Business News

Digital advertising spend outstrips TV in US as UK print revives

Spend on digital advertising has overtaken that of television in the United States for the first time.

Last year, internet advertising revenues in the United States hit $88bn (€77bn), an increase of 21pc on the previous year, according to the latest ‘Internet Advertising Revenue’ report from professional services firm PwC and the Interactive Advertising Bureau (IAB).

In comparison, television advertising fell 2.6pc year-on-year to $70bn (€61.5bn) in 2017.

A main driver of the increase in internet advertising has been a shift to mobile. Spending on advertising delivered to mobile devices totalled $49.9bn in 2017 in the US, a 36pc increase from the prior year, as marketers target larger numbers of consumers through their mobile phones.

“Consumers are increasingly spending a tremendous amount of time with interactive screens and content, from mobile to desktop and audio, and brands are in lockstep with a growing commitment to digital ad buys,” said Randall Rothenberg, CEO of the IAB.

“Mobile captured more than half of the total digital ad spend last year and we can expect that share to continue to climb.”

Advances in technology are driving the growth in the industry, with greater internet access and speed of connection all cited as factors behind the growth.

From a marketer’s perspective, the digital ad industry claims it can apply analytics and artificial intelligence to massive volumes of data and so better target end users.

While advertising delivered on mobile devices now makes up 56.7pc of total internet advertising revenues and is charging ahead in the digital online spend, desktop revenues rose far less quickly – up 5.8pc to $38.1bn, the report found.

Search revenues and video revenues represented the bulk of the internet advertising revenue last year, making up 46pc and 31pc of internet advertising revenue respectively. Looking forward, the report suggests that new technologies such as artificial intelligence (AI), augmented reality, virtual reality, and voice-based systems will create new opportunities for growth within the advertising industry. “Continued advances in AI and data and analytics will enable companies to create more personalised experiences than what we see today,” David Silverman of PwC said.

The IAB report utilises data and information from companies selling advertising on the internet, public corporate data, survey responses and interviews with industry participants.

Despite the strong performance in digital advertising in the US, in the UK there are signs of a revival in print advertising.

In the first three months of 2018, ad revenue for UK national news brands rose for the first time in seven years, according to the UK’s Advertising Association/WARC Expenditure Report.

The strong start to the year in newspaper advertising follows a good final quarter in 2017, reversing the seven-year downturn in display revenue, according to the report.

The UK numbers also show TV also posted relatively healthy growth of 5pc. Total internet spend rose 10.8pc – with search engine spending accounting for over half of the gain.

“Online ad formats – particularly search and social media – continue to overperform, but traditional media are also proving their worth to advertisers”, said James McDonald, WARC’s Data Editor.

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China vows to control debt despite fresh stimulus for cooling economy

China’s state planner pledged on Wednesday to keep debt levels under control even as Beijing rolls out fresh stimulus to support the stumbling economy as a trade war with the US deepens.

The comments by the National Development and Reform Commission (NDRC) came a day after China reported surprisingly weak data that showed investment growth has slowed to a record low.

In a bid to stabilise business conditions and weather the trade war, Beijing is stepping up infrastructure spending and injecting more funds into the banking system, which is lowering borrowing costs.

New loans by China’s largely state-backed banks surged 75pc in July from a year earlier.

But some China watchers fear Beijing’s shift in priorities may mark a return to its unrestrained, credit-fuelled growth, reversing years of work by regulators to reduce risks in the financial system and stem a rapid build-up in debt.

NDRC spokesman Cong Liang told a media briefing that new spending on roads, railways, elderly care and education and the elderly will not be as heavy as in the past and will aim to meet real demand, reducing the risk of over-capacity.

Authorities are also hoping to attract private investment in such projects to reduce the government’s debt burden, he said, noting that regulators are relaxing restrictions on local governments’ ability to sell special bonds to fund projects.

Several large rail projects have been announced in just the last few days.

