User Experience in an Economic Downturn

Gerred Blyth and Be Kaler BlakeUKUPA Jan 09

Contained Within...

We will reveal thoughts on the current industry climate and also wisdoms from the last two UK economic downturns

These are based on an initial series of phone interviews and conversations in January 2009 with a range of people:

� Agency Heads

� Account Managers

� In-house UX team leads

� Proprietors of Consumer Websites

Additional material contained here was developed in workshops with UKUPA members on the evening of the session

� Account Managers

� Freelancers

� Business Consultants

� Proprietors of Consumer Websites

� Proprietors of B2B Websites

� Industry Commentators and Journalists

Pop Quiz!

1. How many UK companies were listed as offering User Experience services in the 2008 User Experience Directory, published on World Usability Day?Lowest Guess - 20; Highest Guess - 1500; Average - 20; Answer - 80

2. What was the estimated value of the usability and accessibility market in 2008 according to E-Consultancy’s Usability and Accessibility Buyers Guide? Lowest - £250k; Highest - £4bn; Average - £48m; Answer - £214m

3. What was the percentage increase or decrease since 2006?3. What was the percentage increase or decrease since 2006?Lowest – 8%; Highest 400%; Average – 60%; Answer - 45%

4. What was the average charge out rate for a user experience consultant in the 2008 Agency Rate Card Survey?Lowest - £350; Highest - £1500; Average - £839; Answer - £707

5. What is the average freelancer rate for user experience roles?Lowest - £300; Highest - £1000, Average - £430; Answer - £300

What’s Going On?

UK GPD Growth (%)

What’s Going On?

What’s Going On?

In the words of our interviewees:

I don’t know what all the fuss is about! Never been busier..

Time to draw in and survive

Everything’s totally [ahem]

It’s part of the normal economic cycle

Time to profiteer!

Bad news for...

Housing!

Financial Sector!

Motor Industry

Retail Expenditure

Advertsing Expenditure

IPA Bellweather Report shows 49% of UK companies reduced total advertising spend in 2008

GroupM’s This Year, Next Year report forecasts an overall fall in expenditure in all measured advertising media of 0.2 per cent. expenditure in all measured advertising media of 0.2 per cent.

ZenithOptimedia’s Advertising Expenditure Forecasts report predicts advertising to fall in North American and Western European markets by 5.7 per cent and 1.0 per cent respectively.

Enders Analysis report predicted UK newspaper ad revenues will fall by 21 per cent in 2009

Confirmed in UK by ITV and Channel 4 figures. A 1% drop in ITV advertising in 2008 underpinned a 28% reduction in profits in their May 2008 statement.

Obtaining Funding: NVCA (US) survey shows that 92% of VCs predict reduction of capital available in 2009, to an estimated $25 billion (from peak of $35bn in 2007). This overall reduction is offset by likely increases in clean technology, medical sciences and bio technology. Leaving interactive and new media seeing the greatest fall.

Being a VC: 72% not expecting any IPOs un til 2010.

Good news for...

Poundland ☺ - 24.3% jump year on year - Dec 08 vs Dec 07

Morrisons ☺ - 5000 new jobs in 2009

UK Tourism - is going up! West end, Theatres, tourist attractions

Other: ‘Staycations’, Home Improvement, BBC Financial journalists, Adult services, church attendance, buzzwords, lawyers and accountants specialising in restructuring.

More importantly:

Exporting good or services

A weak pound means Britain is more attractive for exports. Selling A weak pound means Britain is more attractive for exports. Selling a £10,000 product to a German company would have cost them €13,500 a year ago, now would cost them €11,400 (not that anyone is buying anything, ahem)

Selling within the UK

The weak pound means importing goods or services is less attractive for UK purchasers. Anyone buying good or services from overseas – esp Euro zone or US will be starting to look to UK suppliers as a way to save money

Online Retail

A survey of 1,957 people by Lightspeed Research found 36% plan to do more shopping online and less on the high street this year.

Aldi.com - 64% y-o-y increase in uniques to Aldi.com who are now launching a travel and flowers presence

ASDA Direct - 70% year-on-year growth

Play.com - 23% increase y-o-y sales

Good news for...

ETSY.com

ETSY made its record daily sales on on Sept. 29 (the day the US stock market took one of its most significant falls), In Nov 08, artists sold $10.8 million of goods (up from $4.2 million in November 2007) . 135,000 new registrants and 1.1 million new items listed, both figures more than double the same month last year.

Experian Now with 1 million customers with monthly payments to check their credit rating

Software as a ServiceIntuit, and Salesforce.com have both shown growth in 2008.

