School for Startups is the UK’s leading provider of business training for entrepreneurs, with lots of useful information on their website and regular one-day business courses across the country. It is the inspiration of serial entrepreneur and angel investor Doug Richard, who many of you will know as a ‘dragon’ or investor in the first two series of BBC’s Dragon’s Den.

I was told that Doug, who has seen some of the revenue figures of Azam Marketing, was “VERY impressed” with how well we were doing and invited to become a Featured Entrepreneur on his site. I think School for Startups does a wonderful job to inspire and educate budding entrepreneurs, and so agreed to be interviewed.

The interview has just been published and you can read it here.

Thanks to the terrific Mark Boyd for his help. You can visit his online marketing blog here.

The new project, PROFounders Capital, has been set up by respected online gurus Brent Hoberman (co-founder of high end home furnishings site MyDeco, and dotcom success lastminute.com), Michael Birch (founder of social networking site Bebo) and two other investors, Peter Dubens and Jonathan Goodwin.

The fund aims to support and finance new online initiatives and technologies as well as helping to encourage new businesses to remain within the UK and Europe. This last point is of particular significance with more and more established businesses announcing plans to axe marketing jobs in lieu of centralising their operations overseas where costs can be lower. The BBC online Jobs Tracker shows how serious this trend has become since the start of 2009.

The initial pot of cash available from the PROFounders Capital fund is reported to be £30/$48.5 million, with the founders hoping to double this figure over the next few months with additional entrepreneurs coming on board. And, like the gang on Dragon’s Den, the founders are pledging to get actively involved with each start up business in order to lend their skills and considerable online experience (as well as their enviable lists of industry contacts!)

The International Monetary Fund (IMF) recently announced the world is now in the grip of what will become known as the “great recession” by future generations and, at the beginning of March this year, British companies confirmed 104, 810 job losses in the last four months.

Having listened to the news and speaking to friends and colleagues, it appears everyone has felt the dreadful impact of the economic slump in some way or another. My husband Craig, who is a self-employed mortgage broker, has had to make significant changes to his own business in order to survive downturn in the financial markets.

With a little arm twisting from me, Craig agreed to share his experience of the recession and offer advice to other business owners about how to survive in difficult times. He also threw in a few tips about where to invest your money if you have some spare cash floating around.

Craig, tell us about how you came to start your own mortgage business?

I started my own business from home six years ago when I was 25. After leaving school at 16, I worked my way up from a cashier at Yorkshire Bank, to Trainee Financial Advisor at United Friendly Life Assurance Limited and eventually as Senior Financial Advisor at Liverpool Victoria.

Over the years I built up many contacts and I dreamed of being my own boss. When I found myself working extremely long hours and constantly on the road advising clients, I decided to bite the biscuit and set up on my own.

What were your first experiences of being your own boss?

Well, I learned quickly that if I didn’t work I didn’t get paid, so the pressure was on. I had a mortgage to pay and a wedding to save for. Also, even though I was successfully generating business and closing deals, I found I might receive the equivalent of three months wages at once and nothing for the next three months so I had to learn to manage my finances and be bold in chasing outstanding monies.

I was already used to working long hours so that didn’t bother me as much but I also had to go out and source my own business and clients.

A few months after setting up from home, I moved to a small office in a regeneration area and took on a business partner. Within a year we had moved to bigger premises and were running a successful company employing more members of staff.

When did you first notice there was a downturn in the market?

April 2008. I began to find it increasingly difficult to place business with high street lenders and started to find that sub-prime lenders (lenders who lend money to niche markets such as self-employed and adverse credit) were beginning to close their doors to new business. The media were also starting to report the UK was facing a potential recession.

How did you react to this?

Our first step was to review our business expenditure and look to cut to costs. Unfortunately, this led to staff redundancies and downsize in office space. I had to look for other avenues of income within my industry. So, for example, I started to increase (mortgage) protection sales and return to my existing client base as new business was becoming increasingly difficult.

What have you seen as the main challenges of the current recession?

I’ve had to review my business practices and become more hands on again. Previously, I had advisors working for me, but now I am back on the tools. I had to look at new ways to generate an income and have to work much harder for my bread.

Has the recession benefited your business in any way?

In the last few months I have returned to working from home and I actually feel more in control of my business and life. I have reduced my business costs dramatically and am able to spend more time with my daughter and wife rather than be travelling to and from work. I am more proactive and have increased my income by cutting unnecessary overheads such as company cars and mobile phones.

What tips would you give to other businesses about coping with the recession?

I would advise other firms to review their business model and expenditure. When you run a company it is so easy to get caught up with spending money on unnecessary outgoings rather than bottom line profit. Also, don’t be afraid to speak to other business owners about what strategies they are employing to stay afloat. I recently attended an industry event where I found many other people from SMEs to major organisations in the same postion as me. It made me feel as though I wasn’t alone and gave me confidence in the decisions I had taken.

What advice can you offer other businesses about winning new clients and business?

New clients are important but it is also paramount to look after the ones you already have. If businesses nurtured their existing clients they would see a quicker return for their efforts. One way I will be doing this is through targeted email marketing to keep my clients up to date with new deals and encourage or remind them to contact me first for financial advice.

In terms of seeking new business and marketing, I would advise companies to invest in activities that generate a solid ROI. In the last few years, I have seen so many businesses, including my own expend valuable marketing budgets in areas where they are unable to measure the true financial return.

In the past, I have always focused on offline advertising – event sponsorship, radio campaigns and magazine ads. Now I am looking towards search, affiliate and email marketing as I can forecast my ROI and closely monitor and control activity and spend. If my campaigns fail to work, I can tweak them but, as I will mainly be paying on performance, I feel more confident in allocating money to these areas.

