talkSPORT
724 95.8 Capital FM
Table continues...


...table continued
Station Name
Channel
Number
725 Premier Christian Radio
726 U105
727 Absolute Radio
728 Heart London
Source: Key Note
INDUSTRY DEVELOPMENTS
Smart Televisions
Smart televisions are essentially a new way of categorising a range of
televisions that have integrated a full range of Web 2.0 features such as media
streaming, web browsing and interactive web content. The term runs parallel
with the phrase smartphone, which was essentially coined to describe the same
aspects.
This is another technological advancement which further blurs the lines

between industry sectors. For example, it is now hard to decipher which
Internet-based content was accessed through a television and which content
was accessed through a computer or mobile phone. However, smart television
is certainly offering advertisers a new way to reach new and existing audiences.
However, one barrier to the mass market for smart televisions is cost. Some
consumers could find themselves paying almost double the price for a smart
television compared to an equivalent non-Internet-enabled television set.
Many consumers have video games consoles, which effectively turn a television
into an Internet-enabled screen.
Social Television
Many stakeholders in the industry feel that the future of television lies in
audiences becoming more social, and the building and enhancement of
communities will become more prevalent. By engaging audiences and giving
them the chance to interact with content and converse about output, content
makers have a bigger opportunity to monitor and drive content and
understand audiences.

Despite being in its early stages, social interaction with viewers could be a huge
part in encouraging larger audiences for any television channel. There is also
the chance for content producers to offer viewers extra content and this could
also contain marketing material.
On-Demand on Various Platforms

On-demand (OD) services were originally available on Internet web browsers.
However, recently channels and station owners have been releasing further
ways of accessing OD television such as from applications (‘apps’) available on
mobile phones or tablet computers. Furthermore, many owners of video games
consoles have access to OD services through their television if they use OD
software on the games console.
Another interesting development in the industry is the advancement of OD

technology in digital set-top boxes with companies such as Sky or Virgin Media.
These set-top boxes have a hard drive to store recorded material, but at the
same time have Internet connectivity so can connect to OD material.
MARKET SIZE
Digital Television Uptake

Compared to other digital services, digital television uptake is streets ahead.
With a penetration level of 93% for digital television, it far outshines the
nearest technology, broadband at home, with 74%. This shows the widespread
nature of digital television and, by the end of 2012, over 95% of households
should have a digital television as the terrestrial signal is switched off.
Table 3.3: Ownership of Digital Devices and Capabilities

in the UK (% of households), 2008 and 2011
2008 2011
Digital television 85 93
Paid-for television services 53 55
DAB radio 22 37
Broadband at home 57 74
Mobile broadband - 17
Source: The Communications Market 2008 and 2011, Ofcom

CONSUMER TRENDS
The Broadcasters’ Audience Research Board (BARB) is the leading industry
association when it comes to monitoring consumers’ behaviour surrounding
television. It maps the reach (the number of people that have watched content
on a television station in a certain period of time) of leading television channels
in the UK.
The top five channels in terms of reach are all five terrestrial channels, with
BBC One topping the list at 98.3% over the quarter and 83.9% over a 1-week
period. After this ITV1 was the most popular channel with a quarterly reach of
96.3% and a reach of 72.6% over a period of a week.
Table 3.4: Weekly, Monthly and Quarterly Reach of the Leading

Television Channels in the UK (%), Quarter 1 2012
Weekly Reach Monthly Reach Quarterly Reach

Terrestrial
BBC One 83.9 94.8 98.3
BBC Two 63.4 85.4 94.2
ITV1 72.6 89.9 96.3
Channel 4 63.3 85.8 94.5
Channel 5 53.0 79.2 92.1
Others
BBC Three 30.4 58.1 77.7
BBC Four 19.8 40.5 59.3
CBBC 9.6 18.3 28.2
Comedy Central 10.7 22.7 33.9
Dave 21.8 43.6 61.9
E4 20.5 39.5 58.6
Film4 19.8 39.6 56.3
ITV2 35.1 63.0 81.2
ITV3 21.5 40.3 58.5
ITV4 19.8 43.0 63.7
More4 21.5 44.1 63.4
Sky1 21.7 36.1 45.0
Source: BARB Quarterly Reach Report, Quarter 1 2012, Broadcasters’ Audience

Research Board

One interesting development in the industry is the fact that free-to-air

channels are not catching up with traditional terrestrial channels in terms of
reach, despite the digital switchover. The reach of channels such as BBCThree,
ITV2 and More4 has yet to come close to the reach for the traditional five
channels, despite almost every television viewer now receiving digital services.
However, one thing that has yet to be fully monitored is consumers using OD
services to access their content, which is becoming much more prevalent.
However, BARB is currently working on devising a way of monitoring content
usage on devices such as laptops, mobile phones and tablet computers. This is
especially true for accessing content illegally, which the UK television industry
currently does not have any figures on.
ADVERTISING
Main Media Advertising Expenditure

The figures in Table 3.5 outline the leading television channels in terms of
advertising expenditure. These figures cover the 12 months from January 2011
to December 2011. Where applicable the expenditure has been attributed to
a particular channel, but some general advertising services, such as Sky, have
been made clear in the table.
Table 3.5: Main Media Advertising Expenditure by the Top

Digital Channels (£000), Year Ending December 2011
General Sky Services 51,323

Sky Atlantic 10,201
Sky Movies 116
Sky Living 799
Sky One 1,888
Sky Sports F1 442
Sky Box Office 126
Sky Sports 1,190
Channel 4 8,195
E4 958
4Music 828
Film4 197
ITV1 4,047
ITV2 1,515
Table continues...


...table continued
ITV Player 112

Channel 5 5,912
CBBC 553
BBC Four 174
FX 1,583
Universal 686
Cartoon Network 1,425
Disney Channel 1,450
Discovery 2,935
Nickleodeon 1,280
Alibi 189
Yesterday 191
National Geographic 781
History Channel 840
CI Network 272
CBS 337
4D Interactive 100
Racing UK 95
Food Network 734
History Channel 326
MTV 1,423
Pick TV 116
Really 736
UKTV 541
Comedy Central 1,721
PBS 154
Dave 663
E!ent TV 346
Gold 188
Syfy 412
TCM 350
Table continues...


...table continued
Watch 489
Yesterday 91
Good Food 99
ESPN 1,785
Primetime 468
Cartoonito 269
Simplify Digital 115
Home 224
Challenge TV 157
Vintage TV 151
Virgin Media 109
Eurosport 478
Sony Entertainment TV 219
Star TV 2,644
S4C 108
STV 161
Teletext 85
Other 9,388
Total 125,490
Source: Nielsen
From the figures shown in Table 3.5, it is possible to see that Sky’s advertising
expenditure dwarfs every other channel’s expenditure and accounts for over
half of total industry expenditure on advertising. After this, Channel 4 and its
sister channels have the next highest levels of expenditure, followed by ITV.
Advertising Revenues
From the figures in Table 3.6 it is possible to see that advertising revenue
among commercial UK television stations has seen a slight increase in 2011
after very difficult years in both 2008 and 2009. However, with an increase in
market value of 11.2% in 2010 the market is certainly on the road to recovery.

Table 3.6: Commercial Advertising Revenue in Leading UK

Television Stations (£m), 2007-2011
2007 2008 2009 2010 e2011
Net advertising
revenue 3,576 3,470 3,136 3,486 3,520
% change year-on-year - -3.0 -9.6 11.2 1.0
e — Key Note estimates
Source: The Communications Market 2011, Ofcom/Key Note
Figure 3.1: Commercial Advertising Revenue in Leading UK

Television Stations (£m), 2007-2011
3,600
3,550
3,500
3,450
3,400
3,350
3,300
3,250
3,200
3,150
3,100
2007 2008 2009 2010 2011
Note: 2011 figure is a Key Note estimate.

Marketing in the Digital Age Digital Radio
4. Digital Radio
BACKGROUND
Digital Radio Switchover Problems

In 2009, the Department for Culture, Media and Sport (DCMS) published a
report entitled Digital Britain, written by Lord Carter. The report
recommended that the digital radio upgrade in the UK should be completed
by 2015.
However, this target is presently in major doubt and looks as though it will be
just be a pipe dream for now. William Rogers, the Chief Executive (CE) of local
radio operator UKRD Group, said in March 2011 that the target was ‘dead in
the water’ and not even a boost in funding from taxpayers could see the goal
reached. Further to this, Ford Ennals, the CE of Digital Radio UK, the group in
charge of the digital radio switchover, told The Guardian that he would no
longer publicly refer to the 2015 date recommended by Lord Carter.
These damning quotes clearly show that it is highly unlikely that digital radio
will be completely switched over by 2015. There has been a slower uptake in
digital audio broadcasting (DAB) radio than digital television. It remains to be
seen if government sources or Digital Radio UK will name a revised target for
the digital radio switchover.
As far as digital radio equipment is concerned, the overall sector will

undoubtedly struggle in terms of growth until a date for a switchover is set in
stone and receives the kind of funding seen for the digital television
switchover.
However, the industry has seen one promising development in the market. The
uptake in new technologies such as mobile phones, laptop computers and
tablet computers has meant that the radio industry has benefitted from a
strong audience for digital radio, despite this slow transition from terrestrial
to digital radio.
Licensing
As it stands, the regular FM (frequency modulation) spectrum in the UK is
extremely crowded and there is little room for any new radio stations to
broadcast. This is one of the main drivers behind a shift toward digital radio.
More stations could broadcast if digital radio was broadcast to more radio
devices, as digital audio broadcasting (DAB) compresses data into one
particular frequency and then up to ten stations can broadcast on the same
frequency without interference.
Ofcom currently manages the frequencies for local radio stations that wish to
purchase a place on the radio spectrum.

National Commercial Multiplex Operator and National Radio Owners

DAB stations are broadcast via multiplexes — collections of services `bundled’
into a single frequency using terrestrial transmitters. The average multiplex has
1.2 megabits (Mb) of usable capacity (bandwidth). There is one national
commercial multiplex operator — Digital One Ltd — which was first awarded
its renewable 12-year licence in 1998.
Ownership of the national DAB stations is mainly accounted for by five major
companies, as well as some minor Christian ones: Absolute Radio (TIML Radio
Ltd); Classic FM (owned by Global Radio UK Ltd); Planet Rock (owned by Planet
Rock Ltd); TalkSport (owned by UTV Media PLC); Jazz FM (owned by GMG
Radio); Amazing Radio (owned by Amazing Media); Premier Christian Radio
(owned by Premier Christian Media Trust); and UCB UK (owned by United
Christian Broadcasters).
• Digital One Ltd
Digital One is a leader in DAB digital radio. It launched in November 1999, and
has held the only digital radio licence for national commercial radio in the UK
ever since. It broadcasts a broad range of content including traffic data services
and some of the UK’s most profitable radio stations.
The company is wholly owned by Arqiva, one of the UK’s biggest

communications infrastructure companies which operates across broadcast,
satellite and mobile communications markets. Digital One’s head office is in
central London, alongside other Arqiva businesses.
• TIML Radio Ltd
TIML Radio Ltd, a group that is a wholly owned subsidiary of The Times Group,
(that own media properties such as The Times of India and The Economic Times)
is the owner of British radio stations Absolute Radio, Absolute 80s, Absolute
90s and Absolute Classic Rock.
• Global Radio UK Ltd
Global Radio is one of the leading UK radio companies and the home of some
of the most well-known radio stations in the UK. Its headquarters are in
London’s Leicester Square and it has a further 33 locations in the UK. Its brand
portfolio boasts the Heart, Capital, LBC, Classic FM, Gold and Xfm radio
stations.
• Planet Rock Ltd
Planet Rock is a digital radio station in the UK, available on a variety of formats
such as the Digital One DAB network, Virgin Media cable television, Freesat
and Sky, its website and via an Android or iPhone app.

