Show me Numbers

Today marks the start of Global Entrepreneurship Week. In their own words it is

“a worldwide celebration of enterprise, which aims to unleash young people’s enterprising ideas and address some of society’s biggest issues, from poverty reduction through to climate change. More than 70 countries are currently signed up to run their very own versions of Enterprise Week, all coming under the banner of Global Entrepreneurship Week!”

The UK’s part of this, Enterprise Week, is promoted as “Make your Mark Week” which last year consisted of over 5,000 events involving more than 500,000 people. The campaign has completely embraced the use of the online media, with pretty much every online resource you can think of - blog, Twitter, media resources,  Flickr, You Tube and more. Hopefully the week will inspire some great business ideas for the future.

Lord Mandelson was on BBC Breakfast this morning promoting the event and there is a quote on the site that has been approved for use from the Secretary of State for Business, Enterprise and Regulatory Reform,

“Small and medium enterprises are the backbone of our economy, with 4.7 million businesses last year contributing more than 50 per cent to the UK’s turnover.

The Government is on the side of small and medium-sized businesses and understands that they are facing tough times ahead.

We are working to create the right conditions for British enterprise by removing barriers, creating opportunities and supporting events like Global Entrepreneurship Week to inspire tomorrow’s entrepreneurs.”

I agree wholeheartedly with the first statement, but as I have said in the past, the Government’s actions last year of increasing small companies corporation tax and capital gains tax on sales of small businesses, do not support the rest of this statement. Lets hope this statement indicates that we are about to see a major U-turn on these things in next week’s pre budget report so that the enthusiasm that this campaign generates is supported through the difficult times ahead.

An aggressive statement I know and one I suspect some people will tell me I am mad to claim. I am only relating this to consumers however not too business where the impact on lending that is more often linked to base rates and the potential benefits to exports of lower exchange rates may produce some positive results. But my own current experience of remortgaging has got me thinking about the effect on Joe Public.

Leaving aside the debate about whether stimulating demand through cheaper debt is really the best thing for the economy in the long run or merely trying to recreate a bubble that has already burst, consider the following:

The average age of first time buyers reached 34 in 2006 having risen from 27 over the preceeding 30 years. So lets assume that the average age as a first time buyer of people who still have mortgages outstanding was 30.

Assume the average term of a mortgage is 25 years and therefore people finish paying it on average around the age of 55.

The average price of a house has apparently fallen by 15% over the past year and is therefore back to the levels it was at in 2006.

Tracker rate mortgages that would benefit from the reduction are only held by a small minority of people as fixed rates have been in vogue and the new deals being offered are either at hefty margins that pretty much wipe out the benefit of the reduction or require LTV levels of less than 60%.

Implication 1 - the majority of people under the age of 45 will be unable to benefit from the reduction either because they are already locked into a fixed rate or can’t switch to a competitive tracker even where one is available because their LTV is likely to be assessed at more than 60% through a combination of being too early in their mortgage term and/or their house price has fallen.

Implication 2 - If you are over 50 your mortgage is likely to be low as you come to the end of your term so even though you qualify for the sub 60% LTV the reduction in your outgoings will be relatively small in absolute terms. Meanwhile your investments including your pension fund which are now much more important to you than debt prices, as you near the end of your working life, have fallen in income terms - due to the very same base rate cut - and asset value terms due to the fall in the stock market.

Conclusion

The people who could benefit from a reduction in interest rates in their pockets and so potentially stimulate demand i.e. under 45s, won’t because for various reasons they can’t get a hold of the cheap money and the ones who can get a hold of the cheap money i.e the over 50’s have lost far more on their investments than they will gain in reduction in debt cost so are also unlikely to start spending more either.

So its all down to everyone between 46-49 to bail us out A simplistic analysis I accept but one with more than a grain of truth?

I was talking to one of our team the other day about music and the Boomtown Rats classic song from 1979 came up. The scary thing was the person concerned had never heard of it. I played her the song – still no recognition.

And that got me thinking. Here is a song from my childhood, that I love by the way, and here is this 24 year old to whom it means nothing and to be fair why should it? She wasn’t even born until years after it came out. But what else has this child of the Eighties missed out on that it looks like she is about to experience?

Recession.

The last recession effectively ended 16 years ago when she was eight years old. She wasn’t even born when the previous one ended in the early 80’s. But to be fair this doesn’t just apply to a 24 year old. If you were born in the year IDLM was released and are therefore 29 now you would have only been 13 when the last recession ended. You may have some appreciation of that period – maybe your Mum or Dad lost their job or your house was repossessed, but I suspect a very high proportion of people in their 20’s can’t really recall what life was like living and working during an economic downturn.

So what has all this got to do with the PR Industry you ask? Well I don’t have the exact figures but I would hazard a guess that the proportion of staff working in the PR Industry who are 29 or less will be somewhere around the 60-70% mark. If my guess is right then that’s the vast majority of people working in an industry who have never known what it is like to work in a recession.

How will they respond? Positively because they won’t be laden down with feelings of inevitability? Or negatively if they don’t recognise the need to up your game big style during times like these?

Only time will tell, but in the meantime let us “console” ourselves with a truly great piece of music (even if the story behind it is clearly not a pleasant one). Particularly anyone for whom it is new.

According to Forrester Research the use of RSS has reached 11% of US online adults. Steve Rubel and others have discussed the other main finding that of the other 89% only 17% are interested in adopting RSS in the future. The implication being that RSS is running out of steam and needs mass education to continue its growth rate.

However I wonder if this discussion is potentially missing a relatively obvious numeric point. What does 11% of US online adults equate to? With an estimated 220 million US internet users applying 11% gives 24 million that use RSS (and another 26 million who apparently aren’t sure if they do – 12% responded thus). However this assumes that minor users follow the same proportion which may not be the case but for the purpose of this calculation lets accept this limitation. To put this in context this compares with around 60-70 million US users of Facebook and Myspace. Unfortunately the study was only based on a survey of US internet users so it is not possible to extrapolate this analysis across global internet users on a rigorous basis. However if we make the (over?) simplifying assumption that this study is indicative of general RSS use then based on approximately 1.5bn internet users worldwide this would give approximately 165 million RSS users worldwide. As penetration rates go I would say that was still pretty impressive. Obviously these calculations are more back of a postage stamp than back of an envelope but they illustrate the point that this percentage implies some fairly big numbers in absolute terms.

The other point to consider is the potential influence implications of RSS subscriptions. What would be really useful to know would be the detailed makeup of the 11% and the sites that they subscribe to. Were it the case for instance that this analysis showed that key influencers and decision makers in certain markets are proportionally more likely to receive their news via RSS its importance in influence terms would be magnified. If anyone has access to the full report and any information on this I would be delighted to hear from you.

No that isn’t my RSS subscriber figure today is Blog Action Day and if I can post this in the next few minutes I will just get in under the wire. With over 12,000 blogs with far more readers than I - 13 million currently according to the site - having already posted some very in depth posts I thought I would just do a little research on the relative frequency of certain related terms in Google. I think the results tell a brief story about how much attention poverty is given.

A search for ”poverty” in Google finds 60 million results. Sounds a lot until you compare it to the following:

“money” - 950 million
“credit” - 723 million
“debt” - 149 million

Of course some of these references will be using the words in other contexts e.g. “it is to his credit”, but these results arguably still reflect the world’s priorities. 

But perhaps there is some hope for us yet as a search for “greed” only finds 19 million results - so at least poverty has got that one beaten?