• A Season of Online Shopping Growth

    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.

  • Small Business Optimism Headlines Survey Results from GrowBiz Media and Zoomerang

    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.

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

    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:

  • Keeping up With Mobile Device Capabilities

    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.

  • Clevelane Fed: 'Continued Weakness in Small Business Lending'

    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.

  • The Business of Sharing

    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:

  • 2010: The Year Online Ad Spending Passed Newspaper Ad Spending

    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.

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

    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.

  • Calculated Risk: Ten Questions for 2011

    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.

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

    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.

  • A Time Person of the Year Curse?

    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.

  • Rohit Deshpandé on the Provenance Paradox and Overcoming Consumer Bias

    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.

  • More Tablets Appears to Mean More Ad Viewers

    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:

    Receptivity to Advertising Among US Mobile Device Users, by Device, 2010 (% of respondents)

    Read What Tablets Can Do for Marketers here.

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

    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.

  • Feminine Values of Finance

    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:

  • Glaeser: 'Does Economic Inequality Cause Crises?'

    In a relatively short post at the New York Times Economix Blog, Harvard's Edward Glaeser provides a nice roundup of the recent work of economists evaluating the argument that inequality helped fuel the global economic crisis.  Glaeser himself does not come to the same conclusion as Nobel Laureate Joseph Stiglitz, who has argued, as quoted by Glaeser, that "growing inequality in most countries of the world has meant that money has gone from those who would spend it to those who are so well off that, try as they might, they can't spend it all."  Glaeser:

    Since theory is pretty inconclusive, we must turn to the data. We are lucky that Professor Atkinson, a distinguished English economist (and regular Stiglitz co-author), has provided a pretty overwhelming empirical examination of the link between inequality and financial crises.

    Within the United States, Professor Atkinson asserts, the prevailing views linking inequality and financial crises "need to be nuanced," because "the rise in overall inequality prior to 2007 was not evident in the case of consumption, nor in the poverty rate," and "income inequality as measured by the Gini coefficient rose by less than 1 percentage point over the preceding 10 years." Income inequality was certainly high, in 2006, but it wasn't rising sharply before the crash, except for the very top of the wealth pyramid.

    Professors Atkinson and Morelli's international data also suggests little regular connection between inequality and crises. Looking at 25 countries over a century, they find 10 cases where crises were preceded by rising inequality and seven where crises were preceded by declining inequality. Moreover, "the Gini coefficient was higher to a salient extent in two of the six cases where a crisis is identified, which is exactly the same proportion as among the 15 cases where no crisis is identified," they found.

    Read the full post here.

  • McKinsey Quarterly: Global Growth and the Need for Capital

    Signs are good for growth in the global marketplace, largely because of the prospects for emerging markets like India and China.  In the latest McKinsey Quarterly, Richard Dobbs, Susan Lund, and Andreas Schreinerare warn that there is some reason to be concerned about all that growth.  Their primary concern: the availability of capital to fuel all the growth.  Growth depends on investment, which depends on capital.  Take a look at the McKinsey Global Institute's projections for global demand on investment over the next 20 years:

    Dobbs, Lund, and Schreinerare note that when economies become more robust, the savings rate declines.  And therein lies the problem for investment capital:

    The capital needed to finance this investment comes from the world's savings. Over the three decades or so ending in 2002, the global saving rate (saving as a share of GDP) fell, driven mainly by a sharp decline in household saving in mature countries. The global rate has increased since then, from 20.5 percent of GDP in 2002 to 24 percent in 2008, as household saving rebounded in mature economies and many of the developing countries with the highest rates-particularly China-have come to account for a growing share of world GDP. Our analysis suggests, however, that the global saving rate is not likely to rise in the decades ahead, as a result of several structural shifts in the world economy.

    First, China's saving rate will probably decline as it rebalances its economy so that domestic consumption plays a greater role. In 2008, China surpassed the United States as the world's largest saver, with the national saving rate reaching over 50 percent of GDP. But if China follows the historical experience of other countries, its saving rate will decline over time as the country grows richer, as happened in Japan, South Korea, Taiwan, and other economies (Exhibit 2). It is unclear when this process will begin, but already the country's leaders have started to adopt policies that will increase consumption and reduce saving.4 If China succeeds at increasing consumption, it would reduce the 2030 global saving rate by around two percentage points compared with 2007 levels-or about $2 trillion less than China would have accumulated by 2030 at current rates.

    Read How the growth of emerging markets will strain global finance here.

  • Congressional Oversight Panel Sees Little Progress in Fighting Foreclosure Crisis

    The Congressional Oversight Panel has once again concluded that a Treasury Department is coming up short of expectations. This time it is Home Affordable Modification Program (HAMP), Treasury's foreclosure prevention program.  COP raised concerns earlier this year that Treasury was not doing enough to stave off a foreclosure crisis, and now it seems HAMP has made too little an impact to satisfy members of the panel.  From COP's December report:

    In some regards, the program‟s failure to make a dent in the foreclosure crisis may seem surprising.  HAMP‟s premise was straightforward: Because the foreclosure process allows

    lenders to recover only a small fraction of the value of a mortgage loan, lenders should generally prefer to avoid foreclosure by voluntarily reducing a borrower‟s monthly payments to affordable levels.  Through HAMP, Treasury attempted to sweeten this deal by offering incentive payments to all parties to a mortgage loan modification.  Yet despite the apparent strength of HAMP‟s economic logic, the program has failed to help the vast majority of homeowners facing foreclosure.