• UTV Media PLC
UTV Media PLC is one of the most prominent media companies in the UK and
the Republic of Ireland, incorporating radio, television, new media and
publishing in its brand portfolio. Its radio division has brands such as talkSPORT,
as well as 13 local radio stations and interests in eight of the UK’s digital radio
multiplexes.
• GMG Radio
GMG Radio is one of Britain’s leading radio businesses encompassing the Real
Radio, Smooth Radio and Rock Radio brands. The group has 13 stations across
London, Wales, Scotland, Yorkshire, the East and West Midlands and the North
East and North West of England, providing GMG Radio with the largest
regional footprint in the UK.
The company is owned by the Guardian Media Group, which houses a number
of well-known media brands.
• Amazing Media
Amazing Radio is a national radio station broadcasting on digital radio. The

station plays new music from a number of music genres including pop, rock,
indie, hip hop, electronica and jazz.
MARKET SIZE
As the data in Table 4.1 show, an estimated 36.2% of UK households had access
to digital radio in 2011, a noticeable increase from the 22.3% of households
that had access to digital radio in 2007. Industry experts had hoped that this
figure would see a large rise in the last 5 years. However, the switchover to
digital radio is proving more difficult because of radios in cars, not all of which
are digital at the moment and owners of used cars are unlikely to purchase a
brand new radio purely to receive digital stations.

Table 4.1: Weekly Reach, Average Weekly Hours Per Capita, BBC
Share of Listening and Digital Take-Up for Radio
in the UK (% and hours), 2007-2011
2007 2008 2009 2010 e2011
Weekly reach % 89.8 89.5 89.8 90.6 90.5

Average weekly hours per capita 20.6 20.1 19.8 20.1 19.8
BBC share of listening (%) 55.0 55.7 55.3 55.2 55.3
Digital radio take-up (% of

households) 22.3 29.7 33.4 35.8 36.2
The average weekly reach for radio in general has gone up in recent years,
rising above 90% in 2010. This has in part been spurred on by the development
of new technologies so that consumers can listen to the radio on their mobile
phones, tablet devices and laptops.
CONSUMER TRENDS
From Table 4.2 it is possible to see that the number of people who listen to
digital radio on a dedicated DAB radio increased considerably in the first
quarter of 2011. The increase of 0.9 percentage points over a single quarter is
almost certainly because of Christmas, as people purchase DAB radios as gifts
to give to a family member or friend. The number of people listening to digital
radio through their digital television stood almost stagnant throughout the
year, while there has been a small rise in the proportion of people listening to
the radio through the Internet.

Table 4.2: Digital Radio’s Methods of Listening (%),

Q1 2010-Q1 2011
Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011
DAB 15.1 15.8 15.3 15.8 16.7

DTV 4.0 4.1 4.4 4.3 4.1
Internet 2.9 2.9 2.8 3.1 3.6
Digital unspecified 1.9 1.8 2.2 1.8 2.0
Total 24.0 24.6 24.8 25.0 26.5

DTV — digital television
The number of requests from UK users for the BBC iPlayer for radio services
increased in the first quarter of 2011 considerably. For the first 3 quarters of
2010 there was a decline, but this figure picked up again and the figures for
live requests increased from 69 million in quarter 4 2010 to 77 million in the
next quarter.
Table 4.3: BBC iPlayer Quarterly Radio Requests

(million), Q1 2010-Q1 2011
Q1 Q2 Q3 Q4 Q1
2010 2010 2010 2010 2011
Live 69 66 58 69 77
On-demand 27 28 26 26 28
Total 96 94 84 95 105

ADVERTISING
Table 4.4 outlines the total amount of money that leading radio stations in the
UK have spent on main media advertising in the year ending December 2011.
Table 4.4: Main Media Advertising Expenditure by Radio

Companies (£000), Year Ending December 2011
Capital FM 4,317
Heart 1,515
Magic 1,129
Smooth FM 603
U105 413
Absolute Radio 286
FM 104 (Dublin) 233
Digital One 230
Premier Christian Radio 223
Gem 106 219
Real Radio 185
Orion Media 167
Kiss 145
Classic FM 122
BBC Radio 113
Global Radio 78
Other 851
Total 10,829
Source: Nielsen
It is possible to see that Capital FM was the radio station that spent the most
on advertising by some margin in 2011, with an advertising expenditure level
of £4.3m. The nearest companies to this level were Heart, which spent £1.5m,
and Magic, with an expenditure level of £1.1m.
The total advertising expenditure level for the industry is noticeably lower than
that seen before the recession. In 2007, the total figure stood at just under
£16.8m, a whole £6m more than seen in 2011, thus showing how the market
has been affected by the economic slump.

Marketing in the Digital Age Marketing on the Internet
5. Marketing on the Internet
BACKGROUND
Increasing Market Share

The overriding theme in the marketing on the Internet sector is one of general
growth, and the Internet becoming a more integral part of the whole digital
marketing industry.
Table 5.1: UK Internet Share of Total Advertising Expenditure

(£m and %), Years Ending September 2007-2011
2007 2008 2009 2010 2011
Internet (£m) 2,642.2 3,270.0 3,468.3 3,944.6 4,448.2

Total spend (£m) 17,270.2 17,257.2 15,189.4 15,773.3 16,181.8
Internet market share (%) 15.3 18.9 22.8 25.0 27.5
According to figures from Warc, total expenditure on marketing on the

Internet increased by 68.4% between 2007 (£2.64bn) and 2011 (£4.45bn).
While this sector has seen strong growth, the overall industry has actually seen
a decline over the 5-year period, largely due to the recession, though it did
record an increase in value in the last 2 years.
There are several main elements that are driving growth for the Internet
marketing sector. Firstly, the penetration levels for Internet usage are
continually rising and this is effectively increasing the potential audience and
opening up new demographics to reach through advertising. On top of this,
developments in technology are giving consumers more chances to go on the
Internet, with tablet computers gaining huge popularity since 2010.
Further to this, the broadband infrastructure in the UK is currently undergoing

a process of upgrades. The Government has put aside a fund to finance a
broadband infrastructure in rural areas, while a variety of Internet service
providers (ISPs) are upgrading their services to offer consumers faster overall
Internet speeds.

Social Networking
One major area of advertising on the Internet is through social networking
sites, which have snowballed in popularity in the last decade. As well as
offering traditional advertising, social networks also offer advertisers a chance
to connect with consumers. As it stands, companies have the chance to push
their brand through advertisements on the side of Facebook’s homepage,
while offering consumers a chance to be a ‘fan’ of their brand and go to events
organised by the brand. The final two services can be organised at no cost at
all.
A social network is defined as a place that facilitates interaction between two

or more people. Facebook does this through creating friendships, while
YouTube does this through sharing and creating videos. Twitter gives
businesses the chance to communicate with customers through micro-blogging
(messages of 140 characters or less).
Table 5.2 presents the top 10 social networking websites in the UK and the US
based on their share of visits. Facebook accounted for the highest proportion
of visits in both the UK and the US, at 45.36% and 62.94%, respectively,
followed by YouTube and Twitter.
Table 5.2: Top 10 Social Networking Websites Based

on Market Share of Visits in the UK and the US, May 2012
Share of
Websites Domain Visits (%)
UK
1 Facebook www.facebook.com 45.36
2 YouTube www.youtube.com 24.98
3 Twitter www.twitter.com 3.56
4 Yahoo! UK & Ireland
Answers uk.answers.yahoo.com 2.44
5 Gumtree www.gumtree.com 1.37
6 Tumblr www.tumblr.com 1.32
7 Instagram www.instagram.com 1.25
8 LinkedIn www.linkedin.com 1.23
9 Moshi Monsters www.moshimonsters.com 0.39
10 Reddit www.reddit.com 0.38
Table continues...

Table 5.2: Top 10 Social Networking Websites Based

on Market Share of Visits in the UK and the US, May 2012
...table continued
Share of
Websites Domain Visits (%)
US
1 Facebook www.facebook.com 62.94
2 YouTube www.youtube.com 20.14
3 Twitter www.twitter.com 1.82
4 Yahoo! Answers answers.yahoo.com 0.95
5 Pinterest www.pinterest.com 0.85
6 LinkedIn www.linkedin.com 0.76
7 Tagged www.tagged.com 0.73
8 Google+ plus.google.com 0.63
9 MySpace www.myspace.com 0.46
10 Yelp www.yelp.com 0.35
Source: Experian Hitwise
This new type of marketing has, however, led to several issues for advertisers.
In 2010, a member of Vodafone UK’s staff was suspended after an obscene
message was seemingly posted on its official Twitter account. Later in the year
the company made another error when it posted an unmoderated Twitter feed
on its website. Any Twitter user who posted a message with ‘#makesmesmile’
in it would see their message on the Vodafone website. Minutes later the feed
was inundated with users voicing their concern for Vodafone’s UK tax
arrangements, resulting in embarrassment for the firm.
Google+ Hits the Ropes

In 2011, Google officially launched Google+, which is a social network that has
been directly compared with its rival Facebook. Since Facebook’s launch there
has not been a social network to challenge it. However, Google downplayed
this, saying that Google+ was merely an extension of its Google product.
However, since the Google+ project has been launched the website has
received mixed reviews. In recent months the majority of the articles
surrounding the website had suggested that the network is doomed to fail,
including one in Forbes magazine in July 2011. Further to this, web traffic
figures from Alexa.com are suggesting that the amount of traffic to the
website has been dropping for some time.

Increasing Broadband Speeds

Almost every household that has access to the Internet has broadband, and
dial-up connections have become almost redundant, except in very rural areas.
According to statistics from Ofcom, the average broadband speed in the UK is
7.5 megabits per second (Mbit/s). However, there is a huge gap between an
average speed and an advertised speed, with an advertised speed of up to
24 Mbit/s actually having an average of 7 Mbit/s.
Many ISPs are investing in high-speed broadband and it is possible to see that
services advertised at being above 24 Mbit/s actually average out at 35.5 Mbit/
s.
Table 5.3: Average UK Broadband Speeds

(megabits per second [Mbit/s]), November 2011
Average Speed
Advertised Speed
All connections 7.6
Up to 10 Mbit/s 5.3
Up to 24 Mbit/s 7.0
Above 24 Mbit/s 35.5
Source: UK Fixed-Line Broadband Performance, November 2011, Ofcom
MARKET SIZE
By Advertising Expenditure
Advertising expenditure on the Internet reached £4.45bn in 2011, a
considerable rise from the £2.64bn seen in 2007 and thus showing that the
industry is going from strength to strength despite the recession.

Table 5.4: Total UK Internet Advertising Expenditure

(£m), Years Ending September 2007-2011
2007 2008 2009 2010 2011
Expenditure (£m) 2,642.2 3,270.0 3,468.3 3,944.6 4,448.2

% change year-on-year - 23.8 6.1 13.7 12.8
The data in Table 5.5 show the top five sectors in the UK by share of display
spend in 2011. The largest proportion of display spend was accounted for by
the finance sector, closely followed by the consumer goods sector, with the
retail sector in third place.
Table 5.5: Top Five Sectors by Share of Display Spend

in the UK (%), 2011
Finance 15
Consumer goods 15
Retail 12
Entertainment and the media 12
Technology 9
Source: Internet Advertising Bureau/PwC, 2011 Online Adspend Study
By Internet Access
According to statistics from the Government, Internet access in the home has
increased consistently over the last 5 years. Among UK households, penetration
levels for broadband stood at 77% in 2011, owing to the fact that a growing
number of people in the older generation are learning how to get online and
Internet access among those in rural communities is increasing. All in all, over
the last 5 years there has been a 16 percentage-point rise in the proportion of
households in the UK that have broadband in their home.