Finally, do you have any suggestions for people wanting to invest money in the current economic climate?

Now is a great time to invest in property, if you have cash to spare you can strike a good deal. Many people think it’s impossible to get a mortgage these days, in fact, there are some great deals to be done – you just need a healthy deposit to put down.

For more information about how you can recession-proof your enterprise, check out the advice in this blog from back in January: recession-beating tips for your business or read the Telegraph’s tips here. Or email sinead [at] azam.net. You can contact Craig at craig [at] urbanmortgagesolutions.co.uk.

As any regular exhibition-attender knows, these bags are invaluable for placing handouts and freebies! 

Yagmur Guven, Senior Strategic Partnerships Manager at Azam Marketing, who has had considerable experience working in the continental European market with advertisers such as Dell, Amazon and easyJet, says, “We are delighted to be sponsoring the premier affiliate marketing conference in Europe as part of our initiative to increase our presence in mainland Europe.”

We like to think of ourselves as a truly international agency, with staff who speak fluent German, French, Spanish, Turkish and other languages. Our agency’s first niche European websites, selling books in Germany and France, went live in 1998 and since then we have carried out affiliate management, PPC and SEO in multiple languages for advertisers and agencies in Western Europe. As a result of our 12 years’ experience in e-commerce and digital marketing, we have also consulted for major European brands seeking to expand their reach into the UK.

Our involvement with the a4uexpo Europe event co-ordinates with our plans to launch an outsourced business development service later this month, when our sales team will be making their skills available to advertisers, agencies and networks throughout Europe, saving them the cost of hiring their own sales representatives.

To give an example of the kind of results we achieve all the time, our business development specialists have helped one of our clients win lucrative partnership contracts with nine out of the top ten prepaid card providers in the UK whereas their better-resourced competitors have struggled to win one contract between them.

The two-day a4uexpo event takes place at the Amsterdam RAI from 28-29 April, and promises to be an invaluable learning and social event. Many UK and European affiliate networks will be exhibiting and confirmed speakers include Matt Bailey, newly appointed Chair of the IAB Affilliate Council and Chris Howard, Senior European Affiliate Manager at the eBay partner network. To read more about the event or to register, visit a4uexpo.com/europe.

To benefit from Azam Marketing’s unparalleled experience in business development and digital marketing please email results [at] azam.net or telephone +44 (0) 20 7436 4496 between 08:00 and 22:30 GMT, seven days a week.

LOVEFiLM have reported a 40% increase in subscriptions since January as more people choose to spend their Saturday nights on the sofa rather than going drinking/clubbing in town. Comedy DVDs are particularly in demand as customers seek to cheer themselves up and find a temporary escape from their economic woes.

The increased number of people staying indoors has also had a positive impact on fast food outlets such as Domino’s and Pizza Hut, who have stepped up to the mark by offering bargain meal deals to families and couples who might normally splash out on meals out at fancy restaurants.

Surprisingly, underwear sales are up for one of Azam Marketing’s clients, froggybank.co.uk. Based on a report released by the site showing underwear sales increased 2%, the Walletpop website in the United States published an article amusingly entitled When the economy gets tough, the Brits buy…bras? in which my colleague Nadeem is quoted. The theory is affordable luxuries and small treats are becoming more important as people cut back on more expensive purchases.

Perhaps most satisfyingly, the credit crunch has proven that even in tough times, love is not dead. Dating websites such as Match.com are seeing significant increases in traffic and site registrations as people opt to find love online rather than spending expensive nights out in pubs, bars and nightclubs in pursuit of a partner.

Shoppercentric, an independent agency specialising in shopper behaviour research, notes that almost nine out of ten households in the UK have made significant changes to the way that they shop for groceries in the past year. Trends noted in the report include:

• 40% of people visiting shops that they previously wouldn’t have frequented
• 27% of people choosing to shop locally in an effort to support small businesses and save on petrol costs
• Budget supermarkets Lidl and Aldi seeing 22% and 21% (respectively) extra shoppers through their doors

Not everyone is saving, however. Although the majority of households are visibly tightening their belts, luxury retailers such as Cartier and De Beers have reported an increase in jewellery and diamond sales as wealthy customers opt to invest in trusted commodities.

With Mother’s Day around the corner, it will be interesting to see whether people will forego the expensive flowers and chocolates in favour of treating their mums to a budget day of treats instead! Mother’s Day has traditionally always been one of the busiest days for restaurants and pubs, but perhaps this year mothers can expect to receive a takeaway pizza at home and a handmade card instead?

Client News: A new product feed is available for Trust William on Webgains. The natural healthcare specialist, which has a 160 year history in the sector, has got the perfect gifts for Mother’s Day. Take advantage of huge 20% commission rate, a generous 120 day cookie, and fantastic voucher codes. Contact karen [at] azam.net for more details.

In the following interview with Sinead Hernen, Claire discusses her role as well as her thoughts and views about the future of affiliate marketing and The Co-operative Travel’s response to the credit crunch.

Claire, thank you for taking time out of your busy day to talk to me. The Co-operative Travel is part of The Co-operative Group.  Please can you start by giving our readers a brief overview of how these two entities work together?

The Co-operative Group is the world’s largest consumer co-operative. You may have learnt something about our ethical values from the recent TV campaigns. We were the first major high street travel agent to offer customers the opportunity to offset their flight emissions in store and do not support the third runway at Heathrow or any other runway developments unless there is a clear sustainability case. It’s really rewarding knowing I work for a company which is so socially responsible and, as we’re owned by our members, we’re not working to satisfy hungry shareholders.

Our travel business is also the UK’s largest independent travel agency, so we’re not tied to one particular tour operator. This allows us to source and sell the best offers from all major operators, flight and hotel suppliers. We’re similar to a travel comparison website.

