Post on 20-Jan-2015
description
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Post Recession Post Digital
The New Horizon15th September 2010
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The First global recession for 60 years(since second world war)
UK Debt Problem
First Half 2010 Green Shoots
But Double Dip a possibility
UK Economic Forecast
Will the UK fall behind in next 5yrs
Ageing UK Population
The New UK Economy
Britain’s always on society 24/7
UK Ad Expenditure
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After this recession what is different
• The impact on the consumer psyche and difference
from past recessions
• The experience of past recessions
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The aftermath of financial crises
Percent decline Duration of downturn
(years)
House prices -35.5 6
Equity prices -55.9 3 – 4
Unemployment 7 4.8
GDP -9.3 1.9
Public debt 86 -
An examination of the effects of protracted financial crises based on an analysis of relevant systemic financial crises of the past. Source: National Bureau of Economic Research, Working paper 14656
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Recovery time for spending in the UK(number of quarters for spending to recover to pre-recession level *)
0
5
10
15
20
25
30
Overall spending Holidays abroad Alcohol consumed in the home
Clothing Food consumed in the home
Hotels in the UK
1970s
1980s
1990s
Source ONS
* Spending (in real terms) to recover to the level of six months prior to the start of the recession
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Wealth impacts of this recession in the UK
• UK wealth peaked in the 3rd quarter of 2007 – Net housing wealth : £3.8tn
– Net financial wealth : £2.9tn
– Overall net wealth : £6.7tn
– By 1st quarter 2009 we calculate the following losses:
– Loss of housing wealth : £0.55tn
– Loss of financial wealth : £0.75tn
– Overall loss : £1.3tn
Source: Bank of England/Trajectory Analysis
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Consumer incomes compared to last year
0%5%
10%15%20%25%30%35%40%45%
Up 5% + Up less than 5%
Same Down less than 10%
Down 10-25%
Down 25%+
Total
Source: Trajectory/Sense Consultants
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Impact of the credit crunch, so far
0%10%20%30%40%50%60%70%80%90%
Home repossesed
Move to cheaper home
Higher mortgage
repayments
Refused Credit None of these
Source: Trajectory/Sense Consultants
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Confidence to ‘spend as usual’ on everyday items less affected (food, going out, clothing etc)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Very Confident Fairly Confident Bit Cautious Very Cautious
Source: Trajectory/Sense Consultants
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Confidence to ‘spend as usual’ on large items – more affected
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Very Confident Fairly Confident Bit Cautious Very Cautious
Source: Trajectory/Sense Consultants
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The consumer psyche post-recession
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The consumer psyche post-recession
• Key consumer themes:
– Simplicity here to stay– Trust/transparency given a boost (faith in companies damaged
permanently)– Thrift for a generation– Post-austerity Britain/World = considered consumption: innovation
essential
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Real versus psychological impacts of the recession
• The impact of the recession on most consumers is psychological
rather than real or tangible
• Trajectory latest research (UK) shows that:
– only 25% of consumers feel that their incomes have fallen in the last year – 75% report that their incomes are the same or have increased
– Over 80% of consumers have not been directly affected by the credit crunch
• However, the majority of consumers have had their confidence
undermined by the current economic crisis
– over 70% say that they are not confident to ‘spend as usual’ on large items (e.g. a car or holiday)
– 55% of say that they are not confident to ‘spend as usual’ on everyday items (e.g. Food or clothing)
Source: Trajectory
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The consumer context for this recession
• The current economic crisis follows 15 years of exceptional economic growth and stability from 1993 onwards
• Consumer incomes and asset values rise rapidly, with low and stable levels of inflation
• Between 1995 and 2005 real disposable consumer incomes in the US and UK increased by a third
• This has had a liberating effect on consumers - broadening horizons, interests and concerns
• Towards the end of the growth period, we began to see a questioning of the benefits of growth and increased affluence among better off consumers
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Some key impacts of the recession on the consumer psyche
• Simplicity – the pressures of life in a recession increase the consumer
desire for simplicity– Consumers want edited choice and strong, identifiable,
reassuring brands– Growing role for advisors and intermediaries
• The new thrift– Recession makes a (pre-existing) desire for thrift
acceptable for more affluent consumers– Appeals to the desire for a more ‘wholesome’ and less
extravagant consumer lifestyle than the one that emerged towards the end of the period of economic growth
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Some key impacts of the recession on the consumer psyche (2)
• The extremes of the experience economy are put on hold– The extremes of the experience economy now seem frivolous – out of
keeping with our new seriousness and an era of responsibility– Also, the recession creates pent-up demand for ‘things’ (durable goods
especially)– Simple, ‘wholesome’ experiences will do better
• Ethical consumption put on hold– Green consumption holding up relatively well in this recession, but only
to the extent that reducing waste fits with the new thrift– Other aspects of ethical consumption – organic, fair trade, CSR - take a
back seat as making ends meet becomes a priority– A renewed interest in boardroom ethics: prudence, stability and no
excessive bonuses!