Table 5.6: Household Internet Access in the UK (%), 2007-2011
Household Internet Access (%)
2007 61
2008 65
2009 70
2010 73
2011 77
Source: Internet Access — Households and Individuals, 2011, Office for National
Statistics © Crown copyright material is reproduced with the permission of the
Controller of HMSO (and the Queen’s Printer for Scotland)
From the statistics shown in Table 5.7, it is apparent that the majority of
Internet users access the Internet from their own homes. The proportion of
people that access the Internet at work or at their place of education has stayed
roughly the same over the last 5 years, as has the proportion of those accessing
the Internet at another person’s house. Finally, the use of wi-fi hotspots has
increased from 7% in 2010 to 13% in 2011.
Table 5.7: Places for Accessing the Internet (%), 2008-2011
2008 2009 2010 2011
Home 90 94 95 95
Place of work (other than home) 44 43 41 43
Another person’s home 20 28 17 24
Hotspot (wi-fi) 5 6 7 13
Place of education 14 15 13 12
Of the people surveyed in 2010 and 2011, those who do not have Internet
access gave a reason why. There has been no great shift in reasons why people
do not have Internet access, with 50% of the respondents in 2011 replying that
they simply do not need the Internet in their household, up from 39% in 2010.

Table 5.8: Reasons for Not Having Internet at Home (%),

2010 and 2011
2010 2011
Have access to the Internet elsewhere 8 8

Don’t need Internet 39 50
Don’t want Internet 20 -
Equipment costs too high 18 19
Access costs too high 15 13
Lack of skills 21 21
Privacy or security concerns 4 5
Physical disability 2 3
None of the above, but other 14 18
CONSUMER TRENDS
It is apparent that over half of Internet users (57%) use social networks, with
the highest penetration levels evident among people aged between 16 and 24
(91%) and 25 to 34 (76%). On top of this, penetration was slightly higher
among female respondents (60%) than male respondents (54%).
Penetration for finding out information about goods and services on the
Internet was fairly evenly distributed among age and gender, with an average
of 77%. This is a similar story to using services related to travel and
accommodation, which had a lower penetration level of 57% but was also
fairly evenly distributed. Penetration for both of these activities was lowest,
however, among those aged 16 to 24.
Respondents who used Internet banking services totalled 55%, with the
highest penetration by age range recorded among 25 to 34 year-olds, at 72%.
On top of this, men (58%) had a higher penetration level than women (52%).

Table 5.9: Internet Activities of Internet Users in the UK

by Sex and Age (%), 2011
e.g. on Facebook or Twitter
Finding information about
travel and accommodation

Using services related to
goods and services
Social networking,
Internet banking
All 57 77 57 55
Sex
Men 54 78 58 58
Women 60 77 56 52
Age
16-24 91 63 45 49
25-34 76 77 58 72
35-44 58 80 58 63
45-54 42 83 63 51
55-64 30 85 63 50
65+ 18 78 55 31
The highest penetration level among the Internet activities shown in Table 5.10
was recorded for reading or downloading online news, newspapers or
magazines, at 53%. It was also apparent that men (57%) were more likely to
read or download online news, newspapers or magazines than women (47%).
However, women (46%) were more likely to use the Internet to seek
health-related information than men (38%).
Perhaps predictable, penetration levels for looking for information about

education, training or courses on the Internet was at its highest among
younger respondents, with 58% of 16 to 24 year-olds using the Internet for
this reason, much higher than the 36% average. Finally, male respondents
(39%) were almost twice as likely as female respondents (20%) to use the
Internet to download software (other than games software).


Seeking health-related information

news, newspapers or magazines
Reading or downloading online
Looking for information about

education, training or courses
(other than games software)

Downloading software
All 53 42 36 30
Sex
Men 57 38 34 39
Women 47 46 39 20
Age
16-24 48 30 58 38
25-34 65 51 46 38
35-44 57 50 36 32
45-54 50 38 23 60
55-64 46 42 19 21
65+ 41 39 11 16
As the demographic with one of the highest unemployment rates at the

moment, it perhaps does not come as a surprise that penetration levels for
using the Internet to look for a job or to send a job application were at their
highest among 16 to 24 year-olds, at 49%; much higher than the 30% average.
Furthermore, penetration levels were fairly even among individuals using the
Internet for telephoning or making video calls (via a webcam) over the
Internet. The average stood at 21%, with 28% of respondents aged between
25 and 34 using this feature online.

It was also apparent that male respondents (35%) were much more likely to
use the Internet to sell goods or services over the Internet than their female
counterparts (27%). However, penetration levels were comparatively low
across the board for doing an online course, with an average penetration level
of just 7%.

calls (via webcam) over the Internet

Telephoning or making video
sending a job application
Selling goods or services
Doing an online course

Looking for a job or
over the Internet

All 30 21 31 7
Sex
Men 31 23 35 6
Women 29 19 27 7
Age
16-24 49 22 28 9
25-34 42 28 45 9
35-44 31 21 35 6
45-54 24 16 31 9
55-64 14 18 21 3
65+ 2 17 16 3

A large proportion of respondents (47%) said that they used the Internet to
consult Wikis to obtain knowledge in any subject, with Wikipedia being the
most well-known example of a Wiki. However, reading or posting opinions on
civic or political issues (14%), professional networking using websites such as
LinkedIn (12%) and taking part in online consultations or voting on civic or
political issues had much lower penetration levels (7%).

or voting on civic or political issues

Taking part in online consultations
Professional networking using

Reading or posting opinions
Consulting Wikis to obtain
websites such as LinkedIn

knowledge in any subject
on civic or political issues
All 14 7 47 12
Sex
Men 18 7 51 16
Women 11 7 43 9
Age
16-24 16 5 59 8
25-34 19 8 52 18
35-44 16 9 51 17
45-54 9 7 43 14
55-64 15 9 39 9
65+ 8 6 26 3

Top Social Media Brands

The top five brands engaged in social media in 2011, as scored by Social Media
Reputation, were all Internet or technology based. Ebay, an Internet auction
hosting firm, had the highest rank of any company, with a score of 92.29
according to Social Media Reputation. After this, Apple is second in the
rankings, followed by Google, BlackBerry and Amazon, according to the Social
Media Reputation (SMR) index devised by social specialists Yomego.
Table 5.13: Top Five Brands Engaged in Social Media, 2011
Brand Reach Satisfaction Overall

Position
1 ebay 98.65 85.60 92.29
2 Apple 98.22 88.98 88.61
3 Google 97.82 84.22 87.00
4 BlackBerry 95.13 76.09 85.25
5 Amazon 94.25 80.12 83.58
Source: Social Media Reputation — Top Brands in Social Media, according to the
Social Media Reputation (SMR) index devised by social specialists Yomego

Marketing in the Digital Age Mobile Marketing
6. Mobile Marketing
BACKGROUND
Impending 4G Auction
The auction of the 4G bandwidth has been delayed for many years, but in
January 2012 solid plans were finally laid out. It is looking likely that the
auction will take place at the end of 2012, according to the Financial Times,
which said the delays seen beforehand had come because of objections from
the main mobile operators about how the bidding process would be
structured.
Analysts at PwC have forecast that the auction could raise £4bn for the UK
Government, which is considerably less than the £22.5bn seen for the 3G
auction in 2000. However, before the auction date is confirmed, there is a
possibility that a service provider will object to the conditions of the auction
and hold up the process with legal action.
In terms of how this will affect the mobile marketing industry, consumers
would have access to higher speed Internet, which could allow them to view
more complex websites more quickly on their phones. Furthermore, it could
allow advertisers to add more features to applications or explore new avenues
in terms of interactive content.
Near Field Communication

Another exciting development for the industry is the potential that near field
communication (NFC) could offer the mobile marketing industry. Already
advertisements are appearing in London that are NFC-enabled, which allow
consumers that have NFC phones to get additional advertising content on their
phone.
In March 2012, Reading was selected for a trial of NFC advertising. Advertising
in selected advertising sites covered 13 brands, including EA Games, Morrisons,
H&M and Mercedes, which offered consumers exclusive content and
promotions via the QR (quick response) codes and NFC such as coupons, offers,
music and games.
Increase in Internet-Enabled Mobile Phones

Unsurprisingly, the number of 3G connections in the UK is still increasing on a
considerable scale, meaning that more consumers are open to mobile
marketing opportunities. In the past year, the number of 3G connections has
increased by 3.1 million to a total of 83.3 million, according to figures from
Ofcom. This growth has been spurred on by the fact that consumers are
becoming increasingly interested by having a faster Internet connection on
their mobile phone as smartphone sales continue to rise.

Table 6.1: Mobile 3G Connections by Service Provider

(million), 2007-2011
2007 2008 2009 2010 e2011
Everything Everywhere - - - 31.2 31.9

O2 20.0 21.4 22.4 24.3 24.7
Vodafone 16.8 17.7 18.8 20.1 20.5
3 4.0 4.5 4.9 5.6 6.2
T-Mobile 17.3 16.8 17.2 - -
Orange 15.7 16.4 16.9 - -
Total 73.8 76.7 80.3 81.1 83.3

MARKET SIZE
Since AdMob was acquired by Google for $750m, and published its last AdMob
Mobile Metrics Report in 2010, independent figures on the mobile advertising
industry in the UK have been sparse.
AdMob facilitated advertisements for more than 23,000 mobile sites and apps
in 2010. However, Apple swiftly announced that only ‘independent’ mobile
advertising networks could collect data on Apple users and target advertising
on its products and as a result. Key results from the last AdMob Mobile Metrics
Report is shown in Table 6.2.

Table 6.2: Mobile Advertisement Requests by Manufacturer

(%), May 2010
Model % of Requests
Brand
Apple iPhone 18.8
Apple iPod Touch 11.0
Motorola Droid 3.2
Samsung SCH R350 1.6
Nokia 5130 1.5
HTC Magic 1.4
Nokia 3110c 1.4
Nokia N70 1.2
HTC Hero 1.1
Nokia 6300 1.1
Source: AdMob Mobile Metrics Report, May 2010
While there is no available information on current market shares, it is possible

to attain that Apple and HTC both hold a considerable share of the market, as
do BlackBerry and Samsung.
As the data in Table 6.3 show, the US accounts for a considerable share of the
market. However, as this data is from 2010, India and Indonesia’s share would
have undoubtedly increased since as its markets are still developing and
growing rapidly, as is that of Vietnam. The UK’s position would have stayed
roughly the same in 2012, at around 3%.
Table 6.3: Mobile Advertisement Requests by Country (%),

May 2010
% of Requests
Country
US 40.3
India 9.9
Indonesia 5.3
UK 3.0
Canada 2.2
Table continues...

