December 2010 - Global Economic Watch

A Season of Online Shopping Growth

12-24-2010 9:23 AM with no comments

If there were any doubts about the growth of online shopping, ComScore reports that Americans spent $28.36 online from November through December 19.  That's a 12.2 percent increase over last year.  And last weekend alone spending topped $900 million, a 17% increase over the last pre-Christmas weekend of 2009.  Here's a look at the week-by-week breakdown:

Read the full release here.

Posted by Graham Griffith

Small Business Optimism Headlines Survey Results from GrowBiz Media and Zoomerang

12-23-2010 10:16 AM with no comments

Looks like some entrepreneurs are looking forward to 2011, and not just because it puts 2010 in the rear view mirror.  Writing at Small Business Trends, Rieva Lesonsky shares some results from the Small to Midsized Business: Plans for 2011 survey.  GrowBiz Media (Lesonsky's company) and Zoomerang conducted the survey, and Levonsky reports that the participants were "overwhelmingly positive about both their own companies, and the economy as a whole." 

Nearly three-quarters of SMBs (72 percent) say the overall economy will improve (30 percent) or hold steady (42 percent) in 2011. And when it comes to their own companies, 34 percent expect their sales to rise in 2011, while 50 percent expect them to stay the same. Only 16 percent think their sales will decrease.
These entrepreneurs are also putting their money where their mouths are. Twenty-five percent plan to hire employees next year. With over 27 million small businesses in the U.S., Zoomerang's Alex Terry believes this could lead to the creation of millions of jobs. And in contrast to the layoffs of recent years, 64 percent say they will maintain their current staff levels-just 11 percent plan to cut.

Read 2011 Outlook: Small Businesses Optimistic About Economy, Ready to Reinvest and Hire here.

Posted by Graham Griffith

Ned Hallowell and the Steps to Getting Employees to 'Shine'

12-23-2010 8:51 AM with no comments

Edward (Ned) Hallowell, formerly on the faculty of Harvard Medical School and now the head of the Hallowell Centers, is a psychiatrist who seems to have spent a lot of time thinking about what makes humans tick at work.  His latest book, Shine: Using Brain Science to Get the Best from Your People, is all about learning how to manage employees and put them in position to succeed.  Hallowell argues that the old method of just getting people to work harder doesn't get results.  Rather, a good manager must master five steps in order to get the most productive and reliable workforce: select, connect, play, grapple, and shine.  He describes the steps in this Harvard Business Idea Cast:

Posted by Graham Griffith

Keeping up With Mobile Device Capabilities

12-22-2010 10:20 AM with no comments

By now, most marketing professionals realize that they need to consider how their messages are transmitted differently depending on the technology consumers are using.  What works for a website viewed on a laptop may not work on a smart-phone, or on a tablet.  But as the variety of mobile devices continues to expand, keeping up with the new technology becomes even more important, and challenging.  Robert Carroll is CMO of SDL's Web Content Management Solutions, and he writes in Marketing Profs, that marketers "must consider how to incorporate geo-targeting, profiling, and time- and location-based marketing to better support and engage customers anytime and anywhere. "  And that requires a comprehensive mobile tech strategy.  Carroll shares ten design issues that marketers need to consider in this age.  For example, design issue #3:

Localization, localization, localization! The global marketplace demands that a CMS enable companies to create language variants easily and manage the translation process and regional go-to-market strategies. But it's also important to consider how each content variant will interact with the limited screen space of a mobile device. Creating customer-experience variants for devices with different form factors will help companies increase savings, management efficiencies, and time-to-market speed.

And #7:

Customer engagement can vary greatly based on the device in use, so companies should consider all devices used to browse the mobile Web. It is essential to capture device specifics, such as browser type, screen resolution, JavaScript/cookies enabled, etc., before serving back the requested content. At the time of the request, the device/browser identifies itself, allowing the CMS to read its specifics from a database and render the appropriate experience.

Read all ten design issues here.

Posted by Graham Griffith

Clevelane Fed: 'Continued Weakness in Small Business Lending'

12-22-2010 9:55 AM with no comments

Small businesses are still having trouble getting loans.  Take a look at the trend for business loans under $1 million over the last decade:

And of the loans under $1 million, most are under $100,000:

These charts are from a recent post by Matthew Koepke and James B. Thomson of the Federal Reserve Bank of Cleveland. Koepke and Thomson took a look at the decline in small business lending, and found a lot about which we should be concerned: in particular, the decline in the smaller loans.