    A major reason is that mortgages are, in practice, far more complicated than a one-to-one relationship between borrower and lender.  In particular, banks typically hire loan servicers to handle the day-to-day management of a mortgage loan, and the servicer‟s interests may at times sharply conflict with those of lenders and borrowers.  For example, although lenders suffer significant losses in foreclosures, servicers can turn a substantial profit from foreclosure-related fees.  As such, it may be in the servicer‟s interest to move a delinquent loan to foreclosure as soon as possible.  HAMP attempted to correct this market distortion by offering incentive payments to loan servicers, but the effort appears to have fallen short, in part because servicers were not required to participate.  Another major obstacle is that many borrowers have second mortgages from lenders who may stand to profit by blocking the modification of a first mortgage.  For these reasons among many others HAMP‟s straightforward plan to encourage modifications has proven ineffective in practice.

    Here's COP chair, Sen. Ted Kaufman, discussing the report:

    Read the full report here.

  • Surowiecki Calls Groupon a 'Real Company'

    We are sure to see Groupon pop up on a series of best-of 2010 lists. It has been a good year for the coupon/daily deal site.  Some wonder whether its growth is a temporary fad, or just the beginning for the next huge Internet company.  The New Yorker's James Surowiecki sees neither outcome in Groupon's future.  He describes it as a "real company," unlike compared to the YouTubes, Facebooks, and Googles:

    Groupon, by contrast, is a much more old-school business. It doesn't have any obvious technological advantage. Its users don't really do anything other than hit the "buy" button. And its business requires lots of hands-on attention: thousands of salespeople to sell to and service local businesses, copywriters to come up with the right pitches for customers (Groupon's clever ad copy is one of its selling points). Groupon isn't just flinging piles of deals at users; the idea is that it's performing a "curatorial" role, and is relying on humans, instead of on Google-style algorithms. All these things are real assets-and a reason that Groupon is less vulnerable to competition than people think-but they're also very labor-intensive. Facebook, with five hundred million users, has fewer than two thousand employees, while Groupon, with some forty million subscribers, already has three thousand employees. Groupon can obviously add subscribers easily (all it has to do is send out more e-mails), but serving them enough deals to keep them happy is another matter: the more business it does, the more people it has to hire. Recently, Groupon has experimented with a self-service system, which would let it outsource some of the work to local merchants, who could set up virtual storefronts. But, unless it wants to abandon the approach that made it successful, scaling up will require more work and more workers than the Twitters and YouTubes of the world need.

    Read Groupon Clipping here.

  • Container Store CEO on Employee-Centric Culture

    The Container Store invests a lot of time and money in its first year employees.  And then the company gives them a lot of say in how they do their jobs.  CEO Kip Tindell calls it "radical empowerment," and he says it keeps everyone at the company "going in the same direction toward the same ends."  Tindell describes The Container Store approach and the rationale behind giving employees great say in how they do their jobs in this Big Think interview:

  • Soap Maker Procter and Gamble Stepping Away From Soaps

    They aren't called soap operas for nothing.  The genre of daytime television (and at one time radio) dramas was started in part by Procter and Gamble.  The maker of Ivory soap produced soap operas for a couple of decades, and then spent a lot of ad dollars sponsoring them.  But now they are putting their money into social media, according to Associated Press business writer Dan Sewall:

    "The digital media has pretty much exploded," marketing chief Marc Pritchard said in an interview. "It's become very integrated with how we operate, it's become part of the way we do marketing."

    The last P&G-produced soap opera, "As The World Turns," went off the air in September. The show was the leading daytime soap for decades, but had lost some two-thirds of its audience at the end.

    Over the years, P&G produced 20 soap operas for radio and TV. But ratings for daytime dramas have been sinking for years, as women, their target audience, increasingly moved into the workplace, switched to talk and reality shows, and spent more time using online media and social networking sites.

    This would appear to be a significant moment in the transition of ad dollars from broadcast to digital, given that P&G is the world's biggest advertiser.  Read the article here.

  • UBS Americas CEO on Positive Prospects for US Economy

    If you're looking for a banker who is relatively optimistic about the direction in which the US economy is heading, Robert Wolf may be your guy.  Wolf is CEO of UBS Group Americas.  He is also part of the White House's Economic Recovery Advisory Board.  And while he recognizes that the growth over the last three quarters has been small, he nevertheless sees that growth, along with the stock market's rise, as important signals.  He explained his "glass half full" view on economic recovery, and shared his thoughts on the prospects for investment banking in this interview with Knowledge@Wharton:

  • From Entrepreneur to Trusted Resource

    David Garland of The Rise to the Top is comfortable pushing for attention, and he thinks all entrepreneurs should embrace celebrity.  Not the US Weekly version of celebrity, but rather celebrity as a "trusted resource," and a "go-to person and company," as Garland writes at Small Business Trends.  And Garland believes a trusted resource does the following:

    • Educates, entertains and inspires.
    • Makes a lot of money because people know, like and trust him or her.
    • Is often a person as opposed to a faceless company.
    • Is accessible and transparent on social media sites, via e-mail, etc.
    • Is not all-knowing and stuffy, but instead friendly and helpful.

    Read Garland's advice on how to become a trusted resource here.

  • Social Media's Place in Marketers' Plans Keeps Rising

    EMarketer reports that nearly three-quarters of marketers used social media as part of their overall outreach this past year.  That's up from about 60% in 2009.  Next year 80% of marketers will employ social media, eMarketer estimates from third-party survey results.  And  one of those surveys--from Maxymiser--found that social media tied for third in rankings of areas in which companies are spending their online marketing budgets for 2011:

    Read How Many Marketers Are Using Social Media? here.

  • The Economic Crisis Backstory, Animated

    Here's a short animated video out of Europe from filmmaker Denis van Waerebeke.  It is another simple explanation of one of the story-lines of the global economic crisis. 

    Ecoland - Bubble story from Denis van Waerebeke on Vimeo.

    (Hat tip Barry Ritholtz)