Table 6.3: Mobile Advertisement Requests by Country (%),

May 2010
...table continued
% of Requests
Country
Japan 2.1
France 1.9
China 1.9
Mexico 1.7
Vietnam 1.6
Other 30.1
Source: AdMob Mobile Metrics Report, May 2010
CONSUMER TRENDS
Key Note commissioned an exclusive consumer survey in March 2012 to
understand consumers’ habits and interactions concerning mobile phones. The
respondents were given a range of types of tasks they can perform on a mobile
phone and were asked:
“If you have a mobile phone, which of these uses of the phone
would you say you ‘could not do without’?”
The highest penetration was recorded for keeping in touch with friends
(74.1%) and family (74%), thus showing that the most common use of a mobile
phone is still as a communications device. Of all the respondents, only 8.4%
responded that they did not own a mobile phone.
After contacting friends and family, the next highest penetration for use of a
mobile phone ‘you could not do without’ was as a means of security, at 72.5%.
This was followed by having the ability to text somebody instead of speaking
to them in person (58.5%).
Penetration was recorded at 38.5% for not being able to do without using a
mobile phone as a means of taking photos or videos without carrying a camera.
After this, many respondents (34.8%) said that they could not do without using
their phone to organise social events, or using it as their all-round ‘life
organiser’ (34.5%).
After this, browsing the Internet on a mobile phone proved to be the next most
popular function, with penetration at 29.6%. Perhaps the most scope for
growth could lie in playing games (16.5%) and watching television or videos
(8.4%) on a mobile phone, as smartphones become more sophisticated.

Table 6.3: The Role of Mobile Phones in Consumers’ Lifestyles

(% of adults), March 2012
Keeping in touch with friends 74.1

Keeping in touch with family 74.0
As my means of security (e.g. walking home late,
breaking down in the car) 72.5
Texting someone instead of having to speak to them
in person 58.5
Being able to take photos or videos without carrying
a camera (e.g. at parties, on holiday) 38.5
Organising social events (e.g. sports, going to pub or
restaurant) 34.8
As my all-round ’life organiser’ (e.g. telling time, alarm
clock, communicating, calendar) 34.5
Browsing the Internet 29.6
Listening to music or the radio ’on the move’ 23.4
Sending work-related emails and communications 21.7
Playing games on the phone 16.5
Using for household jobs (e.g. texting/phoning
shopping lists) 14.4
Watching television or videos 8.4
Do not own a mobile phone 8.4
Source: Key Note

Marketing in the Digital Age An International Perspective
7. An International Perspective
MARKET PENETRATION
The international market is extremely different when it comes to market
penetration of the latest technologies and devices. The UK leads the way
among nations with digital television, with 97%; penetration levels for most
nations were of a high standard, but penetration levels among the developing
BRIC countries (Brazil, Russia, India and the People’s Republic of China) were
relatively low in comparison.
Further to this, the UK is among the nations with the highest penetration for
fixed broadband connections per household. The UK is only behind France
(77%) in its standings and is above the US (70%) and Germany (67%). Once
again, the developing countries at the bottom of Table 7.1 are behind the more
developed countries above, especially in the case of India, which has a market
penetration of just 5%.
The UK leads the way for accessing the Internet on a mobile phone, with 46%
of the nation having access to the Internet through their mobile. However, the
US (41%), Italy (40%), France (39%) and Germany (38%) are not far behind in
the standings.
Finally, the UK ranks fourth in terms of the number of mobile connections there
are per 100 people, behind Russia, which has 156 mobile connections per 100
people, Italy (with 148) and Germany (with 133). The UK currently has 130
mobile connections per 100 people, above France, the US and Japan. India and
the PRC are seemingly behind by a considerable margin, but their growth levels
are forecast to be much higher than other nations.

Table 7.1: Market Penetration for Digital Technology

in Selected Countries (%), December 2011
Digital Television (%)
Mobile Connections
Fixed Broadband
Via a Mobile (%)

Internet Access
Per 100 People

Household (%)
Connection in
Country
Russia 34 36 - 156
Italy 78 51 40 148
Germany 62 67 38 133
UK 97 74 46 130
Australia 75 66 - 129
Brazil 59 25 - 100
France 93 77 39 99
US 87 70 41 98
Japan 66 66 - 92
India 29 5 - 64
PRC 33 32 - 64
PRC — People’s Republic of China
Source: International Communications Market Report 2011, December 2011,

Ofcom
ADVERTISING ENVIRONMENT
From Table 7.2 it is clear to see what kind of an impact the Eurozone crisis has
had on the advertising market in Europe in 2010 and 2011. Europe is the only
region to actually see a fall in advertising expenditure between Q2 2010 and
Q2 2011, but this fall was relatively minor, at -0.3%.
The areas in which developing nations are situated have seen the fastest
amounts of growth in recent years, with Asia Pacific having 9.3% year-on-year
growth and Latin America recording 8.2% growth over the period. North
America, a more established market, experienced 3.1% growth, while the
Middle East and Africa reported 2.6% growth.

Table 7.2: Change in Advertising Expenditure in Global Regions

(%), Quarter 2 2010-Quarter 2 2011
% Change
North America 3.1

Asia Pacific 9.3
Europe -0.3
Latin America 8.2
Middles East and Africa 2.6
Global 5.7
Source: Nielsen Global AdView Pulse Q2 2011
CONSUMER BEHAVIOUR
Table 7.3 outlines the reach (the percentage of global Internet users who visit
a specific site or type of site) of all social networking websites among the
leading countries of each major region in the world.
The UK has a relatively high reach of 98% for all social network websites. All
but two of the nations covered in the table (the PRC and Japan) have a reach
of 85% or more for social networks, thus showing how integral they have
become to the daily lives of Internet users across the globe.
Table 7.3: Reach of Social Networking Sites in Selected

Countries Among Internet Users (%), October 2011
Reach (%)
North America
US 98
Canada 94
Latin America
Brazil 97
Argentina 96
Columbia 96
Table continues...


...table continued
Reach (%)
Latin America (cont.)
Mexico 96
Peru 96
Venezuela 96
Chile 94
Puerto Rico 90
Europe
Spain 98
UK 98
Portugal 96
Turkey 96
Republic of Ireland 95
Poland 95
Denmark 94
Netherlands 94
Belgium 93
Italy 93
Sweden 93
Finland 91
France 91
Germany 90
Switzerland 90
Norway 89
Russia 88
Austria 86
Table continues...


...table continued
Reach (%)
Middle East and Africa
Israel 94
South Africa 88
Asia Pacific
Australia 96
Phillippines 96
India 95
New Zealand 95
Indonesia 94
Malaysia 94
Singapore 94
Taiwan 94
Hong Kong 93
South Korea 87
Vietnam 85
Japan 58
PRC 53
PRC — People’s Republic of China
Source: comScore Media Metrix, October 2011
The reach for Canada and the US was relatively high, at 98% and 94%,
respectively, as was the case in the Latin American countries, with every nation
seeing a reach of 90% or above.
When it comes to Europe, the UK and Spain lead the way with a reach of 98%,
while Austria recorded the lowest reach in Europe, at 86%. Both Israel and
South Africa in the Middle East and Africa region also saw a reach of over 88%.

In the Asia Pacific region, the results were much more mixed. Some nations,
such as Australia (96%), the Philippines (96%), India (95%) and New Zealand
(95%), had very high levels of social network usage. However, in the PRC (53%)
and Japan (58%), levels were much lower and these are the regions that social
networks will undoubtedly be targeting at the moment.

Marketing in the Digital Age PEST Analysis
8. PEST Analysis
POLITICAL
Improving Rural Broadband

There are still large areas of the UK with little or no access to broadband
services and, in August 2011, it was announced that the Government had
allocated £362m to improve broadband access in rural areas. The culture
secretary, Jeremy Hunt, said that the fund would ensure that 90% of
hard-to-reach communities with ‘painfully slow’ Internet speeds could have
access to superfast broadband by 2015.
At the moment advertisers have some difficulty reaching people in rural areas
in a digital format. Many rural areas do not have a mobile phone signal or
mobile Internet capabilities; this needs to be addressed to maximise potential
audiences.
Impending 4G Auction
The auction of the 4G bandwidth has been delayed for many years, but in
January 2012 solid plans were finally laid out. It is looking likely that the
auction will take place at the end of 2012, according to the Financial Times,
which said the delays seen beforehand had come about because of objections
from the main mobile operators concerning how the bidding process would
be structured.
Analysts at PwC have forecast that the auction could raise £4bn for the UK
Government, which is considerably less than the £22.5bn seen for the 3G
auction in 2000. However, before the auction date is set, it is possible that a
service provider could object to the conditions of the auction and hold up the
process with legal action.
The benefits of 4G telecommunication for consumers include being able to

access the Internet at a faster speed, which could allow them to view more
complex websites on mobiles more quickly. Furthermore, it could allow
advertisers to add more features to applications (‘apps’) or explore new
avenues in terms of interactive content.
Adult Content Internet Filters

In May 2012, it was announced that the Government was considering the
introduction of web filters to make adults who want to view pornography ‘opt
in’. This filter would also block access to other graphic and violent content, as
well as content such as gambling websites. This could come as a blow for some
advertisers such as bookmakers who wish to advertise online.

Later in May 2012 the Internet service provider TalkTalk announced that it
would be the first company to ask both new and existing subscribers whether
they want to install a filter removing access to all adult material. TalkTalk
predicted that 1 million subscribers will have adopted it by March 2013.
ECONOMIC
Looking at the general economic forecasts in Table 8.1, there are some
emerging trends that are of interest relating to the digital marketing industry.
All of the figures are taken from government sources and take into account
the current economic climate.
The UK is forecast to see a steady increase in population for the next 5 years
and in 2016 the population of the UK is forecast to reach over 65 million for
the first time. This increase in population is good news for the digital marketing
industry as it inevitably leads to an increase in audience in the long term.
The UK’s gross domestic product (GDP) growth is expected to increase in 2013,
to 1.7%. This rise is then set to continue, with growth reaching 2.1% by 2014
and rising again to 2.4% in 2015. These figures show a very small amount of
growth and could ultimately lead to fewer new jobs becoming available, as
output is increasing by such a small amount. As a result, advertisers may want
to consider that many consumers will have less disposable income.
Inflation is forecast to decrease by 1.1 percentage points in 2013. A minimal

increase of 0.1 percentage points is forecast for 2014, followed by a large
increase in inflation of 0.5 percentage points in 2015. Finally, there is forecast
to be no change in inflation in 2016.

Table 8.1: Economic Forecasts (000, % and million), 2012-2016
2012 2013 2014 2015 2016
UK resident population
(000) 63,244 63,758 64,271 64,776 65,271
GDP growth (%) 0.7 1.7 2.1 2.4 2.4
Inflation† (%) 4.0 2.9 3.0 3.5 3.5
Unemployment‡ (million) 1.66 1.71 1.66 1.56 1.45
GDP — gross domestic product

† — at retail price index (RPI)
‡ — actual number of claimants; claimant count measures the number of people claiming
Jobseeker’s Allowance
Source: National Population Projections, 2010-based projections, National

Statistics website/Forecasts for the UK Economy, February 2012, Treasury
Independent Average © Crown copyright material is reproduced with the
permission of the Controller of HMSO (and the Queen’s Printer for Scotland)
SOCIAL
Digital Radio Switchover Problems

In 2009, the Department for Culture, Media and Sport (DCMS) published a
report entitled Digital Britain, written by Lord Carter. The report
recommended that the digital radio upgrade in the UK should be completed
by 2015.
However, this target is now in major doubt. William Rogers, the Chief Executive
(CE) of local radio operator UKRD Group, said in March 2011 that the target
was ‘dead in the water’ and not even a boost in funding from taxpayers could
see the goal reached. Further to this, Ford Ennals, the CE of Digital Radio UK
(the group in charge of the digital radio switchover), told The Guardian that
he would no longer publicly refer to the 2015 date recommended by Lord
Carter.
These damning quotes clearly show that it is highly unlikely that digital radio
will be completely switched over by 2015. There has been a slower uptake in
digital audio broadcasting (DAB) radio than digital television. It remains to be
seen if government sources or Digital Radio UK will name a revised target for
the digital radio switchover.
As far as digital radio equipment is concerned, the overall sector will

undoubtedly struggle in terms of growth until a date for a switchover is set in
stone and receives the kind of funding seen for the digital television
switchover.