The Co-operative Travel TV Advert

Describe your role as Affiliate Manager at The Co-operative Travel.

My role as affiliate manager is extremely varied. I’m not only responsible for managing our new affiliate program, but also for price comparison marketing activities and partnership deals.

What does a typical day for you involve?

My day normally starts with struggling on to a busy tram from Altrincham to Manchester and praying I’ll get a seat!

The first thing I do when I get to the office is check the previous day’s sales. After that I’ll reply to emails, prepare for my meetings and then prioritise and get started on my to-do list.

It’s important I action affiliate queries promptly, which range from requests for creative and copy to liasing with new publishers.

We are a small e-commerce team of eight, so we work very closely together and all help out with whatever needs to be done from reporting to writing website copy.

You have recently upgraded your website and launched a new affiliate program. What changes have you made and how do you feel these will benefit your affiliates?

The new site is performing fantastically well, exceeding all targets and the response from our affiliates has been positive. The development work we undertook included removing the telephone number from affiliate traffic to avoid leakage.

The next task is to introduce phone tracking for some key affiliates. The Co-operative Travel program launched just after Christmas, so it’s still in its infancy. At the moment we are focusing on recruitment and understanding our affiliates’ requirements. We still have a lot of work to do with data feeds, dynamic content, search box creatives etc., but it will happen.

What impact (if any) have you seen since your new website was launched?

The functionality of the site has resulted in increased conversion rates; the homepage changes based on customer’s search requirements. It also features TripAdvisor reviews, Google Maps and Google Weather, and soon there will be a ‘calendar view’ search results page.

You have worked in online marketing for over five years now, first at AOL, then Littlewoods Shop Direct and now The Co-operative Travel. What changes in online marketing have you witnessed during this time?

My roles within each company have been so different that it’s hard to compare. Whichever company I’ve worked for, the principles of online marketing remain the same; advertisers want to drive quality traffic to their website, cost effectively with trackable, measurable results. Online marketing feels more accessible and flexible than ever; we’re seeing a lot more CPA propositions which three years ago would have most certainly been CPM.

From a Co-operative Travel point of view, we’ve become much more joined up in our approach and now work closer than ever with our colleagues in the offline and marketing teams.

You will have heard that many marketing departments are amending their online strategies to survive the credit crunch. Tell me about any changes your team may have had to make.

Like most online marketing teams, we are working to tight marketing budgets and every penny counts. We can’t afford to trial new activity on a whim; we have to be certain that any investment we make will drive ROI. That said, I’m in a fortunate position in that I don’t have a set affiliate marketing budget as all costs are treated as cost of a sale.

What are your predictions for the role of affiliate marketing this time next year?

Growth. Especially given the current economic climate, there will be even more focus on the affiliate channel as it is so cost effective. From a customer point of view, discount/voucher code and cashback sites will become even more popular, especially as consumers are made aware of these sites through tabloid newspapers such as the Mirror and TV programmes like GMTV which have their own cashback websites.

Do you have any tips for publishers who would like to work more closely with you and your programme?

Please get in contact – I would love to hear from you. I have a very hands on approach so you can either deal with me directly or with Becky Howard, our Aaccount Manager at Buy.at.

Finally, what top tips can you offer to other Affiliate Managers?

I can only speak from personal experience but I always like to stay involved with my affiliates and affiliate networks where possible. I prefer direct communication as it allows both parties to become much closer to your brand, strategy and objectives. I have a weekly conference call with our Account Manager at Buy.at and any queries or requests that I raise in between are dealt with immediately or on the same day.

If you would like to get in touch with Claire you can email her at claire.court [at] co-operativetravel.co.uk or contact becky.howard [at] platform-a.com . You can join The Co-operative Travel affiliate program by visiting Buy.at.

Subscribe to this blog for insightful interviews with marketing experts.

The British are among the most recent group of online purchasers in the Western world, yet we have quickly come to boast the highest concentration of internet buying activity, making the UK the “capital country for shopping online”.

However, any E-commerce Managers believing they have an easy ride ahead of them, please take note: Jindal warns that despite the nation’s enthusiasm for shopping online, UK shoppers have been described as “cynical, savvy and demanding,” making your job much tougher in 2009.

Whereas previously, an innovative, user-friendly website with thousands of products was enough keep your visits and conversions high, this year the requirements for successful online trading are cold hard cash and high return on investment (ROI).

Hearing Ian state this took me back to my first days at Shop Direct, before it merged with Littlewoods Home Shopping. My ’apprenticeship’ with the company was spent seeking new online acquisition opportunities and building business cases to support budget for new projects. Every case was presented with an ROI forecast and purchase order and had to be signed off by the Head of E-commerce, Finance Director and CEO.

It’s fair to say I had to work hard for my money; data managment systems were built to constantly monitor performance. We had to ensure an ROI of 90%. The pressure was on, but the system worked and the company gradually recovered from falling sales and debt to make a profit.   

This model eventually changed as new online competitors and channels started to emerge. New projects were signed off more quickly to ensure our brands could widen their reach across the web. Suddenly, the level of ROI was relaxed. It continued to be monitored and reviewed but margins were not as restrained. We were looking for exposure as much as sales and new customers.

According to Ian Jindal’s 2009 predictions, it appears e-commerce has come full circle. In the current recession, businesses can’t afford to pay for brand exposure which returns low or 0% profit. Targets have to be met - bosses will be putting pressure on their internal teams to deliver results; agencies and partners in turn will feel this weight.  

In an age where popular brands such as Diesel and Miss Sixty are widely available through multiple retailers, focus and differentiation will have to outweigh product range and stock. 

However, before you start worrying you may not be up to the challenge, fear not. Ian assures us we are moving into a ‘magical phase’, where data will form the building blocks of the next decade of digital commerce. Vital customer data is key to developing a targeted proposition to allow you to interact and serve your customers, making your business step beyond the screen and become an interactive brand.