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Cong reiterated a pledge made by the ruling Communist Party’s Politburo last month that China will still meet this year’s economic growth target of around 6.5pc, despite the trade war.

Analysts say that will surely require more spending, but Cong maintained that the government will push ahead with its “structural deleveraging” in a gradual and orderly way.

Highlighting the dangers policymakers face in stimulating the slowing economy without fueling asset bubbles, data on Wednesday showed China’s new home prices accelerated at their fastest pace in almost two years in July.

Cong said China would “resolutely curb” property price rises.

“We still have sufficient capacity to cope with impact from escalating trade frictions, and ensure the successful completion of the economic and social development goals set at the beginning of the year,” Cong said.

At the start of this year, China’s leaders had made risk and debt reduction their top priority, even if it led to somewhat slower growth.

That scenario appeared to be playing out roughly to plan earlier in the year, before the trade war erupted, with growth easing only slightly to 6.7pc in the second quarter year-on-year.

Some economists are now cutting their second-half and full-year growth estimates for China in the wake of Tuesday’s weak readings.

While stressing it does not see a hard landing for the world’s second-largest economy, ING said in a note it has trimmed its 2018 forecast to 6.6pc from 6.7pc.

It sees growth cooling to 6.5pc and 6.3pc in the third and fourth quarters, respectively, as tougher US tariffs start to bite.

So far, official data shows trade frictions have had limited impact on the economy, and any impact from higher tariffs will be “controllable”, the NDRC’s Cong said.

Many local governments and state firms are still saddled with debt following China’s massive stimulus during the global financial crisis.

Despite some progress in its risk crackdown in the last few years, China is still among the economies most at risk of a banking crisis, the Bank for International Settlements (BIS) said earlier this year.

China’s overall debt level rose 2.7pc points in 2017 to 250.3pc of gross domestic product, according to the central bank.

The corporate debt ratio fell 0.7pc points to 159pc of GDP – the first decline since 2011, but the household debt ratio climbed 4 percentage points to 55.1pc of GDP.

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How to manage €13,000 bill for child’s first year in university

Parents of the 120,000 students who get their Leaving Cert results this Wednesday are facing a bill of as much as €12,800 to put their child through their first year in college. It currently costs €12,828 a year to put a child through college – if he or she is living away from home and renting in Dublin for nine months, according to the latest cost of student living survey by the Dublin Institute of Technology (DIT).

That cost falls to €11,829 a year if the student is renting outside Dublin – or to almost €7,000 a year if the student can continue to live at home.

The DIT survey takes into account the cost of rent, utility bills, food, travel, books, clothes, medicine, mobile phones, social life – as well as the student contribution charge. Rent is by far the highest cost faced by students living away from home. The average cost of rent for a student in Dublin is €541 a month, according to DIT. However, if the student were to rent a one-bedroom apartment in Dublin 2, he could expect to pay an average rent of €1,817 a month – based on the findings of Daft’s latest rental report. Rent paid at that €1,817 monthly rate would push up the cost of sending a child to college to €24,300 a year.

As a typical third-level education course runs for either three or four years, the cost of sending a child to college is one of the biggest bills parents will ever face. There are some steps you can take however to keep that bill in check – here are some of them.

Get tax back
At €3,000 per student, per year, the student contribution charge is a big hit to the pocket. The tax relief on tuition fees allows you to claim back up to a fifth of the cost of the student contribution charge – for any second or subsequent children in third-level education. This tax relief is worth €600 if you have two children in full-time third-level education. However, you cannot get tax relief on the student contribution charge if you only have one child in college. You may also be entitled to tax back if you are paying tuition fees for a post-graduate or part-time course – or if your child is repeating the year.

Avoid or limit rent
As it is more than €5,000 cheaper a year for a student to live at home than to pay for rented accommodation, avoid going down the rental route – if it’s feasible and practical to do so. Should your child be facing a four-hour (or more) return trip to college every day, however, renting may be unavoidable. Explore all your options if your child must rent. Should you have a relative living near the college, he or she could earn up to €14,000 tax-free rent a year (under the rent-a-room scheme) by renting out a room in their home to your child.