However, the industry has seen one promising development in the market. The
uptake in new technologies such as mobile phones, laptop computers and
tablet computers has meant that the radio industry has benefitted from a
strong audience for digital radio, despite this slow transition from terrestrial
to digital radio.
Social Media Evolution

Social media networks are very closely linked to the latest fashions and trends.
New social media networks usually have a relatively small, cult following, with
the potential to reach a wide-scale audience. At the time of writing, the
fastest-growing social network is Pinterest, where users can share photos that
they have saved to albums, sometimes for inspiration and as a place to discuss
ideas.
Table 8.2: Average Minutes Spent on Selected Social Network

Sites per Visitor (minutes and %), October 2011
Average Minutes Per Visitor % Increase Year-on-Year
Facebook 378.7 40
Tagged 155.2 25
Tumblr 81.6 41
Pinterest† 72.1 512
† — growth in engagement for Pinterest is measured from May 2011, when comScore
began reporting on the site
Source: comScore Media Metrix, October 2011
Shift in Mobile Phone Usages

The up-and-coming advertising medium at the moment is on mobile phones.
Agencies are still trying to understand user habits fully and, in turn, many users
are still investing in smartphones that have Internet capabilities.
Many consumers are starting to use their mobile phones in a similar manner
to computers. Social media apps have a good market penetration and are
ultimately encouraging consumers to use the Internet on their mobile phones.

TECHNOLOGICAL
iPad Leads the Tablet Market

In 2010, Apple launched the iPad — one of the first mass-produced tablet
computers. Since then, a range of similar products from Apple’s competitors
have been introduced onto the marketplace, but none has, as of yet, achieved
the success and high sales figures experienced by the iPad. In recent years,
netbooks have also recorded particularly high sales figures, although these
appear to have slowed slightly due to the introduction of tablet computers.
After undergoing a long period of product testing, Apple revealed that it had
found that laptop or desktop computers with touch-screens did not work for
users on the whole. Instead, it found that a tablet shape was much more
comfortable for users if they wanted a touch-screen model. This goes some way
in explaining the success of the iPad since its release in April 2010.
One of driving forces behind the success of tablet computers has been the
method that these devices use to download software. As tablet PCs do not have
a disc drive, all software has to be downloaded. This option has been developed
from extensions to existing mobile phone app download models, such as
Apple’s iPhone and Google’s Android devices. Apple’s App Store only offers
downloads for its own devices, while Google’s Android Market offers
downloads for all Android devices, including software from several different
manufacturers.
Media Convergence
As it stands mobile phones are growing increasingly similar to computers,
laptops and tablet devices. This trend is going to continue into the future as
users expect and demand more from their mobiles in terms of speed, functions
and tasks that they can perform. On top of this, programmes that might be
considered a computer-specific piece of software could start to emerge on
mobile phones.
The mobile phone industry is just one sector in a market saturated with
consumer technology devices. However, the mobile phone industry is ideally
placed as consumers still want to make calls on a portable device and the size
of the device is also important. Generally speaking, the smaller a device means
that consumers will carry it at all times as it is easier to place in a pocket or
purse. Tablet devices are popular at the moment and are likely to take a
proportion of market share from traditional computers. However, the growing
tablet industry is unlikely to harm the mobile phone market in the future.

Marketing in the Digital Age Industry Dynamics
9. Industry Dynamics
TELEVISION
• “By Autumn (2012), the last few remaining regions will make the change to
an all-digital future and I’m delighted at how smooth the process has been
to date.”
Ed Vaizey, the Minister for Culture, Communications and the

Creative Industries (www.digitaluk.co.uk)
• "I think advertisers have been scared off by the Olympics. The expected drop
in commercial impacts is probably scaring them off with the expected price
rises in the offing."
Anonymous TV Buyer (quoted in PR Week, 6th June 2012)
• "The strength of linear TV advertising investment reflects commercial TV’s

record viewing and the further acknowledgement by advertisers of its ability
to create business profit."
Tess Alps, Chief Executive (CE) of Thinkbox

(www.hollywoodreporter.com, 7th March 2012)
• “Many companies are flocking to launch new TV services or social media

services that feed off people’s love affair with TV."
Lindsey Clay, Managing Director (MD) of Thinkbox

(www.telegraph.co.uk, 24th January 2012)
• “We expect a slow evolution of the industry towards cross platform

standardised measurement, that is where consumption of television
programmes across TVs, tablets, computers, smartphones and other devices,
is all measured. We also expect a modest progression towards mainstream
use of targeted advertising.”
Jolyon Barker, Global Lead for Technology, Media and

Telecommunications at Deloitte (www.deloitte.com,
16th February 2012)

RADIO
• "Publicly they (motor industry) are right behind switchover and by the end
of 2013 all new cars will be fitted with digital radio as standard."
Roger Darlington, Chairman of the Digital Consumer Expert

Group (www.guardian.co.uk, 30th November 2011)
• “We want to get into the position where we can be certain about the date
for switchover. We have said that 2013 is the right time to take that decision
to give you [the radio industry] time if you [the radio industry] do go for a
2015 switchover to make that happen.”

Creative Industries (www.telegraph.co.uk, 5th November 2011)
• “It is very difficult to convince people what the benefit is.”
John Whittingdale, Chair of the Culture, Media and Sport Select

Committee, talking about the digital radio switchover (Lloyds
TSB, 1st December 2010)
• “Radio is in rude health, with audiences growing through digital and online
engagement.”
Karen Stacey, Head of Broadcast, Bauer Media (PR Week,

20th October 2011)
• "In addition to very encouraging listening figures, advertiser interest has

been stimulated by the RAB, which has done some great research recently
highlighting how radio boosts consumer happiness."
Tom Drummond, Head of Radio, Initiative

(www.campaignlive.co.uk, 20th October 2011)
INTERNET
• “Businesses and brands must begin to engage consumers in an open and
transparent dialogue about how and why they see advertising online. “
Carl White, Chief Executive Officer (CEO) ValueClick Europe

(Internet Advertising Bureau UK, 10th May 2012)
• “Internet adspend’s 14.4% growth is exceptional when compared to an

estimated advertising growth of less than 2% across all media in 2011.”
Anna Bartz, Strategy Manager at PwC (Internet Advertising

Bureau UK, 3rd April 2011)

• “I fully recognise the difficulties we face in trying to achieve the balance

between ensuring the user’s right to privacy and ensuring that the data
people share can continue to be the foundation for innovative businesses
online.”

Creative Industries (Department for Culture, Media and Sport,
3rd November 2011)
• “The growth of online advertising in 2011 illustrates the high value that
advertisers place on digital media.”
Tim Elkington , Director of Research and Strategy at the Internet

Advertising Bureau (IAB) (www.nsdesign.co.uk, 30th April 2011)
• “2012 will see huge growth in online video. An increasing number of brands
will invest in this form of advertising and media companies will move towards
digital as consumers’ definition of TV will start to change.”
Daniel Ruch, VP for Europe at Tremor Video and Chair of the

IAB Video Council (www.thedrum.co.uk, 9th January 2011)
MOBILE
• "Mobile advertising is gaining momentum — with growing opportunities to
target consumers with a range of innovative formats, on the web and in
mobile applications."
Anna Bartz, Strategy Manager at PwC (Internet Advertising

Bureau UK, 20th March 2011)
• "Adverts within search, map and location-based augmented reality

applications will generate the highest revenue initially, but mobile web
display and in-app ads will catch up.”
Stephanie Baghdassarian, Research Director at Gartner

(www.v3.co.uk, 16th June 2011)
• “Hyper-personal and always-on, mobile has a tremendous potential as an

advertising medium.”
lain Heureux, President and CEO of IAB Europe

(www.strategyeyedigitalmedia.com, 7th June 2012)
• "As the penetration of smartphones continues to increase among consumers,

so, too, has the value and significance of mobile marketing."
Richard Brooke, Communications Buying Manager at Unilever

UK (Marketing Magazine, 20th March 2012)

• “It’s no surprise to see mobile advertising continuing to grow at such an

overwhelming and encouraging rate.’’
Jon Mew, Director of Mobile and Operations at the IAB

(Internet Advertising Bureau UK, 20th March 2011)

Marketing in the Digital Age Company Profiles
10. Company Profiles
BACKGROUND
The companies found in this sector of the report are driving the changes in this
market at the moment. At the beginning of the chapter there is a
comprehensive section featuring the top 50 UK marketing companies ordered
by UK digital fee income, provided by New Media Age. The latest batch of
results was launched in May 2012. After this, profiles are given of the
companies that are boosting the industry through technological advancement
or retail on the UK high street.
LEADING DIGITAL MARKETING COMPANIES

Table 9.1 shows the 25 leading digital marketing companies in 2012 by UK fee
income.
Table 9.1: The Leading 25 UK Digital Marketing Agencies

UK Fee Income
Rank
1 SapientNitro 916,449,882 Dec 11 815
2 LBi 57,047,000 Dec 10 605
3 AKQA 46,503,102 Dec 11 350
4 Engine 39,600,000 Dec 11 348
5 Detica 33,429,930 Dec 11 336
6 Iris Worldwide 24,000,000 Dec 11 120
7 Wunderman Network
UK 23,520,000 Dec 10 209
8 Dare 23,040,000 Dec 10 192
9 RAPP 22,062,469 Dec 10 371
10 CACI 20,700,000 June 11 100
11 TBWA 19,114,361 Dec 11 197
12 EHS 4D 18,028,967 Dec 10 260
13 Razorfish 17,815,000 Dec 11 186
Table continues...

Table 9.1: The Leading 25 UK Digital Marketing Agencies

...table continued
UK Fee Income
Rank
14 TBG Digital 17,250,000 Dec 11 71
15 EMC Consulting 16,600,000 Dec 10 -
16 Publis Chemistry 15,665,000 Dec 11 140
17 Endava 14,530,000 June 11 60
18 Amaze 14,330,149 Dec 11 200
19 Tullo Marshall Warren 14,247,800 March 11 195
20 M&C Saatchi UK 13,806,279 Dec 11 208
21 Kitcatt NohrDigitas 13,496,000 Dec 11 110
22 VCCP 13,463,000 Dec 11 83
23 MRM Meteorite 13,249,000 Dec 10 100
24 Gyro 13,100,000 Dec 11 -
25 R/GA London 12,688,000 Dec 10 82
LEADING TECHNOLOGICAL COMPANIES
Apple (UK) Ltd
Company Structure
Apple (UK) Ltd is the UK subsidiary of the global powerhouse that is Apple Inc.
Its roots are firmly placed in the manufacturing of computers, but it has now
diversified into a large series of products covering the computer, music,
telephony and television industries. The large majority of its products have
been very popular among consumers and it is now arguably the biggest
company in the world when it comes to consumer electronics.
At the time of writing (April 2012), Apple had three types of phones on the
market in the UK. The newest, the iPhone 4S, is the premium and most
up-to-date version with Siri, an intelligent assistant piece of software. Apple’s
mid-range phone is the iPhone 4, which has a retina display (ultra-high
definition screen). After this, the iPhone 3GS is the lowest-specification and
priced iPhone.

