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UK Internet Market

Published by: Key Note Publications Ltd

Published: Feb. 1, 2009 - 129 Pages


Table of Contents


Executive Summary

1. Industry Overview

REPORT COVERAGE

REPORT BACKGROUND

ECONOMIC TRENDS

Population

Table 1.1: UK Resident Population Estimates

by Sex (000), Mid-Years 2003-2007

Gross Domestic Product

Table 1.2: UK Gross Domestic Product at Current and

Annual Chain-Linked Prices (£m), 2003-2007

Inflation

Table 1.3: UK Rate of Inflation (%), 2003-2007

Unemployment

Table 1.4: Actual Number of Unemployed Persons

in the UK (million), 2003-2007

Household Disposable Income

Table 1.5: UK Household Disposable Income

per Capita (£), 2003-2007

MARKET DEVELOPMENT

Computer Hardware

Table 1.6: The UK Computer Hardware Market

by Sector by Value (£m), 2003-2007

Internet Access (Consumer Market)

Internet Usage

Table 1.7: Reasons for Using Home Computers

(% of adults), 2008

Table 1.8: Reasons for Using the Internet

(% of adult users), 2008

INDUSTRY STRUCTURE

MARKET POSITION

KEY TRENDS

Social Networking

E-Commerce and the Leisure Market

Convergence in Media

UK Internet Market Contents

LEGISLATION

The UK

The EU

KEY TRADE ASSOCIATIONS

British Interactive Media Association

Direct Marketing Association

European Interactive Advertising Association

Interactive Advertising Bureau Europe

Interactive Media in Retail Group

Internet Advertising Bureau

Remote Gambling Association

UK Association of Online Publishers

2. PEST Analysis

POLITICAL FACTORS

ECONOMIC FACTORS

SOCIAL FACTORS

TECHNOLOGICAL FACTORS

3. Key Note Primary Research

INTRODUCTION

INTERNET ACTIVITIES

Table 3.1: Penetration of Selected Internet Activities

(% of adults), December 2008

OTHER KEY NOTE SURVEYS

Online Shopping

‘Surfing’ the Internet as a General Leisure Activity

Table 3.2: Selected Popular Leisure Activities

(% of adults), 2008

Leisure-Related E-Commerce

Table 3.3: Selected Online Leisure Activities

(% of adults), November 2007

4. Competitive Structure

INTRODUCTION

The Development of the Internet

The Growth of E-Commerce

Technical Terms

Website and File Development

Connecting and Downloading

Communications

UK Internet Market Contents

Security

Advertising and Marketing

MARKET LEADERS

Table 4.1: Key Companies in the Internet Market, 2008

Amazon (US)

Apple (US)

BBC (UK)

eBay (US)

Google (US)

InterActive Corporation (US) and Spin-Offs

ITV (UK)

Microsoft (US)

News Corporation (Australia/US)

Time Warner (US)

Wikipedia (US)

Yahoo! (US) and BT Group (UK)

OUTSIDE SUPPLIERS

MARKETING ACTIVITY

Online Advertising

Table 4.2: UK Internet Advertising Expenditure

at Current Prices (£m), 2003-2007

Table 4.3: UK Advertising Expenditure

by Medium (%), 2003-2007

Categories of Online Advertising

5. Information, Education and Publications

INTRODUCTION

KEY TRENDS

MARKET DEVELOPMENT

The Book Market

Table 5.1: The UK Online Market for Consumer Books

by Value (£m and %), 2004-2008

Figure 5.1: The UK Online Market for Consumer Books

by Value (£m), 2004-2008

Education and Libraries

Price Comparison

Unofficial and User-Generated Information

SECTOR STRUCTURE AND KEY WEBSITES

The Book Market

Key Website: AbeBooks

Education and Libraries

Key Website: British Library

Price Comparison: Moneysupermarket

Unofficial and User-Generated Websites

UK Internet Market Contents

BUYING BEHAVIOUR

Key Note Primary Research

Table 5.2: Use of the Internet for Information Activities by Sex, Age, Social Grade,