Source: Trajectory
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Challenges to received wisdoms
• Because it’s going to be bad, things won’t return to normal or at least will take a long time to do so
• Britain can survive London no longer being a major global financial centre if that were to happen
• Government debt has historically been higher and not as bad as some international competitors
• But impact on taxes (and public services) inevitable• Key consumer themes:
– Simplicity here to stay– Trust/transparency given a boost (faith in companies damaged
permanently)– Thrift for a generation– Post-austerity Britain/World = considered consumption: innovation
essential
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The biggest single consumer psyche post-recessionis TRUST
• Trust in Banks and Companies fundamentally
undermined .
• People now believe friends and other users and
look to social media blogs and reviews
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User-generated content and social media will be key to generating sales and reaching consumers
once the recession lifts
“Social media key to recovering post recession,”
Experian's 2009 Insight Report
• As disposable income tightens, UK internet users are spending less time
on transactional sites and more on user content driven websites such as
social networks, according to.
• In terms of traffic, social networks overtook retail websites in the UK for
the first time in January 2009 and by March were receiving 14 per cent
more internet visits, the report said.
post digital
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“Like air and drinking water, being digital will be noticed only by its absence, not its presence.”
Nicholas NegroponteMIT Media Lab
Harriette’s computer
post digital now?
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post networked digital?
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the transition continues
…by 2011, 90-percent of our
product categories will
connect wirelessly to the
Internet – and to each other
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first recession where the internet is mainstream
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in just two years…
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IPA Touchpoints 3 vs. Touchpoints 2008 changes in average time online per week . Average increase 32” (5%)
unprecedented access to information
Source: European Technographics Benchmark Survey, Q2 2008
but…display advertising media driving search
Source : IPA Touchpoints 3. Rank order within age-group of def/tend to agree “<medium ads> often lead me to search the internet for informationon products and services”
unprecedented access to people
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unprecedented access to people
Source: Universal McCann
Key considerations for businesses and brands
“(post) Recession”
• Trust
• Transparency
• Simplicity
• Thrift
• Efficiency
• Transparency
• Conversation
• Desirability
“(post) Digital”
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“Shopping itself is less impulsive and more disciplined. Recession-habituated shoppers are more inclined than ever to do research...” [Booz & Co]
Valuing customer relationships, listening and offering great service will pay dividends
Degradation in product quality, poor service, marketing chicanery will be uncovered and disseminated via the social web
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post digital products: wifi scales
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post digital brands: uniqlo lucky counter
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post digital brands: nike chalkbot
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post digital brands: nike chalkbot
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what about online advertising??
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+$1billion this year globally
what about online advertising??
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what about online advertising??
Google goes post pc
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“What we call 'display' today will just be 'advertising' - a single platform that can coordinate an advertiser's campaign across streaming audio ads in car stereos, interactive mobile experiences on smartphones, and HD video ads on set-top boxes“
Jonathan Bellack, Director of product management
beyond the pc
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screen proliferation
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location liberation
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at home… in just two years
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Source: Percentage HH, Touchpoints 3 (2010) vs Touchpoints 2 (2008)
beyond home…hotspots nearly triple in 4 years
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smartphone sales
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In June 2010, over a quarter of people in the UK said they had a smartphone, more than double the number two years previously.
The Communications Market August 2010, OFCOM
Over 60% of contract phones sold in the UK are now smartphones
Gfk, May, 2010
interface evolution
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Content, services and social interaction…
…how people want, where they want, when they want
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A tale of two screens: Mobile
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The Mobile Internet
…Simply put, location changes everything. This one
input – our coordinates – has the potential to change
all the outputs. Where we shop, who we talk to, what
we read, what we search for, where we go – they all
change once we merge location and the Web.
Mathew Honan, WIRED magazine, 1/19/09
Smartphones show the future
Source: comScore GSMA MMM; comScore Media Metrix, December 2009
Currently all about social updates
Source: comScore GSMA MMM; comScore Media Metrix, December 2009
soon: location as a platform
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A tale of two screens: TV
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TV – INTERWEB CONVERGENCE
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but people like watching TV on TV
Source: IPA Trends in TV
project canvas – many pipes, but TV screen
even so, linear’s got legs
• Deloitte predicts that in 2010 most video content
will continue to be consumed linearly - that is,
according to broadcasters' programming schedules.
They estimate is that over 90 percent of all television
watched will be via traditional broadcast.
TV and web belong together
summary
• post recession– trust, transparency, simplicity, thrift
• post digital– digital is a virtual given
• new horizon– Internet everywhere, seamlessly integrated into life