Apple is well known around the globe for its computer hardware and software.
Its computer hardware range includes the Mac Book, Mac Book Pro, Mac Book
Air, iMac, Mac Mini, Mac Pro and the iPad. All of these products have enjoyed
large volumes of sales, particularly the iPad range, which some have labelled
as an iPhone but without calling capabilities and with a larger screen.
The company is unique in the fact that it produces its own software for all of
its products, including mobile phones and computers. Its iOS mobile phone
software is very popular among users and seamlessly integrates external
features such as Google Maps and YouTube. The company’s Safari web browser
can also be found on its computers and mobile phones.
The company operates 361 retail stores (as of March 2012) across the globe and
licences thousands of other retailers worldwide. On top of this, the company
has plans for a further 46 stores around the world in the coming years. In the
UK, the company has 33 stores across the country.
In terms of mobile marketing, advertisers who want to advertise on software

available on Apple’s iPhone and iPad products have to go through a vetting
process to make sure content is suitable.
Current and Future Developments

The co-founder and former Chief Executive (CE) of Apple Inc, Steve Jobs, passed
away in October 2011 after a long-term illness. Jobs had been credited by Apple
as being the source of ‘countless innovations that enrich and improve all of our
lives and had made the world immeasurably better’. Share prices for Apple
instantly plummeted when the announcement of his death was made and the
US President Barack Obama said the world had ‘lost a visionary’.
Later in October 2011 the latest Apple phone, the iPhone 4S, was launched
across the globe. At first critics were disappointed with the lack of new updates
and features, with The Wall Street Journal saying: ’The iPhone 4S is one of
Apple’s less dramatic updates’. However, this did not put off consumers, as
Apple recorded a record-breaking 4 million sales within the first 3 days of its
launch, eclipsing the iPhone 4’s record of just 1.7 million sales.
Apple saw the launch of its latest new product, ‘the new iPad’ (unofficially
being called the iPad 3), in March 2012. The new version of this product has a
screen with four times the resolution of its predecessor and features voice
dictation. Apple announced that the new iPad had sold 3 million units in 3 days,
considerably more than the previous model. However, reports have emerged
that the most recent model runs at a temperature of 33.6 degrees Celsius (°C),
noticeably hotter than the previous model.
Financial Results
In the financial year ending 25th September 2010, Apple saw sales of £69m,
which is a 35.2% increase on the £51m seen in the previous year. Furthermore,
its pre-tax profit increased from £17.8m in 2009 to £26.9m in 2010, which is a
year-on-year increase of 51.4%.

Google UK Ltd
Company Structure
Google was founded in 1998 by two students of Stanford University, Larry Page
and Sergey Brin. In 1996, the pair had developed a search engine and Google
Inc was born in 1998, when Sun Microsystems’ co-founder Andy Bechtolsheim
wrote a cheque for $100,000.
In 2000, it introduced AdWords, a self-service program for creating online

advertising campaigns. Today its advertising solutions include display, mobile
and video advertisements, as well as the simple text advertisements seen
initially. It increased its product portfolio in April 2004 when it launched Gmail,
an email service which, at the time of launch, had considerably more storage
than its competitors.
Another one of its noticeable developments came in 2004 when it bought

map-services company Keyhole and launched Google Maps and Google Earth
in 2005. This service allows user to scan maps and satellite images, as well as
street view images. This opened avenues for businesses to advertise their
services where they are based on a map. Another acquisition came in 2006
when it bought the successful video sharing website YouTube, which is a major
avenue for advertising revenues today.
Google’s moves into the mobile phone market came in 2007 when it launched
the Android operating system. It was announced that the software would be
open-sourced. Further to this, Google’s expansion continued when it launched
the Chrome web browser in 2008.

In 2011, Google officially launched Google+, which is a social network that has
been directly linked with Facebook in its rivalry. Since Facebook’s launch there
has not been a social network to challenge it. However, Google downplayed
this, saying that Google+ was merely an extension of its Google product.
However, the Google+ project has received mixed reviews since its launch. In
recent months the majority of the articles surrounding the website have
suggested that the network is doomed to fail, including one in Forbes
magazine in July 2011. Further to this, web traffic figures from Alexa.com
suggest that traffic to the website has been falling for some time.
Financial Results
In the financial year ending 31st December 2010, Google saw a turnover of
£239.5m, a considerable amount more than the £169.5m seen in the previous
year. However, the company made a pre-tax loss of £22.1m in 2010, which is
just under double the £11.5m seen in the previous year.

HIGH-STREET RETAILER
The Carphone Warehouse Ltd
Company Structure
Carphone Warehouse is the largest mobile phone retailer in the UK, with 800
stores in the UK and 2,400 stores across a total of ten countries. Traditionally,
it has focused primarily on selling a range of mobile phones on both
pay-as-you-go (PAYG) and contract subscriptions. However, the company is
starting to branch out into offering consumers a range of wireless broadband
contracts that are designed for use on-the-go with laptops and tablet
computers.
The company was co-founded in 1989 by current Chief Executive Officer (CEO)
Charles Dunstone, when he placed a stake of £6,000 into the company. He then
hired an old school friend, David Ross, to become Finance Director. The
company was originally based in Charles Dunstone’s rented flat in London, but
4 years later the company had grown to 20 stores. It then continued to grow
for 6 more years and created its own virtual network operator (VNO), Value
Telecom, in 1999.
In 2000 the company made its shares available in the London Stock Exchange
(LSE) and it acquired several different companies in the years thereafter. One
of its biggest moves was the creation of its TalkTalk brand in 2003 and the
subsequent launch of TalkTalk broadband in November 2004.

In May 2008, Carphone Warehouse bought the US group Best Buy for £1.1bn.
This led to the company rolling out a small chain of Best Buy branded stores in
the UK, but this was short lived as all 11 Best Buy stores were closed in
November 2011, costing 1,100 jobs nationwide. The original plan for the group
was to open a chain of 200 Best Buy stores across the UK.
Another big move for the company came in March 2010 when Carphone
Warehouse and TalkTalk were split into two separate companies. This was
partly to facilitate the joint venture that Carphone Warehouse had gone into
with Best Buy.
Financial Results
The Carphone Warehouse Ltd saw its turnover increase by 2.5% in the year
ending 2nd April 2011, from £1.58bn to £1.62bn. Another encouraging figure
is the fact that the company more-than-doubled its pre-tax profit from £61.6m
in the year ending 3rd April 2010 to £188.5m in 2011.

Marketing in the Digital Age The Future
11. The Future
MARKET SIZE
The Internet became the largest sector of the market in 2011 and its place looks
set to be reaffirmed in 2012 and onwards, as Key Note predicts that £6.09bn is
set to be spent on Internet advertising by 2016. The main trend is one of
traditional advertising sectors such as the print media and direct mail having
a relatively tough time, experiencing small losses in expenditure in the coming
years. However, the industry as a whole is set to see considerable gains, as
advertising expenditure on digital formats such as the Internet and mobile
phones is set to increase considerably.
Table 10.1: Forecast Total UK Advertising Expenditure

by Media Sector (£m), Years Ending September 2012-2016
2012 2013 2014 2015 2016
Internet 4,805.5 5,058.8 5,142.7 5,734.8 6,091.1

Television 4,552.6 4,850.2 4,908.2 5,227.1 5,285.5
Newspapers 3,068.8 3,129.1 3,338.3 3,215.2 3,635.0
Direct mail 1,939.1 2,103.5 2,129.3 1,974.3 2,102.4
Outdoor and cinema 1,028.5 938.7 1,082.7 1,165.8 1,080.7
Magazines 927.4 712.7 812.0 846.1 766.3
Radio 539.6 591.1 631.6 639.3 687.7
Total 16,861.5 17,384.1 18,044.8 18,802.6 19,648.7

% change year-on-year 4.2 3.1 3.8 4.2 4.5
Source: Key Note
MARKET GROWTH
As the data in Figure 10.1 show, UK advertising expenditure is forecast to show
overall growth of 13.8% between 2007 and 2016, rising from £17.27bn to
£19.65bn, despite experiencing a downturn and reaching a low of £15.19bn in
2009.

Figure 10.1: Growth in Total UK Advertising Expenditure (£m),

20,500
20,000
19,500
19,000
18,500
18,000
17,500
17,000
16,500
16,000
15,500
15,000
14,500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Note: 2012 to 2016 figures are Key Note estimates.
FUTURE TRENDS
Internet Affirms Its Dominant Position

In 2011, the Internet sector became the largest in the advertising market in
terms of expenditure. This followed a long-term trend of the Internet sector
showing strong growth in the UK, mainly due to the penetration of Internet
users in UK households increasing consistently.
Furthermore, companies are continually finding new and innovative ways of

advertising on the Internet. Social networks are now a major part of the
Internet advertising sector and this avenue was not exploited to its maximum
scale 5 years ago. Furthermore, there has been an increase in video
advertisements appearing before and during multimedia content.
Looking to the future, it is highly likely that Internet advertisements will

become more sophisticated. Currently, many users do not get exposed to
advertisements on mobile versions of a website if they use a tablet computer
or mobile phone. However, in the future, many more advertisers will become
savvy to this and launch campaigns that are compatible on multiple platforms,
while on the other hand users may download software such as AdBlock to
remove advertisements placed on web pages.

Mobile Becomes a Major Player

As it stands, mobile phone advertising is something that advertisers are still
trying to understand, as are mobile phone software developers. Many mobile
phone applications offer a paid-for ‘app’ with no advertisements and a free
version of the app with advertisements usually placed at the bottom or full
screen at interludes. However, this is likely to evolve in the future, with
integrated advertising appearing in the majority of apps, even those that are
paid for.

Marketing in the Digital Age Further Sources
12. Further Sources
Publications
• Expenditure Report 2011 • IAB Internet Advertising Revenue
The Advertising Association Report
7th Floor North Internet Advertising Bureau
Artillery House 14 Macklin Street
11-19 Artillery Row London, WC2B 5NF
London, SW1P 1RT Telephone: 0207-050 6969
Telephone: 020-7340 1100 E-mail: info@iabuk.net
Fax: 020-7222 1504 http://www.iabuk.net
E-mail: aa@adassoc.org.uk PricewaterhouseCoopers
http://www.adassoc.org.uk 1 Embankment Place
Warc London, WC2N 6RH
85 Newman Street Telephone: 020-7583 5000
London, W1T 3EX Fax: 020-7822 4652
Telephone: 020-7467 8100 http://www.pwc.com
Fax: 020-7467 8101
E-mail: enquiries@warc.com • International Communications
http://www.warc.com Market Report
•The Communications Market
• Experian Hitwise • UK Fixed-Line Broadband
Performance
Experian
Ofcom
6th Floor
Riverside House
Cardinal Place
2a Southwark Bridge Road
80 Victoria Street
London, SE1 9HA
London, SW1E 5JL
Telephone: 0300-123 3000
Telephone: 0203-042 4794
Fax: 020-7981 3333
Fax: 0203-042 4750
http://www.ofcom.org.uk
http://www.hitwise.com
• Media Metrix
• Global Adview Pulse
comScore
Nielsen
6-7 St Cross Street
3rd Floor
London, EC1N 8UA
Telephone: 0207-099 1760
Fax: 0207-831 2739
http://www.comscore.com