From the 2000 to 2008, the increase in small business loans was driven by an increase in the number of loans made. The general decline in the average small business loan made over this time period was due in large part to strong growth in the number of loans under $100,000. While the average growth in the small business loan portfolios of banks and thrifts through 2008 was 13 percent, the number of loans under $100,000 grew 14 percent compared to 6 percent and 7 percent for loans between $100,000 and $250,000 and loans between $250,000 and $1 million, respectively. From June 2008 to June 2010, the shrinking small business loan portfolios of FDIC-insured institutions have been driven by a combination of shrinking loan balances (falling 4 percent a year) and declines in the numbers of loans (falling nearly 9 percent a year). Again, the reversal of growth in the number of loans has been driven by the decline in the number of loans under $100,000, which declined nearly 10 percent a year between June 2008 and June 2010. In comparison, the number of loans between $250,000 and $1 million fell only one percent a year and those $100,000 and $250,000 fell only 4 percent a year over the same time period.

Read the full article here.

Posted by Graham Griffith

The Business of Sharing

12-21-2010 11:10 AM with 1 comment(s)

Are companies like Zipcar onto something?  The car-sharing company caters to those who would rather pay a fee for sharing cars than shell out the dough to own their own.  Rachel Botsman, author of What's Mine Is Yours: The Rise of Collaborative Consumption, says that companies with business models based on sharing are tapping into natural human behavior.

Here she is discussing this collaborative consumerism in a recent Ted Talk:

Posted by Graham Griffith

2010: The Year Online Ad Spending Passed Newspaper Ad Spending

12-21-2010 8:41 AM with no comments

It looks like 2010 has turned out to be the important year in the transition of ad dollars to online.  eMarketer estimates that spending in online ads will exceed spending in newspaper ads in the US.  Here's a look at their estimates:

Unfortunately for newspapers, they have not been able to capture lost revenue online.

In 2010, online makes up about 11.7% of all US newspaper ad spending, a proportion set to rise to 13% next year.

Ad spending on newspapers is expected to continue its decline. eMarketer estimates that print newspaper spending has already been cut in half since 2006, and online has done relatively little to make up the difference. By contrast, total US online ad spending will continue double-digit growth through 2014, when it will surpass $40 billion.

Read the full article here.

Posted by Graham Griffith

Darden's Robert Bruner on Comparing Great Recession with Great Depression

12-20-2010 9:43 AM with no comments

Robert Bruner, Dean of the Darden School of Buiness at the University of Virginia, believes that big financial crises share some basic criteria.  He co-wrote a book about The Panic of 1907, and is highly skilled at explaining what that crisis and our global economic crisis a century later have in common.  But he still cautions us not to draw too fine a point between our current slow economic recovery and the Great Depression:

Watch the full interview with Bruner at Big Think, here.

Posted by Graham Griffith

Calculated Risk: Ten Questions for 2011

12-20-2010 8:56 AM with no comments

Bill McBride (AKA Calculated Risk) has us thinking about 2011.  McBride posted his ten big questions for the new year.  We've pulled out 4 of them here:

2) Residential Investment: It appears residential investment (RI) bottomed in 2010, and will probably make a positive contribution to GDP growth in 2011 for the first time since 2005. RI is mostly investment in new single family structures, multifamily structures, home improvement and commissions on existing home sales. Historically RI has been the best leading indicator for the economy, but the growth in RI will probably be modest because of the large overhang of excess housing units. How much will RI grow in 2011?

5) Employment: The U.S. economy added about 87 thousands payroll jobs per month in 2010 through November. This was extremely weak payroll growth for a recovery. How many payroll jobs will be added in 2011?

7) State and Local Governments: How much of a drag will state and local budget problems have on economic growth and employment? Will there be any significant muni defaults?

8) Europe and the Euro: What will happen in Europe? When will the next blowup happen? How much of a drag will the problems in Europe have on U.S. growth?

Take a look at the complete post and all ten questions for 2011, here.  Then let us know what you would add.

Posted by Graham Griffith

Xtranormal: Online Toy or Valuable Tool for Marketers, Small Business?

