OECD is now forecasting that the UK economy will enter a recession (story from Telegraph).
From a macro perspective I guess it is not counter-intuitive that growth comes to a halt when the world is engaged in a massive deleveraging operation; and at the same time impacted by the increasing uncertainty caused by the public finances in the Euro Zone.
But reading the forecast from the OECD I couldn’t help think back on the previous posts on this blog about how the change in online sentiment for some time as indicated that a recession was becoming more likely.
The 2nd of August I wrote a this post that showed that those with more influence in the debate on the UK economy was becoming more concerned about a possible recession than the public in general.
Since our influence-weighted analyses usually serves as leading indicators, this was a clear warning sign.
On the 1st of November I wrote this post in which I point out that the Onalytica Recession-Index for the UK economy had reached an all-time high (since April 2010).
In October 2011 the equal-weighted Recession-Index, which represents the sentiment of the board population, actually overtook the influence-weighted, which represents the sentiment of those with more influence in the debate on the UK Economy. The gap has widened in November.
This effectively means that the broad population as a whole are now more convinced that we are heading for a recession and are likely to reign in their spending further.
The Wall Street Journal has a story that economists thinks there is a reduced chance of recession in the U.S.
According to the story 52 economists surveyed in November put the chance of a U.S. recession in the next 12 months at 1-in-4, down from 1-in-3 two months ago.
I checked the Onalytica Recession-Index for the U.S. Economy to see if I could corroborate that. The chart is shown below.
Clearly it shows that there has been a declining anticipation of a recession in the U.S. economy since September.
Comparing the Onalytica Recession-Index for the U.S. economy to the U.K. economy is interesting. The chart below shows the Recession-Index for both economies.
Notice how they were very closely linked until May 2011. After that time the recession concerns were primarily with the U.S. economy. However, after August the outlook for the U.K. economy started to become worse while the perception for the U.S. economy started to improve.
Maybe what the U.K. can hope for is that the U.S. economy starts to grow to an extent that it can help the U.K. avoid recession.
See this article for more information on how these indices are constructed.
The state and trends of the sentiment in the economic debate can be highlighted using Onalytica Indexes.
Onalytica Indexes is a collection of indexes which tracks how online media report on a range of economic and business issues.
Over the years an increasing amount of research has been done into how media reporting can be used as indicators for the state of the economy. Other research has highlighted that the way economic news is reported can explain why consumer sentiment sometimes departs from economic fundamentals.
Onalytica Indexes shares the same basic ideas as these examples; that the level and change in the attention an issue receives in the public debate can increasingly be transformed into an indicator of economic trends.
In practice this is done by continuously collecting a large sample of what is published online about, in this case, the Eurozone economy. The Inflation-Index then measures the amount of articles that make references to what can be interpreted as inflationary issues. This includes the word “inflation” itself, references to increasing prices, that goods and services are becoming more expensive, and so on.
Figure 1 (below) shows the Onalytica Recession-Index for the UK Economy. Notice the sharp and accelerating increase since the low-point in July 2011.
The Recession-Index shown in Figure 1 uses equal weight for all voices. This weighting usually makes the results correlate well with what a popular poll would show.
The interpretation of the graph is thus that the population in general thinks that there is a higher chance of a recession in the UK Economy than they have thought at any time since April 2010.
Figure 2 (below) also shows the Recession- Index, but here all voices are weighted according to their calculated influence on the topic “UK Economy”. This means that national media, influential economists and similar are weighted more than, say a personal blog.
One way of interpreting Figure 2 is that among this group of stakeholders there has also been an increasing expectation (or fear) of a recession in the UK Economy since June, but the increase seems less dramatic.
Comparing Figure 1 and Figure 2 it is clear that “the average person” regards the chance of a recession as higher; both groups regard the chances as dramatically increased since July of 2011.
Clearly, if the government was hoping that consumers were going to feel more optimistic and start spending more, the data seems to be disappointing.
Another example of how the economic sentiment can be better understood using this type of analysis is shown in Figure 3.
Figure 3 (below) shows the Onalytica Crisis-Index for the Euro Zone since April 2010. Clearly the view that a crisis is becoming more likely has been increasing since late April 2011 and although it seems to have dropped slightly in the last three weeks it will be very interesting to follow this index going forward.