The other good news is this data is free and not exclusive: you just need to know where to look and how to use it. New social shopping websites such as ThisNext are already using their own resources to swap loyalty points for free customer data allowing them to slowly build a distinguished, active and profitable position in a slowing saturated market.

If you are interested in exploring the ideas above further and meeting the man himself, Ian Jindal will be making his presentation again at the Sanctuary Cafe, Hove on 11th February. He is a well of knowledge and one of the wittiest speakers in the business!

You can review notes from last year’s event here or contact sinead [at] azam.net for further information.

You can view the slides of the presentation here:

Everyone is looking for money-saving ideas right now, and business owners are no different. While large companies are saving money by laying off employees, the small business must be more creative as its staff is often too valuable to let go.

In times of rising inflation and high prices, cash flow management is more important than ever. Regular outgoings may threaten to swallow up revenue and, with no prospect for borrowing money on the horizon, a business could flounder if it isn’t careful with the money it is spending.

So where can savings be made? Here are a few ideas that could help your bottom line:

Business rent
If your business rents office space, you could be paying too much rent. Office-based businesses could downsize by setting up some staff as remote workers and moving to a smaller space, or by moving to a managed office space which is cheaper because some of the facilities like conference rooms, kitchens and bathrooms are shared.

Business rates
Small businesses that occupy premises which come in under the £15,000 threshold for rateable value are entitled to a reduction in business rates on a sliding scale. Check that you are getting the correct discount from the council.

Energy costs
Utility prices do not look like coming down any time soon so it is up to the individual business to save energy in order to reduce bills. Make sure all lights are turned out after hours and that computers are switched off not left on energy saving mode. If you use bulbs rather than strip lighting you could replace them with the energy saving variety. Businesses should also watch their water usage and take steps to ensure that staff are all working towards a greener working environment.

Shopping around
Because running a business takes up so much time it can be tempting to take the first price that seems reasonable. However taking the time to shop around can be hugely beneficial and will ensure that you get the best prices with your suppliers, your bank, and on business insurance, petrol and manufacturing materials.

Business insurance
You don’t have to wait for your insurance to expire to get a cheaper deal. The savings you could make with a new insurer could more than outweigh any cancellation fee, so it’s worth checking your existing policy and doing some shopping around.

When searching for quotes you can get the lowest possible prices if you are aware of the things that push costs up. For example you might end up with some insurance covers you don’t need or a higher level of cover than is necessary for your business needs. Get a business insurance quote – click here.

Marketing
Even in a downturn, marketing is still an important function for the small business and it shouldn’t be cut completely. However this is a good opportunity to look at where you are spending and at your return on investment. Instead of conventional advertising such as printed adverts in newspapers the smart business is concentrating its effort online.

Web marketing is cheaper, it’s quick to get started, and you can see the results immediately. Websites can be set up for a minimal cost. Advertising in the many local directories and on local sites can be cheap and cost-effective. Pay-per-click is also an instant way to get your advertisement seen and you can control the cost to fit your budget. Get a free web analytics software such a search engine such as Google and you can track traffic and costs to maximise your revenue.

The most important thing to remember is that your business deserves a fighting chance and so you can’t be afraid to shake things up in order to find the savings. Just a little research and effort can make all the difference.

This article was originally published in Simply Business. Compare small business insurance quotes for free – save time and money.

It ceased to amaze me a long time ago how easy it was to manipulate the rank and file in society and, with enough marketing guile, be able to influence what they say and do (today is the 70th anniversary of Kristallnacht), but what still astonishes me is how the supposedly smartest and best educated minds, be they politicians, journalists, bankers or businesspeople, also assume the same herd mentality.

Last year the Consensus was that anybody who suggested a laissez-faire running of the economy with expenditure outstripping earnings would result in a spectacular crash landing was dismissed as being misguided at best and insane at worst. The good times would roll on forever and it was preposterous to prepare for any economic downturn. So you had Wall Street’s five biggest firms – Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley – paying a record $39 billion in bonuses to themselves. Our own sector, the internet, was far less spoilt, but there were a few web 2.0 businesses, marketing agencies and networks hiring ever increasing numbers of staff at ever increasing salaries in ever larger offices; indeed, despite making about as much net profit with 40 staff as individual super affiliates would do from their home offices, they would sometimes blow so much money on parties that it made the self-congratulatory revelry of the dot.com boom years seem positively restrained.

Now, barely 18 months later, these same people ‘in the know’ have changed their tune and are proselytising doom and gloom. We are supposedly heading into the worst recession since the 1929 Wall Street Crash. Apparently we must all preach that the number of people shopping either offline or online will drop to such an extent that no business will ever make a penny in profit for years. The same journalists who for the last ten years were enticing their readers to use their credit cards to buy new designer clothes every month and splash out on holidays to distant lands with radiant sunsets are now filling their column inches with penny-pinching tips egging their readers to turn off their car engines as they drive downhill and reuse their dental floss.

There are people – admittedly a minority – who do not live their lives or run their businesses as per Groupthink: they did things differently in the supposed boom years and their businesses are doing better than ever now. When I was being interviewed on Sky News last Saturday (video clip below) the presenter expected me to tow their official line which is to moan about how we were all struggling to make a profit.

But the client who I was representing, V A C Media, and I have always ran our enterprises based on our own intellects and analyses, not what the Consensus states. As a result things have never been better. When I told the interviewer “sales are going through the roof,” which counteracted the corrosive pessimism that Sky News has been feeding its viewers for the last several months, she claimed I was “talking up” my client’s business. She may have found it difficult to comprehend that V A C Media is managed by a CEO who does not run his company by whichever modus operandi the ‘experts’ are telling managers to operate by in a particular season, and hence Froggybank.co.uk and his other 179-odd websites are thriving.