The cheapest rent is typically available to those who stay in ‘digs’ or who share accommodation. Shop around though. For example, it can cost anything from €450 to €800 a month to rent a room in a house near University College Dublin (UCD) over the student term, according to recently advertised student accommodation. Be aware that some accommodation is only available to rent from Sunday to Thursday nights – with students expected to return home at weekends.

Campus residences may work out cheaper than renting privately – though this isn’t always the case. For example, it costs between €6,629 (about €736 a month) and €11,347 (about €1,260 a month) to rent campus accommodation in UCD from August 30 to May 20, depending on the accommodation chosen. It costs between €5,395 and €5,729 to rent a single room in Dublin City University’s campus accommodation from mid-September to late May.

Remember, it can be difficult to get an offer of campus accommodation – particularly if there is a long waiting list. Should you be considering renting private accommodation, be on the alert for rental scams – make sure the property is genuinely available to rent and that the person advertising the property is not a fraudster.

Grab all discounts
Be sure your child gets all the discounts they’re entitled to, as this should help limit day-to-day living costs – particularly travel. Students usually get discounted travel rates (as well as various other discounts) and may still even qualify for child fares. The child Leap card, for example, can be used up until age 19. This can reduce the weekly cost of travel by over 60pc, according to DIT.

Borrow cheaply
Many parents have to borrow money to fund a child’s third-level education. You could pay twice as much – or thousands of euro more – for a loan than you need to if you don’t shop around for it. For example, it would cost €2,593 to borrow €10,000 from Permanent TSB over four years – through its personal loan. However, it would cost you either €1,302 or €1,510 (depending on whether or not you qualify for the bank’s discounted personal loan interest rate) to borrow the money from KBC Bank instead. Should you qualify for the discounted rate on Ulster Bank’s fixed rate parental loans, it would cost €1,550 to borrow €10,000 over four years; otherwise, it costs €1,759. Bank of Ireland charges 7.5pc interest on a personal loan of €10,000 – which would cost €1,551 in interest over four years.

Along with Permanent TSB, AIB and Avantcard worked out pricey for a four-year personal loan of €10,000. It costs €1,812 to borrow €10,000 over four years through AIB’s personal loan; it would cost €1,854 to borrow the money from Avantcard – as long as you have an excellent credit history. (Avantcard’s personal loans are more expensive for those with poor credit histories).

AIB also offers loans to parents and students seeking to cover the student contribution charge. The interest rate on this loan is 8.45pc.

Don’t rule out your local credit union if you must borrow for college fees as it may work out cheaper than your bank. St Raphael’s Garda Credit Union, for example, offers an education loan with an interest rate of 4.59pc.

Save early
It currently costs €51,000 to send a child to college for four years – assuming they are living away from home and studying in Dublin. The best way to prepare for – and limit the cost of – college bills is to start saving for your child’s third-level education when they are very young.

Should you only have five years to go until your child starts college, you would need to save €807.57 a month to hit a €51,000 target – assuming you’re making a 2pc return on your savings each year, according to figures compiled by Colin Davis, savings specialist in Curran Financial Services. You can’t afford to take much investment risk with your money if you have five or less years to save up for college bills so a 2pc return is probably the best you can expect.

Should you have 10 years to save, you need to save €345.20 a month to hit a €51,000 target – assuming you’re making a 4pc annual return on your investment, according to Davis.

You’d need to save €174.79 every month if you have 15 years to save the money up – assuming your investment is making a 6pc return, according to Davis. “When it comes to saving for your children’s education, the most important thing to do is start early,” said Davis. “Building a fund for a five-year-old is far more affordable than building one for a nine-year-old. Our figures show that you need to save approximately €80 per month more for the nine-year-old than the five-year old to achieve the same target.”