Working Status and Internet Access (% of adults), December 2008

Other Surveys

THE FUTURE

6. Communication and Networking

INTRODUCTION

KEY TRENDS

MARKET DEVELOPMENT

E-Mail and Messaging

Social Networking

Other Internet Communications

Genealogy

Auctioning

Video Sharing

Blogging

SECTOR STRUCTURE AND KEY WEBSITES

E-Mail and Messaging

Social Networking

Key Website: Facebook

Key Website: Friends Reunited

Blogging

BUYING BEHAVIOUR

Table 6.1: Use of the Internet for Communications by Sex, Age, Social Grade,

Working Status and Internet Access (% of adults), December 2008

THE FUTURE

7. E-Commerce

INTRODUCTION

KEY TRENDS

MARKET DEVELOPMENT

Table 7.1: Penetration of Online Purchasing by Type

of Goods/Service (% of adults), 2006-2008

Travel and Tourism

Table 7.2: UK Online Sales of Holidays Abroad

by Value (£m), 2001-2007

Table 7.3: Main Source of Information for the Last Holiday

Taken in the Last 12 Months (% of adults), 2006-2008

Home Shopping

Table 7.4: E-Commerce and Other Home Shopping

in the UK by Value (£m at rsp), 2003-2007

UK Internet Market Contents

Figure 7.1: E-Commerce and Other Home Shopping

in the UK by Value (%), 2007

Grocery Shopping

Table 7.5: Outlets Used for Grocery Shopping

(% of adults), 2008

SECTOR STRUCTURE AND KEY WEBSITES

Travel and Tourism

Key Website: TripAdvisor

Other Shopping

Key Website: Tesco

Key Website: eBay

BUYING BEHAVIOUR

Key Note Primary Research

Table 7.6: Use of the Internet for E-Commerce by Sex, Age, Social Grade,

Working Status and Internet Access (% of adults), December 2008

Other Surveys

THE FUTURE

8. Entertainment and Culture

INTRODUCTION

KEY TRENDS

MARKET DEVELOPMENT

Entertainment Products

Table 8.1: UK Online Sales of Entertainment Products

by Type (£m), 2001-2007

Figure 8.1: UK Online Sales of Entertainment Products

by Type (£m), 2001-2007

DVD/Video

Electronic Games

Music

Ticketing (Event Bookings)

Table 8.2: The UK Events Market and Online Bookings

by Sector by Value (£m), 2003-2007

Gambling

Table 8.3: Expenditure on Gambling in the UK

by Value (£m and %), 2001-2007

Sports Information

Table 8.4: Major Team Sports Followed in the Media

or as a Spectator (% of adults), 2008

SECTOR STRUCTURE AND KEY WEBSITES

Entertainment Products

Ticketing

Gambling

BUYING BEHAVIOUR

UK Internet Market Contents

Key Note Primary Research

Table 8.5: Use of the Internet for Entertainment and Cultural Activities by Sex, Age,