A final example shows how combining indices can be very powerful.
Figure 4 (below) shows the Onalytica Recession-Index and Onalytica Inflation-Index for the US Economy since April 2010.
The Recession-Index is used as an indicator of the collective sentiment and indicates that the economy is likely to decline.
As Inflation is a key focus of a growing economy an increase in the Inflation-Index can be interpreted as an expectation of economic growth.
The idea is not that these Indexes should necessarily predict the underlying economic data, but show how the public in general (the equal weighted version) and those with more influence (the influence weighted version) perceive the economy.
I haven’t tested the indexes in Figure 4 against actual GDP or Inflation figures so I can’t comment on those correlations. I have tested them against the S&P500 Index and that looks impressive.
We have a couple of new positions in our software development team. Great opportunities for software engineers who want to work with “big data”.
Check them out here http://www.onalytica.com/careers/current-opportunities
Earlier this week I looked at the use of the word ‘recession’ in the context of the UK economy. Following the downgrade of the US debt I had a similar look at the debate on the US economy.
The first chart shows the share of online mentions that use the word ‘recession’ in relation to the US economy.
It is clear that there has been a substantial increase in the index since March and that the level in August has surpassed the previous peak of August last year.
But while the mentions of Ben Bernanke seemed to correlate well with the mentions of recession last year, the story is different this time. Notice how the focus on Bernanke has gone down in July and August when the focus on ‘recession’ has gone up.
The explanation might be that the problems this time around are more centred on political issues or the inability of politicians to deal with the issues.
The second chart seems to indicate that this time there is a better correlation between the mentions of ‘politicians’ and ‘recession’ than ‘Bernanke’ and ‘recession’.
Note: The charts are adjusted for the measured influence each “voice” has in the debate on the US economy. For example, compared with the New York Times (the most influential), FT weighs in with 59%, Guardian with 43% and the blog Seeking Alpha with 15%
My colleague Tom Flaye recently introduced me to the Recession index, an index developed by The Economist that tracks the mentions of the word ‘Recession’ in New York Times and Washington post.
It inspired me to take a look at the UK economy in InfluenceMonitor and it came up with an interesting graph.
The graph below shows the share of online articles and blog posts (not just the newspapers used in the original R-index) that mention the word ‘recession’ when they also mention the UK economy.
The blue line is where all articles and blog posts are weighted equal and the red line is where they are adjusted for their measured influence in the debate on the UK economy.
The green line (Gap) shows the percentage difference between the 2 lines.
Although the direction of both the blue and the red line would (according to the R-Index) indicate that the UK Economy is not on its way to a recession the sharp increase of the gap (green line) indicates that those with more influence in the debate on the UK economy have substantially increased their mentions of the R-word compared with other (and less influential) commentators.
Greece used to be a focal point in the debate on the global economy but in the last couple of week the attention has been dwarfed by the debate on the US debt ceiling.
It will be interesting to see if the attention returns to Greece once the US gets the debt ceiling sorted.
With just one year to go until the Games commence, we thought it was good time to take a look at some of the debate surrounding the Olympics. We have been tracking the global English debate on the Olympics since January 2011.
Some of the key stories driving the debate included talk of claims from Iran that the 2012 Olympic logo is racist, which appeared in February and interest in June as customers began to find out whether they had been allocated tickets to the Games.
We expect the debate to increase in July as people seize the ‘one year to go’ opportunity (much as we did!) to discuss this great event.
For this post, we will be concentrating on the Worldwide Partners; VISA, GE, Acer, Atos Origin, Coca Cola, Dow, McDonald’s, Omega, Panasonic, Procter & Gamble and Samsung. We show the spilt of the debate among these brands in the chart below. Of these competitors, VISA generated the highest volume of coverage in relation to the Olympics between the 1st January and the 30th June 2011, marginally ahead of Samsung.
Figure 1: Share-of-Buzz for Olympics Worldwide Partners in the global English debate on the Olympics
However, when mentions are weighted for influence the order changes considerably, as we show in the next chart. Although VISA still remains the most prominent partner, Coca Cola and GE move to take a close 2nd and 3rd place while Samsung is overtaken and falls to 4th place. This shows that although Samsung had a higher volume of mentions than GE and Coca Cola, it wasn't discussed among influential stakeholders as much as its competitors.