Article Source: http://tinyurl.com/kbwqb42

Brexit negotiations face crunch issues

Brexit negotiations between the UK and the EU are due to reconvene on Thursday in Brussels.

The European Union is signalling that it wants to make September a decisive month in the divorce negotiations, while British Prime Minister Theresa May is more in favour of a late-autumn deadline. The talks are expected to continue on Friday.

Tomorrow, China will release its industrial production and retail sales data for July.

Of interest to investors will be the impact, if any, of US sanctions on the figures.

Meanwhile back home, KBC Bank Ireland, along with the ESRI, will release the Consumer Sentiment Index for July today.

Glenveagh Properties is due to hold an extraordinary general meeting today, where the company will ask shareholders to formally approve its recent funding round of €213m.

Tomorrow, the Central Statistics Office will release the residential property price index for June. This will be followed on Wednesday by the release of the imports and exports data from the CSO.

Looking ahead, the outcome of an internal investigation into FBD boss Fiona Muldoon could become known shortly.

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Construction growth raises building costs

Ireland’s construction sector is now growing so fast that shortages of some building materials and services are being reported.

That’s led to higher prices for steel, insulation and transport.

The latest Ulster Bank Construction Purchasing Managers’ Index (PMI), which tracks the country’s building activity, rose to 60.7 in July from 58.4 in June. Any reading above 50 indicates expansion, any figure below, contraction.

The survey’s participants noted housing construction is now particularly strong, albeit still well below levels needed to meet demand.

However, the PMI for housebuilding specifically hit 63.9 in July. That’s one of the sector’s highest readings in the survey’s 18-year history.

The latest data from the Central Statistics Office shows that the number of house completions hit 3,525 in the first quarter of 2018, up 26.9pc year-on-year.

Activity in the commercial sector – which includes offices and warehouses, for example – increased sharply last month compared to June, according to the latest figures.

The civil engineering sector also returned to growth after two consecutive months of decline.

“Firms continue to benefit from sharp rises in incoming new business flows as they report ongoing improvement in client demand for their services,” said Simon Barry, chief economist for the Republic of Ireland with Ulster Bank.

“In turn, the buoyancy of activity and orders patterns continues to underpin strong demand for construction workers, with the pace of job creation remaining substantial in July, albeit not quite as exceptionally strong as June,” he added.

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Explainer: Why families will pay €300 extra for fuel to warm their homes in winter

Householders face paying an extra €300 this winter for oil to fuel their heating systems.

A surge in the cost of home heating oil and the price of petrol and diesel have pushed up the inflation rate to its highest level in more than a year.

The cost of filling an oil tank has gone up by almost a third in the past year, according to the latest consumer price index figures from the Central Statistics Office (CSO).

Despite a small fall in the cost of heating oil in July, over the past year the price is up by 29.3pc.

This means it will now cost around €160 more for a fill of 1,000 litres of oil for the winter than it did this time last year.

Families will have to shell out up to €750, compared with around €550 last year.

The cost of 1,000 litres is between €690 and €750 at the moment, according to price comparison site Cheapestoil.ie.

Rises in the cost of a barrel of oil on international markets are sending up the cost of domestic fuels.

Most homes will require at least two oil fills during the winter months, which means they will have to pay up to €300 more.

Almost two-thirds of rural homes and more than a quarter of urban households use oil to fuel their central heating and water boilers, according to Census figures.

Taxes

Michael Toner of Cheapestoil.ie said heating oil was four times dearer than in Northern Ireland due to higher taxes and levies, including carbon tax.

“August is surprisingly one of our busiest months where consumers are actively encouraged to order early, and we would also recommend heating oil users to order now when distributors are less busy and for the best service,” he said.

The surge in the cost of home heating oil comes after six energy firms hiked their prices this month, raising the price of electricity and gas by up to €200 for some householders who use both fuels.

It was also revealed this week that electricity and gas prices in this country are among the most expensive in Europe.