Social Grade, Working Status and Internet Access (% of adults), December 2008

Other Surveys

THE FUTURE

9. Financial and Other Services

INTRODUCTION

KEY TRENDS

MARKET DEVELOPMENT

Financial Services

Table 9.1: Number of Personal Bank Customers Registered to Access Their Accounts

by Computer and Number of Computer-Based Personal Banking Transactions by Type

(000 and million), 2003, 2005 and 2007

Estate Agents

Government Information

SECTOR STRUCTURE AND KEY WEBSITES

Financial Services

Estate Agents

Key Website: Land Registry

Government Information

Key Website: Department of Culture, Media and Sport

BUYING BEHAVIOUR

Key Note Primary Research

Other Surveys

THE FUTURE

10. A Global Perspective

US DOMINATION

EUROPEAN CONTEXT

Internet Advertising

Online Shopping

11. The Future

ECONOMIC FORECASTS

Population

Table 11.1: Forecast UK Resident Population

by Sex (000), Mid-Years 2008-2012

Table 11.2: Actual and Forecast UK Population

by Age (000), 2007 and 2012

Gross Domestic Product

Table 11.3: Forecast Growth in UK Gross Domestic Product

in Real Terms (%), 2008-2012

Inflation

Table 11.4: Forecast UK Rate of Inflation (%), 2008-2012

Unemployment

Table 11.5: Forecast Actual Number of Unemployed Persons

in the UK (million), 2008-2012

MARKET FORECASTS

Old Media/New Media

Mass-Market/Tailor-Made Entertainment

Socialising and Events

12. Further Sources

Associations

Publications

General Sources

Government Sources

Other Sources

Key Note Sources

Understanding TGI Data

Number, Profile, Penetration

Social Grade

Standard Region

Key Note Research

The Key Note Range of Reports

Abstract

The Internet is now used at home by 68% of UK adults — a penetration rate that continues to climb several percentage points each year (although some signs of market saturation are appearing). The fact that 68% of those adults who use the Internet `go online' at least once a day shows how quickly the World Wide Web has become part of everyday life in the typical UK household. This first edition of UK Internet Market focuses on consumer, rather than business, use of the Internet; among those adults who use the Internet, 93% do so at home, whereas only 32% do so in the workplace.

Although the concept of an Internet originated in the 1960s and reached mass-market status in the 1990s, the 2000s have brought significant improvements in the Internet experience for the consumer: fast broadband connections, interactive Web 2.0 technologies, and remote access using portable computerised devices (e.g. mobile phones).

E-mail is used by 87% of those with domestic Internet access, but communicating through websites — particularly `social networking' websites such as Facebook and MySpace — has become very popular. The rise of social networking in the 2000s has been remarkable, leading to the acquisition — at a high cost — of several leading websites by global media giants. In the latest example of this, in 2008, Time Warner spent $850m on Bebo, a social networking website that is phenomenally popular among teenagers.

Time Warner already owned the ISP (Internet service provider) AOL, in addition to its television, movie and publishing interests. Other multinational companies with Internet operations, almost all of them based in the US, include Microsoft, Apple and News Corporation. However, the Internet has also created large companies that specialise in the medium, such as Google (the dominant search engine), eBay (online retailing and auctioning) and Amazon (the pioneer of online bookselling).

UK organisations with a vested interest in the Internet include broadcasters such as the BBC, BSkyB and ITV. The BBC's iPlayer is the leading technology for `catching up' with television programmes that have already been broadcast, developing the convergence between television and the home computer. ITV offers a similar service and also owns the `reunion' site Friends Reunited.

E-commerce, or online shopping, is transforming the retail sector. However, some markets have been affected more than others. Travel is easily the largest online market, the Internet having underpinned the rise of the budget airlines (easyJet and Ryanair rely almost entirely on the Internet for bookings) and encouraging users to organise tailor-made holidays, rather than booking `packages' through a high-street travel agent. In contrast, online grocery shopping has yet to become a mass market. Generally, any business involving detailed information is suited to e-commerce (e.g. travel, house buying, insurance, books and tickets for events).

Information is itself a large part of the Internet market, ranging across government, education, health, job seeking, family history, weather forecasts and many other areas. Wikipedia, a charitable organisation funded by donations, has become the world's largest online encyclopedia.

With the exception of a few operators, such as Wikipedia, the funding mechanism for websites has shifted over the years from subscription fees to advertising. In 2007, the Internet accounted for 15.6% of all UK advertising expenditure (from a mere 2.9% in 2003). The market divides between advertisements on websites and `paid-for searches', where companies pay search engines such as Google to give their websites prominence.

Looking to the future, the economic crisis of 2008 and 2009 will probably reduce the growth rate for Internet advertising, but the medium itself will continue to play an increasingly important role in commerce and in consumer lifestyles. Key Note has identified three main future trends: convergence between the television and the computer in home entertainment and information; the fragmentation of mass markets as the Internet offers tailor-made options for entertainment; and a stimulus to live events and `socialising' generally, as the likes of networking, blogging and organising events via the Internet spread from the youth market to older consumers.

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