Much has been written about Barack Obama’s historic victory in the American elections, but one thing we should all take away is that he is a man who has always lived life on his own terms. Not having had the parental support and love that many enjoy, he has had to define his own path in life. It would have seemed unattainable for somebody from his background to study at Columbia and Harvard, to become the President of the Harvard Law Review, to be elected a Senator, and to hold the position of the most powerful person on the planet, and most folk would have followed less daunting avenues deemed more suitable for the son of a Kenyan immigrant. But Obama has little time for received wisdom: he has always navigated his own way through the choppy waters of life. And that is a lesson for us all.

Yes, there has been and will be blood on the floor in this recession, but slumps also create tremendous opportunities for canny people. For instance, starting-up and developing a business is cheaper because there are empty offices on the market, tools costs less, skilled staff can be recruited at lower salaries and marketing is less pricey.

So don’t listen to people who are like feathers in the wind and now encouraging you to throw in the towel because nobody will make money for the next x years. If Obama can be elected President only four years after becoming a Senator, then our businesses can be successful in an economic downturn. We need to throw off the shackles of the defeatist mentality that we are being indoctrinated to adopt, roll up our sleeves and get stuck in. Yes We Can.

Coming Soon: interviews with Jonathan Lloyd of Sedo and Kieron Donoghue of UK Offer Media. Subscribe to updates.

Blog Update: the 19^th century quotation competition winners have been contacted and will be announced in the next five days.

Asad Alex Yawar is a London-based lawyer and writer who I first met in the mid-1990s when we were both journalists on a socio-cultural news magazine. One of the most acute commentators I have had the honour of crossing paths with, his writing has often been antithetical to the ‘received wisdom’ of the time but proven to be prescient time and time again.

While investors, economists, politicians and journalists bestowed their expertise on how the supposed Anglo-Saxon boom would go on forever, Yawar has often commented over the last decade on how the fiscal and monetary policies and binge spending culture in countries like the UK and USA was going to lead to a "spectacular crash-landing" and "the biggest bust since that of Lolo Ferrari". In the following piece, Yawar analyses the impact of the credit crunch on London and the imprudence that was behind the city’s current economic woes.

As a result of trying a different, purportedly more efficient route – almost never the wisest idea in London, a city of a thousand transportation delays and alterations – I am running late for a hairdressing appointment. As I haphazardly dash through the streets around Brick Lane, an über-funky neighbourhood to the east of London’s financial quarter, my mind races with a thousand excuses to explain away my poor timing.

Yet as I step through the door of the salon, I am astonished to see that it is all but empty. The hairdresser, with whom I have booked the appointment, an amiable Catalan, is sitting casually on a small sofa, giving the aura of a man with all the time in the world. He does not let me apologise. At the end of the session an hour later, the salon is still almost completely empty, and the receptionist – for the first time in the three years that I have been going here – asks me if I want to book my next appointment right there and then. I politely decline.

As I leave the salon and head back onto Brick Lane, I notice that two retail units that were flourishing as recently as the timing of my last haircut at the beginning of August are no longer in business. One of them was a cafe; as I peer into the windows of the other, the black paint of its facade peeling off in such a way as to obscure its name, I cannot even make out what the previous purpose of the building was. Proceeding towards Bethnal Green, I see empty shisha bars, shuttered shops, and a sudden flowering of letting signs. Commercial activity is scarce.

This is the reality of London in the era of the credit crunch. While macroeconomic events – the failure of major banks, the meltdown of the housing market, and the lurching of a broken financial system towards the point of no return – have, perhaps understandably, dominated headlines in recent months, the interface of these phenomena with events at the microeconomic level, and the consequences of this interaction, has generally not been raised in anything other than prognostic, abstract terms.

But the consequences have already started to arrive in London: failing businesses, stagnant high streets and house prices in freefall. Evidence of these can be seen virtually everywhere across the city, not just in historically deprived east London. In Fulham, a trendy part of west London which has been partially gentrified in the last 25 years, the North End Road, which connects the neighbourhood to wealthy Kensington, is eerily awash with signs indicating that commercial and residential space is up for letting and sale; stores are discounting stock drastically, but there are very few takers [see pictures below].

The streets between Holborn and Tottenham Court Road, including the normally bustling New Oxford Street, contain a number of businesses which have ceased trading: a newsagent, an electronics store and two cafes are the most visible of these. The interest in taking up the leases on these premises appears to be quite minimal, despite their location in the very centre of the city. The volume of human traffic in this area, at times overwhelming during the past few years, has dwindled.

Picking up almost any London property publication provides yet further illustration of a metropolis on a steep economic slide. While GBP £250,000.00 / US $440,000 would have bought you a house only in the most dangerous and least desirable neighbourhoods this time last year, it will now cover the cost of a decent-sized semi-detached property in much of suburbia. Exactly how messily the housing market bubble will burst remains to be seen.

Most if not all the signs are, therefore, that London – and the wider UK economy – are heading towards imminent and painful recession, both at the macroeconomic and microeconomic levels. However, this raises a number of uncomfortable questions which, again, have yet to be addressed by virtually all commentators on this issue.

1. Was the economic boom of the last decade or so effectively a fiction?

The economy of the UK expanded for sixty-three consecutive quarters from the second quarter of 1992 to the second quarter of 2008. Ostensibly, this was a stunning achievement for any economy, but especially so for an economically-developed country. The trappings of mass affluence – gargantuan, ultra-slim televisions, exotic holidays, country retreats, brand new convertibles – could barely be escaped as people trumped each other with outlandish purchases and brazen luxuriating. Aside from a brief blip around 11 September, 2001, people partied like it was 1999 for the best part of a decade.