HR Departments - Voluntary turnover of staff falls in time of HR Departments - Voluntary turnover of staff falls in time of recession

Online Advertising2009 is the broadly agreed to be year that online advertising send will outstrip TV. It will reach £3.58 billion in the UK by the end of 2009 (a newly corrected and more conservative estimate from eMarketer)

ZenithOptimedia’s Advertising Expenditure Forecasts report predicts that online advertising will grow 18 per cent in 2009.

GroupM’s This Year, Next Year report forecasts a rise of five per cent for internet advertising in 2009

Good News

Neilsen Online:

What happened in 2000?

“From the top down the big 5 consulting firms were recommending “web strategies” with no real basis in common sense. From the bottom up, creatives and developers were recommending unworkable ideas. It was madness from both sides, frankly.”

� Cleared away inefficient companies and business models

� Wasteful excesses are shut down

� Non-jobs disappear, non-business go bankrupt

� Governments become more business friendly

� Consolidation of companies� Consolidation of companies

� More start-ups – costs are low!

� Was undoubtedly the birth of the UX industry as we know it

Afterwards:

� It was extremely hard to rebuild key teams

� Companies that held on faced reduced competition

� User Experience, with its focus on measurement and incremental improvement was forged

What happened in 2000?

The last three US bubbles have had beneficial outcomes - While investors indeed do lose money, businesses and consumers find themselves with a residual ‘usable commercial infrastructure’ that they quickly put to new uses.

� The telegraph led to the creation of national and international financial national and international financial markets..

� Extra railroad lines made national consumer brands possible and gave consumers access to distant stores

� After 2000 extra fibre-optic capacity gave everyone Internet access...

What will the finance and property bubbles set us up for?

Forecasts for UX in 2009

� Different circumstances in 2009 - Even otherwise sensible companies can face a brick wall of heavily reduced funding, customer spend, or advertising spend today

� Online, and interactive, represent great ways to reduce costs through customer self-service. If this is so, the experience needs to be as good as possible.

� SEO poses the most attractive –and, crucially - measurable expenditure on the Web

� If it seems OK now, the April-May budget cycle may show a big reduction in expenditure – an unwelcome piece of news for those on both sides!

� Retail will continue to slide in general. Think about what you want to buy right now. If you can’t think of anything significant, why would that be different for the population as a whole?

� In terms of sectors, any “stay at home” products will do well. Companies that have been on the edge for years will fall over – c.f. Woolworths.

� Brands can live on even if the companies don’t! Cf Zavvi having to close their website.

Advice for Agencies

� Be positive about your services and your contributions

� Cashflow Cashflow Cashflow! Its just general good business process, but more important now then ever:- Bill early and have a good system for collection- Client credit checks

� You will be leaking money somewhere. Find it and stop it!

� Reduce operating costs before its becomes a problem

� Present services as good value. Think of how well Primark and Aldi have performed in the last two quarters which is more a consequence of consumer confidence and expectations rather than any reality!

� Innovate services without increasing costs

� Focus on quick win projects for clients. Put yourself in your clients shoes – would you spend the money?

Advice for Agencies

Agencies essentially survive by

under-servicing everybody.

They will find this needs to change!

Advice for Agencies

“Usability”

“Good Value”

This is Scientific Proof that expectations of agency services are changing

Advice for Individuals

� Create your own luck – cf Prof Richard Wiseman

� Meet people! Every conversation is an opportunity

� Ensure your contributions are noticed

� Self promote

Improve your CV and train on weak areas� Improve your CV and train on weak areas

� Produce personal projects

� Consider geographical independence: - Local: businesses relocating to cheaper premises- Wider: language, knowledge of other markets

Advice for Individuals

If all else fails...

FoxJobs in the US found certain words were increasing in job ads as the recession took hold:

1. Sales Representative/Business Development

2. Account/Customer Support

3. Accounting Staff 3. Accounting Staff

4. Counselling/Social Work

5. Software Design/Development

6. Administrative Assistant

7. Networking/System Administration

8. Nursing

9. Mechanical Engineering

10. Sales Management

Biggest increase – up 8 to 16 – “Technology Executive”

Advice for In-house / Startup

� As venture capital funds withdraw, look away from invention-based innovation and towards other types of innovation

� Ensure all progress is measurable (and measured!)

� A / B or Multivariate testing is an approach that can offer demonstrable value

� Abandon the assumption that budgets need to increase 10% year on year – look to value and how you can prove valueto value and how you can prove value

� Join Nesta’s crusade to seek a government underwriting of financing for early stage companies. Why are just the banks being bailed out when the seized-up venture capital community has left innovation high and dry?

� Diversify your funding now – don’t have all your investment eggs in one basket, lest you have to join the scramble for finance when yours runs dry

� If it all goes wrong, wind up nicely- Set honest expectations- Establish a wind-up date where redundancy payments can be made (i.e. Don’t punish people for staying!)

Thanks!

gerred@lighthouseexperience.comgerred@lighthouseexperience.combekalerblake@aquent.com