12-17-2010 11:04 AM with no comments

The do-it-yourself video site Xtranormal provides an easy way of putting your ideas out in a simple and amusing animated format.  For example, this animated video takes a jab at the problems of journalism and the news media business, and has gone viral this week:

Catalyst Marketers says that this could be a great tool for small businesses that want to get their message out to the world in an amusing format and at a very low cost.  Read The Power of Viral Videos: Web Video Leads to Record Sales here.

Posted by Graham Griffith

A Time Person of the Year Curse?

12-17-2010 10:56 AM with no comments

With Time naming Facebook's Mark Zuckerberg the 2010 Person of the Year, Barry Ritholtz reminds us that back in 1999 Time selected another pioneer of the digital business world: Amazon's Jeff Bezos.  And what did it bring Amazon?  Well, the company seemed to top out--at least for a decade.  At The Big Picture, Ritholtz provides this picture of Amazon's market fate following the Time proclamation:

Will the same happen to Facebook?  Read Uh-Oh: Facebook’s Zuckerberg is Time Man of the Year here.

Posted by Graham Griffith

Rohit Deshpandé on the Provenance Paradox and Overcoming Consumer Bias

12-16-2010 10:59 AM with no comments

Corona is a mass market, inexpensive beer in its native Mexico.  But in the US, it is marketed as "fun, sun, beach, vacation in a bottle," says Harvard Business School marketing professor Rohit Deshpandé.  And it represents one of many products that has overcome what Deshpandé calls the "provenance paradox."  "Provenance paradox," is when companies in emerging markets struggle to sell their products at a reasonably high price because of where the product comes from.  That is, consumers are reluctant to pay a lot for something that comes from a less developed economy. 

Deshpandé explains the paradox and how companies can overcome consumer bias in this Harvard Business Idea Cast:

Read more about the provenance paradox from Deshpandé here.

Posted by Graham Griffith

More Tablets Appears to Mean More Ad Viewers

12-16-2010 10:26 AM with no comments

Tablet sales worldwide will hit 15.7 million this year, according to eMarketer, and will top 80 million sometime in 2012.  For the moment, this appears to represent an opportunity for advertisers.  eMarketer shares some data from Nielsen that shows new iPad users are more likely to click on ads than users of other mobile devices:

Read What Tablets Can Do for Marketers here.

Posted by Graham Griffith

The Young Entrepreneur Council and Putting Recent Graduates to Work, For Themselves

12-15-2010 9:46 AM with no comments

The New York Times has an interesting profile of The Young Entrepreneur Council.  The council was started by Scott Gerber, who created the promotional video company Sizzle It after graduating from NYU (and moving back in with his parents in Staten Island).   Hannah Seligson gives the details of the council:

The council consists of 80-plus business owners across the country, ages 17 to 33. Members include Scott Becker, 23, co-founder of Invite Media, an advertising technology firm recently acquired by a Google unit; Lauren Berger, 26, founder of the Intern Queen, a site that connects college students with internships; Aaron Patzer, the 30-year-old who sold Mint.com to Intuit for $170 million; and Josh Weinstein, 24, who started CollegeOnly.com, a social networking site that is backed by a PayPal founder.

The council, which has applied for nonprofit status, serves as a help desk and mentoring hotline for individual entrepreneurs. People can also submit questions on subjects like marketing, publicity and technology, and each month a group of council members will answer 30 to 40 of them in business publications like The Wall Street Journal and American Express Open Forum, and on dozens of small business Web sites.

Council members assert that young people can start businesses even if they have little or no money or experience. But whether those start-ups last is another matter. Roughly half of all new businesses fail within the first five years, according to federal data. And the entrepreneurial life is notoriously filled with risks, stresses and sacrifices.

Read No Jobs? Young Graduates Make Their Own here.

Posted by Graham Griffith

Feminine Values of Finance

12-15-2010 9:23 AM with no comments

Halla Tomasdottir believes that the financial services industry has been hurt by a "sameness" to the thinking among top managers.  That is, the thinking has been driven too much by testosterone.  So when she left her position as an investment banker to start the Icelandic financial services company Audur Capital, she did so with the aim of introducing what she calls "feminine values of finance," into the industry.  And while other companies in Iceland were dissolving as part of that country's severe economic collapse, Audur Capital survived.  Tomasdottir described "five feminine values" in finance in this Ted Talk:

Posted by Graham Griffith