However, it has been readily apparent for a long time that this boom was underpinned by credit. According to auditing behemoth PricewaterhouseCoopers UK, between 1994 and 2002, the number of active credit card balances surged from approximately 13 million to nearly 30 million; the outstanding balances on credit cards rose by a stunning 18 percent per annum from the first quarter of 1995 to the first quarter of 2004, from £12/$21 billion to £54/$95.5 billion. Outstanding balances on personal loans increased by 34 percent in the three years to April 2004; the amount due to banks on overdrafts also grew by 30 percent over the same period.

Factor in mortgage debt, which spiralled out of control as bankers, many of whom were on lucrative commissions paid per mortgage product "sold", liberally sprayed mortgages on a willing population, and we have arrived at a situation where the total of mortgage, loan and credit card debt stands at £1.44/$2.54 trillion, greater than the total gross domestic product of the UK, which stood at £1.41/$2.5 trillion in August 2008.

Once economic expansion is contingent on unsustainable borrowing to such an extraordinary degree, does it really have any intrinsic value? Or does it instead represent an extension of magical realism from the worlds of art and literature into economics?

2. Can the average job finance people’s basic needs?

Cosseted by credit and mesmerised by celebrity, many UK consumers have spent much of the past ten years attempting to live like David Beckham. Flooding their homes with state of the art electronic equipment, sporting Prada label mobile telephones, and jaunting around the world as if a major soft drinks manufacturer was picking up the tab, they have not had to give too much thought to the question of when it would all eventually be paid for.

Now, however, the days of easy, relatively cheap credit fast are becoming a distant memory. Luxuries are slipping off the agenda, and are being replaced by the more pressing matter of the quite extraordinary recent rises in the cost of many staples, such as energy. In 2005, the average annual energy bill was £676/$1,195, which was at that time thought by most to be excessive, but the equivalent figure for 2009 is estimated to be £1,406/$2,486. The National Housing Federation, which represents 1,300 independent, not-for-profit housing associations in England, has projected that by the end of 2009, around 2.6 million people will be in debt to gas or electricity firms, giving them a stark choice between "heating or eating".

With water companies looking to follow other utility companies in hiking up bills above inflation from 2010, whether the average job can finance people’s basic needs is a question that is likely to be answered increasingly in the negative over the coming years. If this is the case, then a fundamental rethink about the structure of the UK economy, particularly over the private provision of essential services, would appear to be necessary.

 3. Can we ever make the transition back to a savings-based economy?

One of the reasons that the UK, along with the US, is so vulnerable to contractions in the credit supply is that most people no longer save a substantial slice of their net income. They therefore have to finance much of their expenditure via money that is ultimately not their own. While in 1995, the UK household savings rate stood at 10 percent of income, by 2003 that had fallen to a measly 5.7 percent. While the situation is not as critical as in the US – where the household savings rate is currently negative – with US households spending more than their earnings on average – it is still a figure that means the UK economy is contingent on the profusion of large amounts of credit.

By comparison, the savings rate in China is an astonishing 50 percent; in Japan and South Korea it varies between approximately 25 percent and 35 percent; and in India, it is around 22 percent and expected to rise. Clearly, these nations are not going to be anything like as dependent on credit to fund expenditure on goods and services; moreover, these savings can be utilised towards the capital investment so essential for sustainable, long-term economic growth.

In the UK, a cursory look at any weekend supplement will confirm that we have comprehensively made consumerism into our religion of choice. This is an ideology which excludes almost everything except instant gratification. Yet the future economic, social and spiritual health of the country demands that UK citizens learn to live within their means. Is the nation up to this challenge?

4. Is the UK capable of approaching the economy with intelligence?

From the late 1990s until the autumn of 2007, it was nothing less than a heresy in most circles to suggest that all might not be optimal with an economy where debt was outstripping income, where financial services counted for an absurdly high fraction of gross domestic product, and where people were paying for food with credit cards. Economists queued up to announce the superiority and sound nature of the British economy in comparison with almost any other country, echoing the then Chancellor of the Exchequer Gordon Brown’s words that there would be "no return to boom and bust"; rather, that the alchemic formula of low interest rates and low inflation would ensure a prosperity of the like that our forbears could only dream of.

Now, of course, many of these analysts are positioning themselves for recession. To take one example, Roger Bootle, a former lecturer in economics at Oxford University who is presently the Managing Director of macroeconomic research consultancy Capital Economics, stated in July 2008 that house prices were scheduled to drop by around 35 percent over the next three years. Yet in August 2000, the same economist went so far as to claim that the boom and bust cycle that has historically permeated the UK housing market was "a thing of the past", stating that rapid rises and falls in housing prices were, in effect, of historical interest only. Given that this was the opinion of one of the UK’s more prescient and imaginative economic commentators, it is not hard to imagine the mindless hyperbole that lesser ‘experts’ were espousing.

It will be interesting to see whether in the future British politicians, economists and other luminaries can approach the economy in a sober, realistic and intelligent manner. If they are not, then the consequences for the UK economy as a whole could be even worse than those it is currently facing.

London’s immersion in the credit crunch is becoming more evident with each passing week. But this phenomenon has thrown up at least as many questions as answers. It is the responses to these questions which will determine whether the city, and the UK more generally, can formulate and implement an equitable economic regime that is predicated on something more sustainable than recklessly spending money that never belonged to us in the first place.

First published in OhmyNews. Click here for more of Asad Alex Yawar’s articles.

Latest News: Four of the Azam Marketing staff will be attending the a4u Expo in London on 14 and 15 October. You may arrange to meet us by emailing results [at] azam.net or calling 0800 018 5600. If you haven’t booked your ticket, you may do so here.