• Mobile Metrics Report • Top Brands in Social Media

AdMob Social Media Reputation index,
http://www.google.com/ads/admob devised by social specialists Yomego
Yomego
• Quarterly Reach Report Longbow House
Broadcasters’ Audience Research 14/20 Chiswell Street
Board (BARB) London, EC1Y 4TW
http://www.barb.co.uk Telephone: 0141-582 0600
E-mail: enquiries@yomego.com
http://www.yomego.com
General Sources
Nielsen
Atrium Court
The Ring
Bracknell
Berkshire, RG12 1BZ
Telephone: 01344-469 100
Fax: 01344-469 102
E-mail: mediacommunicationuk
@nielsen.com
http://www.nielsenmedia.co.uk
Government Publications
Department for Culture, Media and HM Treasury
Sport 1 Horse Guards Road
2-4 Cockspur Street London, SW1A 2HQ
London, SW1Y 5DH Telephone: 020-7270 4558
Telephone: 020-7211 6000 Fax: 020-7270 4861
E-mail: enquiries@culture.gov.uk http://www.hm-treasury.gov.uk
http://www.culture.gov.uk • Forecasts for the UK Economy —
Treasury Independent Average,
HM Revenue & Customs February 2012
100 Parliament Street
London, SW1A 2BQ
• Monthly Statistical Bulletin

National Statistics
Government Buildings
Cardiff Road
Newport
South Wales, NP10 8XG
http://www.statistics.gov.uk
• Consumer Price Indices, January
2012
• Internet Access — Households and
Individuals
• Labour Market Statistics, February
2012
• National Population Projections,
2010-based projections
• Population Estimates for UK,
England and Wales, Scotland and
Northern Ireland — Population
Estimates Timeseries 1971 to Current
Year
• United Kingdom Economic
Accounts, March 2012
Other Sources
New Media Age
Telephone: 020-7292 3717
E-mail: nmcirc@centaur.co.uk
http://www.nma.co.uk

Key Note Sources

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Marketing in the Digital Age Understanding Consumer Survey Data
Understanding Consumer Survey Data

TGI tables, produced by Kantar Media, are generally based on one of the following groups:
households — consisting of either one person living alone or a group of people, usually
members of one family, who live together and whose food and other household expenses are
managed as one unit; adults — aged 15 or over; housewives — a member of a private
household who is solely or mainly responsible for the household duties.
NEMS Market Research is often commissioned by Key Note to conduct exclusive consumer
surveys among a representative sample of adults aged 16 and over in Great Britain.
Number, Profile, Penetration

Tables used in Key Note reports may give figures for the Number, Profile, and/or Penetration.

Marketing in the Digital Age Understanding Consumer Survey Data
Social Grade
This is normally based on the occupation of the Head of the Household, or if the Head of the
Household is retired, their former occupation. If this information is not available, social grade
is based on environmental factors such as type of dwelling, amenities in the home, presence of
domestic help, etc.
The following table broadly defines the six social grades used. The relationship between social
grade and net income of the Head of the Household is a complex one and readers should note
that income is not determinant of social grade.
Head of Household’s
Social Grade Social Status Occupation
A Upper middle class Higher managerial,
administrative or professional
B Middle class Intermediate managerial,
C1 Lower middle class Supervisory or clerical and
junior managerial,
C2 Skilled working class Skilled manual workers
D Working class Semi and unskilled workers
E Those at lowest levels of State pensioners or widows
subsistence (no other earner)
Standard Region
This is as defined by the Registrar-General.

Marketing in the Digital Age Key Note Research
Key Note Research

Key Note is a leading supplier of market information, publishing an extensive range of
consumer, industrial, business-to-business and services titles. With over 30 years’ experience,
Key Note represents clear, concise, quality market information.
For all reports, Key Note undertakes various types of research:
Online searching is carried out by product code or free search method, and covers the period
from the last edition of the report to the current day.
Trade sources, such as trade associations, trade journals and specific company contacts, are
invaluable to the Key Note research process.
Secondary data are provided by Kantar Media (TGI) and Nielsen for consumer/demographic
information and advertising expenditure, respectively. In addition, various official publications
published by National Statistics, etc. are used for essential background data and market trends.
Interviews are undertaken by Key Note for various reports, either face-to-face or by telephone.
This provides qualitative data (‘industry comment’) to enhance the statistics in reports;
questionnaires may also be used.
Field research is commissioned for various consumer reports and market reviews, and is carried
out by NEMS Market Research.
Key Note estimates are derived from statistical analysis and trade research carried out by
experienced research analysts. Up-to-date figures are inserted where possible, although there
will be some instances where a realistic estimate cannot be made or external sources request
that we do not update their figures.
Key Note Editorial, 2012

Marketing in the Digital Age The Key Note Range of Reports
The Key Note Range of Reports

Key Note publishes over 180 titles each year, across both the Key Note and Market Assessment
product ranges. The total range covers consumer, lifestyle, financial services and industrial
sectors.
Title Edition Published Title Edition Published
Key Note Current Reports C

C2DE Consumer 6 2010
A
Canned Foods 18 2011
ABC1 Consumer 6 2010
Care Homes 1 2011
Access Control 12 2011
Carpets & Floorcoverings 16 2009
Accountancy 15 2012
Catering Equipment 14 2011
Activity Holidays 5 2012
Catering Market 21 2009
Advertising Agencies 5 2012
Charity Funding 4 2011
Airlines 22 2011
Chemical Industry 14 2011
Airports Update 15 2011
Childcare 6 2011
All-Inclusive Holidays 2 2012
Children’s Publishing 4 2012
Alternative Healthcare 6 2010
Childrenswear 9 2011
Arts & Media Sponsorship 4 2011
Chilled Foods 16 2011
Automatic Vending 25 2011
China & Earthenware Update 28 2011
Automotive Services 8 2012
Cigarettes & Tobacco 25 2011
Autoparts 20 2012
Closed-Circuit Television 13 2011
B
Clothing & Footwear Industry 13 2010
B2B Marketing 2 2011
Clothing Manufacturing 16 2011
Baby Products 5 2010
Clothing Retailing 8 2011
Baths & Sanitaryware 15 2011
Coffee & Sandwich Shops 7 2012
Betting & Gaming 23 2010
Commercial Dynamics in
Biscuits & Cakes 19 2012 Financial Services 4 2010
Book Publishing 22 2012 Commercial Insurance for Small
Book Retailing on the Internet 4 2010 Businesses 4 2012
Bookselling 18 2012 Commercial Vehicles 16 2011
Bread & Bakery Products 27 2012 Computer Hardware 10 2012
Breakfast Cereals 16 2012 Computer Services 10 2012
Breweries & the Beer Market 29 2012 Computer Software 8 2011
Bricks & Tiles 16 2010 Condiments and Sauces 5 2008
Bridalwear 5 2010 Confectionery 30 2012
Builders’ Merchants 17 2010 Construction Industry 11 2009
Building Contracting 11 2011 Consumer Credit & Debt 6 2010
Building Materials 14 2011 Consumer Magazines 18 2011
Bus & Coach Operators 11 2012 Contact Centres 8 2010
Business Postal Services 2 2008 Contraception 5 2011
Business Press 15 2012 Contract Catering & Foodservice
Business Travel 6 2011 Management 21 2010
Contract Cleaning 21 2010
Cooking & Eating Habits 6 2009
Cooking Sauces & Food
Seasonings 5 2012
Corporate Hospitality 7 2012

Corporate & Promotional F

Giftware 4 2011
Fast-Food & Home-Delivery
Cosmetic Surgery 10 2012 Outlets 25 2011
Cosmetics & Fragrances 25 2012 Film Market 2 2009
Courier & Express Services 16 2010 Financial Services Marketing to
Cruise Market 3 2012 BCs 1 2009
Customer Magazines 5 2012 Financial Services Marketing to
Customer Relationship DEs 2009
Management 4 2008 Financial Services Marketing to
Customer Services in Financial Start-Up Businesses and the Self-
Organisations 5 2010 Employed 3 2010
Financial Services Marketing to
D
the Affluent 1 2009
Debt Management (Commercial
Financial Services Organisations
& Consumer) 6 2010
on the Internet 4 2009
Defence Equipment 11 2010
Fire Protection Equipment 9 2012
Diet Foods 4 2011
Fish & Fish Products 15 2012
Digital Broadcasting 5 2011
Food Industry 20 2010
Digital Communications 2 2012
Football Clubs & Finance 4 2009
Direct Insurance 6 2010
Footwear 17 2012
Direct Marketing 20 2012
Forecourt Retailing 9 2012
Direct Mortgages 8 2012
Franchising 13 2012
Discount Retailing 8 2011
Freight Forwarding 18 2011
Disposable Paper Products 13 2009
Frozen Foods 25 2011
Distribution Industry 10 2009
Fruit & Vegetables 22 2011
DIY & Home Improvements
Fruit Juices & Health Drinks 13 2010
Industry 11 2009
Functional Foods 6 2010
Domestic Heating 14 2009
Further & Higher Education 7 2011
Drinks Market 19 2009
G
E
Garden Equipment 14 2012
E-Commerce: The Internet
Grocery Market 6 2009 Gas Industry 6 2011
E-Commerce: The Internet General Insurance 13 2010
Leisure & Entertainment Market 5 2008 Giftware 20 2011
Electrical Contracting 10 2011 Glassware 16 2011
Electrical Wholesale 5 2009 Green & Ethical Consumer 5 2012
Electricity Industry 8 2012 Greetings Cards 27 2012
Electronic Banking 4 2008 Grey Consumer 5 2009
Energy Industry 8 2010 H
Equipment for the Disabled 5 2009 Hand Luggage & Leather Goods 16 2012
E-Recruitment 4 2012 Health Clubs & Leisure Centres 11 2011
Estate Agents 18 2011 Healthy Eating 6 2008
Estate Agents & Services 6 2012 Holiday Purchasing Patterns 6 2012
Ethnic Foods 16 2011 Home Entertainment 4 2012
European Long-Term Insurance 4 2008 Home Furnishings 20 2011
European Renewable Energy 2 2008 Home Shopping 14 2011
European Short Breaks 2 2008 Horticultural Retailing 17 2008
European Telecommunications 3 2010 Hot Beverages 6 2011
European Tourist Attractions 3 2010 Hotels 26 2012
European Trends in Food Housebuilding 20 2012
Shoppin 4 2009
Exhibitions & Conferences 12 2011

Household Appliances (Brown N

Goods) 12 2011
Natural Products 3 2012
Household Appliances (White
Newspapers 19 2012
Goods) 17 2011
Non-Food Sales in Supermarkets 5 2010
Household Detergents &
Cleaners 2010 Non-Metal Recycling 4 2012
Household Furniture 19 2011 Nutraceuticals 3 2008
I O
Ice Creams & Frozen Desserts Office Equipment Industry 9 2010

Update 15 2011 Office Furniture 22 2012
Independent Financial Advisers 4 2008 Offshore Oil & Gas Industry 6 2012
Insurance Companies 13 2012 Ophthalmic Goods & Services 18 2011
Insurance Industry 10 2009 Opticians & Optical Goods 5 2010
Insurance Prospects 2 2008 Organic Food & Drink 8 2012
Internet & Telephone Banking 1 2011 OTC Pharmaceuticals 15 2011
Internet Advertising 7 2011 Over-50s Consumer 1 2009
IT Recruitment 6 2012 Own Brands 14 2012
IT Security 10 2011 P
IT Training 14 2012 Packaging (Food & Drink) 6 2010
J Packaging (Glass) 13 2008
Jewellery & Watches 26 2011 Packaging (Metals & Aerosols) 13 2012
K Packaging (Paper & Board) 16 2012
Kitchenware 8 2012 Packaging (Plastics) 16 2012
Pensions 6 2009
L
Laboratory Equipment 10 2011 Personal Banking 2 2012
Leisure in the Home 3 2010 Personal Lines Insurance 5 2012
Leisure Outside the Home 3 2010 Personal Loans 4 2008
Lifestyle Magazines 5 2011 Pet Market 4 2009
Lingerie 10 2011 Pharmaceuticals Industry 6 2008
Local Government Services 3 2010 Planning for Retirement 1 2008
Low-Fat & Reduced-Sugar Foods 5 2008 Plus-Size Fashion 4 2011
Poultry 5 2012
M
Power Tools 6 2012
Marketing in the Digital Age 4 2012
Premium Lagers, Beers & Ciders 10 2012
Meat & Meat Products 22 2011
Printing 16 2011
Medical Equipment 18 2012
Private Healthcare 22 2011
Medical & Health Insurance 4 2012
Protective Clothing & Equipment 8 2012
Men and Women’s Buying Habits 6 2012
Public Houses 27 2011
Men’s Toiletries & Fragrances 6 2012
Public Relations Industry 4 2012
Metal Recycling 6 2011
Publishing Industry 13 2010
Milk & Dairy Products 26 2012
Mobile Marketing 1 2009 R
Mobile Phones 8 2012 Rail Travel 8 2011