Figure 2: Share-of-Influence for Olympics Worldwide Partners in the global English debate on the Olympics
When we break this data down by month, as shown in Figure 3, it is clear that the overall conclusions are not as simple as ‘VISA is dominating the influential debate’. We can see that interest in VISA peaked in March and has been decreasing between April and June as attention has shifted towards GE and Coca Cola.
Figure 3: Monthly Share-of-Influence trend for Olympics Worldwide Partners in the global English Olympics debate
Coca Cola drew interest during May amid discussion of the torch relay, of which it is a presenting partner.
In June, GE came to the forefront of debate among worldwide partners driven by the International Olympic Committee’s desire to make GE a top-tier sponsor.
Currently we could say that VISA has been ‘winning’ the Olympic Advertising Games, but VISA may well be usurped by GE shortly, based on the momentum GE has gained since April. With one year to go until the Olympics, it is still early days and it will be interesting to see which brands manage to make the most out of their relationship with the Games.
Having a great brand is something most businesses aspire to. A business or product with a better brand can command a higher price for comparable products. Organisations spend a lot of resources trying to shape their overall brand, products and services. The stakes are very high because of the sheer size of the investments necessary to develop the right brand.
To improve their ability to manage their brand initiatives and thereby secure a greater ROI on these initiatives, most organisations conduct surveys to understand how customers feel about their brands. These surveys are often conducted every six-12 months. However, in today’s fast moving world this is clearly too infrequent to support an increasing number of tactical decisions.
Being able to quickly understand the effects of an organisation’s marketing communications (and those of their competitors) is essential. By having a constant feedback loop from the market place marketers can constantly understand which initiatives they might want to amplify and which they might want to adjust or scale back.
At Onalytica we are putting enterprise listening and analytics solutions in place for an increasing number of organisations. Several of these solutions include the ability to constantly measure the brand profile of the organisations as well as understand what is driving the brand in the right direction.
One of the models we use to analyse brands describes the brand in relation to a number of different personality traits. These traits are defined as “pillars”.
These pillars form part of “The Davies Model”, which can be found in the great book on corporate reputation; “Corporate Reputation and Competitiveness” by Professor G. Davies et al. (Rudledge, 2003).
The pillars of the standard Davies model are shown below:
Naturally, the pillars and the traits can vary according to the brand and our solution allows full flexibility on how many pillars can be used and the descriptive words that go into each pillar.
I had a look at some brands and how they are discussed in the context of mobile phones, below, is what the brand profiles look like.
First up is Blackberry. For this example, the original pillars taken from the Davies model, shown above, have been used. Notice how the brand changed slightly from Q1 to Q2 of 2011: Chic, Enterprise and Informality were down – Machismo was up:
Then I took Motorola. Motorola’s brand also changed during the first half of 2011:
Enterprise and Chic were also down, but Machismo and Competence in particular were up.
The general model of using pillars and traits can be configured to compare brands according to the dimensions that are deemed important to those brands.
The next graph shows how three mobile phones compare on a number of features such as camera, design and security:
Notice the substantial differences between the three phones that largely target the same consumer segment. Also notice how the Motorola Pro scores so much higher than its competitors on “security”. The Motorola Pro has extra strong encryption and a number of new security features that mean the phone can be controlled and wiped clean, should the need arise. These are features that Blackberry used to be more associated with, but the current positive differentiators for Blackberry Bold 9900 seem to be apps/applications and design.
Battery life and camera are key differentiators for the Nokia E6. Talk time for this particular model is said to be 14.8 hours, with 31 days standby. The phone has an 8-megapixel camera with full-focus and support for HD video recording.
It is clear to see how maintaining an up-to-date understanding of a brand’s profile can help in the management of that profile. Combining this with our solution’s ability to interactively run root-cause-analysis on changes, marketers can quickly see what is driving their brands in the direction they want and thus which of their marcomms initiatives they might consider increasing.
Last week we ran the first in our new series of seminars: New Trends in Marketing Communications. The first in the series focused on Influencer Marketing and was well attended with some interesting discussion following the presentations from industry experts at The Economist and Weber Shandwick.
We also had a film crew on hand to capture some of the event on camera - watch the clip below to see what you missed and make sure you don't miss out in the future!