Alan Lansdowne is an inspirational figure who spins many plates at once. An entrepreneur, publisher and academic, the last few months for the 32 year old have consisted of attending travel conferences in Singapore, holidays to the Black Sea, journeys around India and the Philippines, completing an MA with associated research trips to Eastern Europe, and ongoing development on his hugely popular attitude Travel project.

An acute and astute observer of the workings of global finance, I managed to grab hold of Alan three days ago while he was in London to ask him about the causes of the havoc we are currently witnessing in the financial system. In the next interview, which will be published in October, I ask Alan about his popular website and he shares the secrets of setting up a business which allows you to earn a handsome income while being free to travel around the world.

Alan, what do you think are the roots and causes of the failures of the financial system we are now experiencing?

Financial institutions have lent out too much money being confident there would only be a certain number of defaults and, as was always going to be inevitable, the defaults have started to come in thick and fast.

This has exposed the institutions had far less assets than we thought they had. Their assets were basically the interest on their loans.

You say that this was inevitable. Why did the supposed brightest minds, the best educated and the best paid people in government and financial institutions not see this?

It is a tragedy of the commons.

If you have a farmer who puts his cow out to a common pasture, it has plenty of grass to eat and he prospers. But then other farmers see that there’s grass for their cows and take them to the common land to allow them to graze. But as you get more farmers sending their cows to the same piece of land, it gets eaten up, doesn’t have time to grow again and becomes barren. Then, none of the cows have anything to eat and every farmer loses out.

All the institutions thought ‘the more we lend out, the more money we’ll make by charging interest on the loans’. They lent more and more and more. Obviously it gets to the point where borrowing individuals and businesses are at such points of debt that they do not have the capacity to pay back the loans or even afford to pay the interest. Then the collapse comes.

Do you think things could have been done differently, or is it evitable this would be happen?

State institutions could and should have regulated how much money was lent out.

But that means you are putting reins on independent businesses. Should they not be allowed to operate how they wish?

If borrowers or lenders are delusional, then those reins will come into play anyway: the credit crunch is those reins.

Considering that reins are inevitable anyway, is it not more sensible to say ‘this is the sensible limit’?

You’re basically asking for more regulation?

I am arguing for not having unfettered lending…

… sorry to interrupt, but if people want to borrow, they will argue you or the government does not have the right to tell them what to do?

I don’t think there is any credit institution which disagrees with credit ratings and credit restrictions. So we are not talking about anything new, we are just talking about recalibrating mechanisms which exist anyway.

Why did we feel we were flush with money over the last few years?

That’s easy. In the history of the United States and the British Isles, credit has never been so easy to get hold of.

The George W. Bush and Tony Blair/Gordon Brown regimes had us believe we were living in times of untold affluence. Was that the reality?

I don’t think we’ve been much more affluent than in the past. People have had more spending power based on having more debt. That is confusing debt with wealth.

Who has got more money? The person living on the street on a cardboard box or somebody £48,000 in debt? Unless the latter can sell their TV and DVD player and be in profit, then the debtor is not affluent.

They are rather foolish to think they are.

But people have got houses worth £300,000 which, despite the recent drops in property prices, are still worth triple that of a few years previously? Does that make them richer than they were?

The value of a house is not terribly significant in and of itself. If you move, you have to buy a new house.

If you sell your house and then move into a youth hostel, you’re quite well off… if you can sell your house that is [smiles].

The only way of capitalising on that increase in property prices is to be flexible enough to find a job abroad where they are cheaper, be a freelancer or an affiliate.

What’s the way out of this financial crisis?

It’s very simple. Pay off your debt as soon as possible. And do not live on money that’s borrowed.

The current crisis pulls the veil off this illusion that people have been very rich. It just exposes that it was a con trick. Regrettably a lot of people have been seduced it would go on forever, that house prices would always go up, credit would always be cheap.

The British and American governments are bailing out financial and other institutions who are going through difficult times. What do you think about that?

I think it is a disaster. It encourages moral hazard. Institutions have not had to bear the consequences of the risks they’ve taken. What’s even worse is the tax-paying public is bearing responsibility.

It is the privatisation of profit and the socialisation of loss. When the good times are rolling, almost all the profits go into the private sector. When companies are crashing, they are bailed out by the taxpayer. And the money they enjoy is not millions, but billions of dollars. In the case of AIG, for instance, it is $85 Billion.

It leads to obscene situations. For instance, banks are borrowing taxpayers money for, let’s say, five dollars and then lending the same money back to the taxpayers for ten dollars!

Do you therefore believe these companies going through difficult times should be allowed to go the wall?

Ideally, yes. Unfortunately, some of them – although it is regrettable – have to be saved. Institutions like Freddie Mac and Fanny Mae have to be saved. While it is morally just for them to bear consequences of their actions, were they to be allowed to fail, the consequences for the wider economy could be more disastrous.

Some of the ‘experts’ are saying we are currently going through the worst point of the crisis. Is that the case and how much longer do you think this is going to play out?

We are not through the worse of it. I have a hunch the economy will bottom out in 2009. Then it will remain at the bottom for 24 months. It won’t be until 2012 that things will start to improve.

What will the impact be on online marketing? Will it lead to decreased expenditure in our sector?

There will be rationalisation. But our sector will be the least affected, because, between 2001 and 2004, it already went through a rationalisation process, and so our field is better equipped to deal with this than many others.

You are a travel publisher. The travel sector has been going through a rough time of late. Do you see any impact on your business and what do you think the coming weeks hold in store for (a) the travel sector as a whole and (b) the resultant impact on travel websites such as yours.

I think business travellers will continue to travel. The general public will go on holiday less. When people do travel, they will look for cheaper travel and cheaper modes of transport.