Petrol prices are up 11pc in the past year and diesel prices were up 14pc.

Air fares have also risen with strikes at Ryanair potentially linked to this trend. Members of the travel industry this week claimed prices at rival airlines had taken off.

The cost of airfares was up a huge 32pc in the month of July, although the cost is down 9pc on a year ago.

Costs at restaurants and cafés were up 2pc on the year, something which will be closely watched as the Government considers scrapping the special 9pc VAT rate for the sector.

Rents were up 6pc in the past year, with pressure to find reasonably priced accommodation contributing to the rent crisis.

Motor insurance prices are down 6.7pc on the year, but this comes after years of steep rises.

Overall, prices were up 0.8pc in July compared with the same month last year, according to the CSO, the highest inflation rate since April last year.

Alan McQuaid, economist with Merrion Stockbrokers, said that despite strong economic growth, there was little sign of sustained pressure on prices.

“This appears to be the same story across the eurozone, suggesting that the European Central Bank will be in no hurry to increase interest rates,” he said.

He said the direction of oil prices would be critical in determining the headline inflation rate over the next year.

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Doubts grow about Musk’s drive to take Tesla private

Doubts about Elon Musk’s ability to take Tesla private mounted across Wall Street yesterday, wiping out the gains reaped from his initial tweet floating the idea.

The stock plunged as much as 4.6pc to $353.33, below where it was trading two days ago and well off the $420 at which Mr Musk said shareholders would be bought out.

The shares have dropped on back-to-back days after having jumped 11pc on Tuesday, when Mr Musk vowed that he had “funding secured” for a spectacular $82bn deal.

Since that initial tweet, though, he has offered no evidence to back up the statement. Nor has anyone stepped forward publicly – or privately – to say they’re behind the plan. People with, or close to, 15 financial institutions and technology firms who spoke on the condition of anonymity said they weren’t aware of financing having been locked in before Mr Musk’s tweet.

“I don’t really understand the idea of what was suggested in the potential for them to go private,” Dick Weil, CEO of Janus Henderson Group, said in an interview with Bloomberg Television. “That’s obviously an incredibly large valuation to somehow take into the private market.”

All of which could be problematic as the Securities and Exchange Commission starts investigating the matter.

Regulators have asked the company if what Mr Musk tweeted was factual and why such a disclosure was made via social media rather than in a filing, according to ‘The Wall Street Journal’, citing unidentified people familiar with the matter. Judith Burns, an SEC spokeswoman, declined to comment.

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UK business leaders urge scrapping of immigration targets after Brexit

Targets to limit immigration should be scrapped after Brexit, UK business lobby group the CBI has recommended.

Businesses need a new immigration policy, avoiding visas for EU citizens and putting migration on the table for trade talks, according to its new report ‘Open And Controlled – A New Approach To Migration’.

Evidence from 129,000 firms across 18 industry sectors in the report showed the importance of migration at all skill levels, said CBI deputy director-general Josh Hardie.

He called for “blunt targets” to be axed to enable companies to hire the staff they need.

“This is no longer a theoretical debate,” he said. “It’s about the future of our nation. Openness and control must not be presented as opposites.

“Scrapping blunt targets, ensuring all who come to the UK contribute and using the immigration dividend to support public services will add to public confidence.

“Many sectors are already facing shortages, from nurses to software engineers – so fast, sustainable, evidence-based action is needed.”

The report highlights how businesses do not just need “the brightest and best” immigrants, but different skill levels across many different sectors.

Mr Hardie outlined the contribution made by EU immigrants to building Britain’s houses – from labourers and electricians to architects – and in food and drink, starting with farm workers, through logistics and into hospitality.

“The stakes couldn’t be higher,” he said. “Get it wrong, and the UK risks having too few people to run the NHS, pick fruit or deliver products to stores around the country.

“This would hurt us all – from the money in our pockets to our access to public services.

“The needs are more complex than only ensuring that the UK can attract the ‘brightest and best’.”