Motor Finance 4 2011 Ready Meals 13 2012
Motor Industry 12 2008 Recruitment Agencies
(Permanent) 12 2012
Music Industry 2 2010
Recruitment Agencies
(Temporary & Contract) 12 2012
Renewable Energy 4 2011
Restaurants 26 2012
Retail Pharmacies 17 2011

Road Haulage 22 2009 U

Rural Economy 2 2009 UK Internet Market 1 2009
S Utilities 4 2010
Sauces & Spreads 13 2012 V
Savings & Investments 6 2010 Vegetarian Foods 7 2012
Security Industry 13 2010 Vehicle Breakdown Services 7 2012
Shopfitting 15 2012 Vehicle Security 10 2012
Shopping Centres 3 2008 Video Gaming 1 2011
Singles Market 5 2012 Vitamins, Minerals &
Slimming Market 4 2011 Supplements 7 2011
Small Businesses & Banks 2 2010 W
Small Domestic Electrical Wallcoverings & Ceramic Tiles 19 2012
Appliances 13 2012 Waste Management 11 2011
Snack Foods 21 2012 Water Industry 6 2011
Social Media Marketing 2 2012 Windows & Doors 21 2012
Soft Drinks (Carbonated & Wine 22 2012
Concentrated) 18 2011
Working Women 5 2009
Soup Market 4 2012
Spirits & Liqueurs 1 2010 Key Note Archive Reports
Sports Clothing & Footwear 14 2012 A
Sports Equipment 17 2012 Aerospace 12 2003
Sports Market 13 2010 Agrochemicals & Fertilisers 3 2002
Sports Sponsorship 8 2011 Air Freight 2 2005
Stationery (Personal & Office) 26 2012 Air Transport Logistics 1 2003
Supermarket Own Label 4 2009 Animal Feedstuffs 11 2001
Sweet & Salty Snacks 16 2010 Audio Visual Retailing 1 2000
T B
Take-Home Trade 18 2011 Baby Foods 3 2006
Teenage & Pre-Teen Magazines 5 2012 Baths and Showers 1 2000
Teenage Fashionwear 3 2011 Bearings 2 2007
Timber & Joinery 20 2011 Beds, Bedrooms and Upholstered
Toiletries 24 2011 Furniture 2 2000
Toys & Games 25 2012 Bottled Water 2 2001
Training 20 2012 C
Travel & Tourism Market 17 2010 Cable & Satellite TV 10 2004
Travel Agents & Overseas Tour Call Centres 6 2006
Operators 24 2012 Cash & Carry Outlets 16 2001
Trends in Food Shopping 5 2008 Cinemas & Theatres 9 2001
Trends in Leisure Activities 5 2012 Clothing Retailers 1 2000
Tyre Industry 6 2011 Commercial Radio 8 2004
Consumer Borrowing in Europe 1 2004
Consumer Internet Usage 4 2000
Contracted-Out Services 3 2007
Convenience Retailing 12 2002
Cross-Border Shopping 1 2000
Customer Loyalty in the Financial
Services 1 2000

D G
Dark Spirits & Liqueurs 3 2004 Generation Y 1 2007
Defence Industry 7 2003 Global Positioning Systems 1 2002
Design Consultancies 3 2000 Global Waste management 2 2070
Digital TV 2 2003 H
DINKY Market 3 2007 Health Foods 22 2003
Document Imaging Systems 1 2007 Healthcare Market 10 2005
Domestic Telecommunications 4 2006 Heating, Ventilating & Air
Dry Cleaning & Laundry Services 5 2005 Conditioning 9 2002
E I
Electronic Component In-Car Entertainment 1 2000
Distribution 12 2002 Individual Savings Accounts 2 2005
Electronic Component Industrial Fasteners 8 2001
Manufacturing 11 2002
Industrial Pumps 5 2000
Electronic Games 4 2003
Industrial Valves 8 2001
Equipment Leasing 12 2003
Internet Service Providers 2 2005
E-Shopping 1 2002
Internet Usage in Business 8 2005
European Electricity Industry 3 2007
Issues and Challenges in the UK
European Gas Industry 3 2007 Life Assurance Market 2 2002
European Oil & Gas Industry 2 2007 Issues in Higher Education
European Water Industry 3 2007 Funding 2 2006
Extended Financial Families 1 2005 L
F Leisure & Recreation Market 15 2005
Factoring & Invoice Discounting 2 2003 Lighting Equipment 14 2002
Finance Houses 11 2000 M
Financial Services Marketing to Management Consultants 10 2003
ABC1s 1 2000 Marketing to Children 4-11 3 2003
Financial Services Marketing to Mechanical Handling 9 2001
ABs 4 2006
Millenium Youth 2 2002
Financial Services Marketing to
C1C2DEs 1 2004 Mobile Telecommunications 2 2007
Financial Services Marketing to N
Over 60s 1 2004 New Media Marketing 3 2002
Financial Services Marketing to O
the Retired and Elderly 3 2007
Off-Trade Spirits 3 2004
Fitted Kitchens 11 2007
Organic Baby & Toddler Care 1 2007
Free-To-Air TV 8 2004
Over-40s Consumer 2 2005
P
Paper & Board Manufacturers 14 2002
Passenger Travel in the UK 5 2007
Pay TV 2 2004
Pension Extenders 1 2002
Photocopiers & Fax Machines 14 2005
Plant Hire 13 2007
Plastic Cards in Europe 2 2005
Plastics Processing 10 2003
Pre-School Childcare 1 2001
Private-Sector Opportunities in
Education 2 2001

Process Plant Industry 1 2000 T

Public Transport 1 2001 Teenage Magazines 3 2007
R Telecommunications 21 2007
Rail Transport Logistics 1 2003 Teleworking 2 2003
Railway Industry 2 2006 The Computer Market 11 2004
Recycling and the Environment 1 2000 The Film Industry 4 2002
Retail Credit 2 2000 The Fish Industry 1 2001
Retail Development 1 2001 The Legal Services Market 1 2005
Road Transport Logistics 1 2003 The Luggage Market 1 2000
S The Newspaper Industry 3 2005
Saving Trends in Eurozone 2 2002 Tourist Attractions 5 2001
Short Break Holidays 4 2001 Tweenagers 1 2001
Short Breaks 2 2004 V
Slimming Market 8 2000 Video & DVD Retail & Hire 8 2005
Small Office Home Office Videoconferencing 4 2007
Consumer 1 2001
W
Small Office Home Office
Water Transport Logistics 1 2003
Products 1 2001
White Goods 2 2000
Sponsorship 2 2000
White Spirits 1 2005
Supermarket Services 3 2007
Women over 45 3 2007
Supermarkets & Superstores 20 2003
All rights reserved.
No part of this publication may be reproduced, copied, stored in an electronic retrieval system or transmitted
save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act
1988.
Published by Key Note Ltd, 5th Floor, Harlequin House, 7 High Street, Teddington, Richmond Upon Thames,
TW11 8EE. Telephone: 0845-504 0452
Stringent efforts have been made by Key Note to ensure accuracy. However, due principally to the fact that
data cannot always be verified, it is possible that some errors or omissions may occur; Key Note cannot accept
responsibility for such errors or omissions. Details supplied by Key Note should only be used as an aid, to assist
the making of business decisions, not as the sole basis for taking such decisions.
Under the new Privacy and Electronic Communications Regulations 2004, it is unlawful for a business to make
an unsolicited sales & marketing call to a corporate subscriber if it is either registered with CTPS or has
requested NOT to receive such calls.
Key Note Ltd holds and regularly updates (every 28 days) its data in accordance with the regulations and
ensures that its data are compliant, as of the date created. It is the responsibility of the caller to ensure that
these data are up to date; Key Note Ltd does not hold itself liable for any subsequent legalities.
If you have any queries regarding the CTPS legislation you may find the following website useful:
www.ico.gov.uk

Marketing in The Digital Age 2012

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Market Assessment 2012

Fourth Edition June 2012

Marketing in the Digital Age

In today’s competitive business environment, knowledge and understanding of your

The Chartered Institute of Marketing

The British Library

University of Cambridge, Judge Business School

© Key Note Ltd 2012

© Key Note Ltd 2012

© Key Note Ltd 2012

© Key Note Ltd 2012

5. Marketing on the Internet 43

© Key Note Ltd 2012

© Key Note Ltd 2012

10. Company Profiles 75

© Key Note Ltd 2012

11. The Future 80

12. Further Sources 83

Understanding Consumer Survey Data 88

Key Note Research 90

The Key Note Range of Reports 91

© Key Note Ltd 2012

A rise in personal technologies such as smartphones and tablet computers has

Despite these developments, the real growth in advertising expenditure can

© Key Note Ltd 2012 1

© Key Note Ltd 2012 2

The emergence of new technologies means that broadcasters have new

Looking towards the future, the industry is focusing on integrating

© Key Note Ltd 2012 3

© Key Note Ltd 2012 4

There is still a difference in opinion as to the effectiveness of advertising during

Putting aside the economic downturn, in the advertising world, technology

Further to these developments to traditional channels, international websites

© Key Note Ltd 2012 5

MARKET DYNAMICS AND SEGMENTATION

Convergence and Crossovers

Table 2.1: Total UK Advertising Expenditure (£m),

2007 2008 2009 2010 2011

Total 17,270.2 17,257.2 15,189.4 15,773.3 16,181.8

Source: The Advertising Association/Warc Expenditure Report 2011

© Key Note Ltd 2012 6

Figure 2.1: Total UK Advertising Expenditure (£m),

Source: The Advertising Association/Warc Expenditure Report 2011/Key Note

Market Share by Sector

© Key Note Ltd 2012 7

Table 2.2: Total UK Advertising Expenditure by Media Sector

2007 2008 2009 2010 2011

Internet 15.3 18.9 22.8 25.0 27.5

Total 100.0 100.0 100.0 100.0 100.0

Note: totals may not sum due to rounding.

Source: The Advertising Association/Warc Expenditure Report 2011/Key Note

Figure 2.2: Total UK Advertising Expenditure by Media Sector

Note: percentages do not sum to 100 due to rounding.

Source: The Advertising Association/Warc Expenditure Report 2011/Key Note

© Key Note Ltd 2012 8

Table 2.3: Total UK Broadcast Media Advertising Expenditure

2007 2008 2009 2010 2011

Television 4,247.7 4,175.5 3,820.6 4,229.4 4,347.8

Total 4,858.2 4,764.7 4,355.9 4,773.3 4,905.1

Source: Key Note

© Key Note Ltd 2012 9

Figure 2.3: Total UK Broadcast Media Advertising Expenditure

Table 2.4: Total UK Internet Advertising Expenditure (£m),