Post recession post digital new horizon

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Post recession post digital new horizon

  1. 1. 1 Post Recession Post Digital The New Horizon 15th September 2010
  2. 2. 2 The First global recession for 60 years (since second world war)
  3. 3. UK Debt Problem
  4. 4. First Half 2010 Green Shoots
  5. 5. But Double Dip a possibility
  6. 6. UK Economic Forecast
  7. 7. Will the UK fall behind in next 5yrs
  8. 8. Ageing UK Population
  9. 9. The New UK Economy
  10. 10. Britain’s always on society 24/7
  11. 11. UK Ad Expenditure
  12. 12. 12 After this recession what is different • The impact on the consumer psyche and difference from past recessions • The experience of past recessions
  13. 13. 13 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
  14. 14. 14 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
  15. 15. 15 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
  16. 16. 16 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 than10% Down 10- 25% Down 25%+ Total Source: Trajectory/Sense Consultants
  17. 17. 17 Impact of the credit crunch, so far 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Home repossesed Moveto cheaper home Higher mortgage repayments Refused Credit Noneof these Source: Trajectory/Sense Consultants
  18. 18. 18 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
  19. 19. 19 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
  20. 20. 20 The consumer psyche post-recession
  21. 21. 21 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
  22. 22. 22 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
  23. 23. 23 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
  24. 24. 24 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
  25. 25. 25 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
  26. 26. 26 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
  27. 27. 27 The biggest single consumer psyche post-recession is TRUST • Trust in Banks and Companies fundamentally undermined . • People now believe friends and other users and look to social media blogs and reviews
  28. 28. 28 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.
  29. 29. post digital 29 “Like air and drinking water, being digital will be noticed only by its absence, not its presence.” Nicholas Negroponte MIT Media Lab
  30. 30. Harriette’s computer
  31. 31. post digital now? 31
  32. 32. post networked digital? 32
  33. 33. the transition continues …by 2011, 90-percent of our product categories will connect wirelessly to the Internet – and to each other 33
  34. 34. first recession where the internet is mainstream 34
  35. 35. in just two years… 35 IPA Touchpoints 3 vs. Touchpoints 2008 changes in average time online per week . Average increase 32” (5%)
  36. 36. unprecedented access to information Source: European Technographics Benchmark Survey, Q2 2008
  37. 37. 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”
  38. 38. unprecedented access to people 38
  39. 39. unprecedented access to people Source: Universal McCann
  40. 40. Key considerations for businesses and brands “(post) Recession” • Trust • Transparency • Simplicity • Thrift • Efficiency • Transparency • Conversation • Desirability “(post) Digital”
  41. 41. 41 “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
  42. 42. 42
  43. 43. 43
  44. 44. post digital services: mint.com 44
  45. 45. post digital products: wifi scales 45
  46. 46. post digital brands: uniqlo lucky counter 46
  47. 47. post digital brands: coca cola village 47
  48. 48. post digital brands: nike chalkbot 48
  49. 49. post digital brands: nike chalkbot 49
  50. 50. what about online advertising?? 50 +$1billion this year globally
  51. 51. what about online advertising?? 51
  52. 52. what about online advertising??
  53. 53. Google goes post pc 53 “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
  54. 54. beyond the pc 54
  55. 55. screen proliferation 55
  56. 56. flipboard: social magazine 56
  57. 57. location liberation 57
  58. 58. at home… in just two years 58 Source: Percentage HH, Touchpoints 3 (2010) vs Touchpoints 2 (2008)
  59. 59. beyond home…hotspots nearly triple in 4 years 59
  60. 60. smartphone sales 60 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
  61. 61. interface evolution 61
  62. 62. Content, services and social interaction… …how people want, where they want, when they want 62
  63. 63. A tale of two screens: Mobile 63 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
  64. 64. Smartphones show the future Source: comScore GSMA MMM; comScore Media Metrix, December 2009
  65. 65. Currently all about social updates Source: comScore GSMA MMM; comScore Media Metrix, December 2009
  66. 66. soon: location as a platform 66
  67. 67. IBM Seer – augmented reality utility 67
  68. 68. A tale of two screens: TV 68
  69. 69. TV – INTERWEB CONVERGENCE 69
  70. 70. but people like watching TV on TV Source: IPA Trends in TV
  71. 71. project canvas – many pipes, but TV screen
  72. 72. 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.
  73. 73. TV and web belong together
  74. 74. summary • post recession – trust, transparency, simplicity, thrift • post digital – digital is a virtual given • new horizon – Internet everywhere, seamlessly integrated into life

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