And he called for greater migration to be part of future trade negotiations to allow the UK economy to grow, as well as reform of the non-EU immigration system of visas.

“For Global Britain to succeed, the UK must send the right signals that show it remains open and welcoming to the world,” he said.

“That means putting migration on the table in trade talks to get us a better deal, first with the EU and then other countries, where it is clear existing visa restrictions inhibit trade and foreign direct investment.”

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Revenue increases at Kerry, but currency headwinds impact results

Revenue at Kerry Group rose 1.4pc year-on-year to €3.2bn in the six months to June 30.

The growth in revenue reflected volume growth of 3.6pc and a 0.6pc improvement in pricing, as well as the contribution from acquisitions, according to interim results from the group.

However the consumer foods business saw its trading margin decrease by 10 basis points to 10.5pc, as strong volume growth and contribution from acquisitions were offset by adverse currency movements.

On a constant currency basis, group sales increased by 8pc year-on-year.

Group trading profit came in at €340m, up 0.5pc year-on-year, and up 8.7pc in constant currency.

“Evolving consumer trends and the changing marketplace have provided increased opportunities and demand for Kerry’s industry leading RD&A and broad technology portfolio,” Edmond Scanlon, CEO of Kerry Group, said.

“This, along with the group’s enhanced end use market focus, drove healthy volume growth and underlying margin expansion in the first half of 2018. We also continued to make progress with and invest in business development initiatives aligned to our strategic growth priorities.”

During the six month period the group’s taste and nutrition business reported volume growth of 4.1pc, while its consumer foods business reported volume growth of 1.3pc.

Looking forward the group said it was updating its guidance for the year and now expect to achieve growth in adjusted earnings per share of 7pc to 10pc in constant currency.

The group had previously expected to achieve growth in adjusted earnings per share of 6pc to 10pc in constant currency.

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Profits jump 80pc at North’s biggest firms

Northern Ireland’s biggest companies have seen their profits increase by almost 80pc in 12 months.

This is according to the 2018 ‘Top 100 Companies’ from industry magazine ‘Ulster Business’.

Leading the way was Armagh-based poultry producer Moy Park, which reported a turnover of £1.4bn (€1.57bn) over 12 months.

This is the seventh year in a row that the North’s largest private sector business has topped the list.

Moy Park processes over 280 millions birds a year, in addition to producing around 200,000 tons of prepared foods annually.

It saw its profits increase to £59.7m (€66.9m) last year from £35.7m the previous year.

Chris Kirke, president of Moy Park, said that it was the “great people” within the business that have made it the successful company it is today.

“It is our talented team and our focus on enhancing operations across our facilities, that will ensure we can continue to innovate, thrive and grow,” said Mr Kirke.

Overall, turnover among the Ulster Business Top 100 – now in its 30th year – increased by around 9pc, rising to £23.85bn from £21.88bn, when comparing company accounts year-on-year.

Pre-tax profits for the 100 companies making the list grew by 79pc, rising to £924.9m from £517.5m the previous year.

One of the biggest jumps on the list was from Graham Construction.

During the 12-month period the company saw its revenue soar by more than £200m to £759m.

“This year’s Top 100 Companies list is another clear example of the strength of Northern Ireland’s business landscape, right across the sectors,” John Mulgrew, Ulster Business editor, said.

“The majority of company results have taken place during the ongoing stasis, with a lack of a devolved government in Northern Ireland, which makes the huge surges in profit, and turnover, even more impressive.”

There were more than a dozen new entrants to this year’s list, from right across the business spectrum, including Belfast technology firm Kainos, and Mac Interiors, which is based in Newry.

The Ulster Business Top 100 edition was welcomed by Michael Neill, head of A&L Goodbody in Belfast, which sponsored the list.

“We have been inspired by their drive, determination and resilience, and the example they set to Northern Ireland plc,” Mr Neill said. “We very much look forward to seeing their businesses continue to thrive over the next 12 months.”

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