We’ve seen quite a few airlines collapse of late. Will there be more or have we seen the worst of it.

There will assuredly be more.

Which ones?

Alitalia is likely to be reinvented.

SAS is a candidate for collapse if Lufthansa doesn’t buy it up. I say "candidate", because there is nothing to say Scandinavian governments won’t step in to do something.

It is worth noting that there is all sorts of consolidation taking place in the industry. Lufthansa is in talks to buy Brussels Airlines. In Germany, Condor, German Wings and TUI Fly have been in talks to merge as well.

I think more likely than collapses, more airlines will merge to pre-empt collapse. Just like HBOS has merged with Lloyds TSB. It’s easier to survive when resources are combined.

But when there are mergers, it will lead to job losses. So, if you’re a recent employee with an airline or bank, it may be time to start learning how to design websites and learn affiliate marketing!

What about the impact on affiliate marketing? Will the downturn effect affiliate networks, for instance?

Yes. It already has. There are merchants going out of business. XL has gone out of business on DGM. Reserveahotelonline.com has gone out of business on Affiliate Future.

So networks, agencies and affiliates are already being affected. If a merchant goes out of business, everybody down the chain suffers.

What changes can we start to enact, both on a global, national and individual level, to ensure that boom and bust does not happen again – more so in Britain than any other country?

Before he became an Eco-warrior, George Monbiot proposed a Keynesian idea a while back. He wrote a book called The Age of Consent (UK – USA) and looked into Keynes’ ideas.

One of the ideas he explores is Keynes’ suggestion that if the GDPs of any countries are growing faster than the average GDP around the world, over a certain percentage, they contribute to a central pot, and that those are growing slower than the average GDP take from that pot.

So, instead of this huge chasm between rich and poor and fluctuations in many economies, we converge towards the middle. That is one way of contributing towards evenness in the world.

Is this practical?

Brave new socialist futures are always practical. Forward comrades! [smiles]

We’d be living in a much healthier society if we focused on what people need, rather than spending a lot of time and money trying to convince them to buy crap they don’t need.

With a lot of things, the happiness is transient. People borrow money to buy things they don’t need because they are convinced by marketing they want those things. The satisfaction from owning those possessions is very transient and unfulfilling in the long term. In order to remain satisfied, they have to buy the next thing. People’s genuine needs are not being met. People’s genuine needs are feeling that they make a positive contribution to others and being valued by others. That’s the biggest need that everybody has: to matter to other people.

The things that you can give to others, like reading to children, or being there on the weekend to help somebody to move house, or writing a handwritten thank you to somebody for having been there for you, these things are more important than giving somebody a bought present.

A purchased present is a proxy. Instead of requiring your personal presence, or time, those things are often replaced by a priced commodity.

I’d highly recommend Oliver James Affluenza  (UK – USA) which explores human dissatisfaction as life has become one long series of commodity acquisitions.

Even while the economy was supposedly strong, the rate of affiliate marketing’s mindboggling growth was tapering off slightly, from 60% in 2006 to 45% in 2007. We will not continue to see the industry doubling every two years, but that’s because the base from which the increases are happening is so much higher. Aligned with the squeeze in the economy, people will not buy either online or offline with the same eagerness as they did previously, but one cannot draw the conclusion that affiliate marketing businesses will suffer.

The simple fact is affiliate marketing is the most accountable and cost-effective form of marketing there is. Period. And, when marketing budgets are being carefully scrutinised, organisations will be looking to focus their spend on the channels that have the lowest cost per acquisition (CPA).

An art.com Cost of Acquisition study in August 2005 revealed the following CPAs across different advertising media: radio £766, print £504, public relations £43, email £13, online ads £11 and affiliate £5 (figures localised for the UK market; US dollar figures in chart above).

When profit margins are squeezed and advertising budgets are reduced, marketers will be under pressure to produce results, and the switched on ones will be looking at the affiliate channel with even more enthusiasm to drive sales and leads. Aligned with the trend towards more people buying online because prices are usually lower than the high street, the net impact will be that affiliate marketing will enjoy its heyday over the next two to three years. Affiliate business models like cashback and comparison sites are particularly well placed to benefit.  

I have been asked several times in the last month how I envisage the forthcoming recession will impact on our own digital marketing and design business and, while it undoubtedly causes concern and I am making sure that I am keeping a closer eye on economic data than ever, for years now I have sown seeds that I strategised would allow us to not only survive but dare I say it profit from a recessionary climate.

I have the experience: unlike most online agencies which have only existed for a few years, we experienced the fall-out from the dot.com crash seven years ago, an e-recession which was far worse than anything we will see over the coming three years, and came out of it fighting while companies in many sectors were unfortunately left slumbering on the canvas.

I have been rabbiting on about and preparing our business for the so-called credit crunch for a long time. The day before yesterday I was chatting on the phone to my longest standing friend, from Weisbaden in Germany, and she said to me, "the economic downturn you were forewarning about for years and said would effect the USA and UK is indeed finally here".

As the economies supposedly kept on booming, people may have seen me as a doomsdayer when I’d go on about how the flaky economic foundations of the Anglo-Saxon economies and the absurd situation where folk kept buying stuff with huge amounts of other people’s money would lead to a slump. I wanted them to be prepared for an economic downturn as much I have hopefully made sure Azam Marketing was.

Fingers crossed everybody will keep smiling over the coming seven years of famine. For those with at least one of those fingers dipped in the affiliate marketing pie, the impact of the pressing economic times will probably not be too bad: as James Marciano, the founder of the affiliate marketing directory Refer-it, once said, it is "a recession-proof marketing channel".

What do you think: how will channels like affiliate and search marketing fair in the coming recession? Will online businesses go to the wall as many did in the dot.com crash? Your views are welcome below.

Recommended Reading:

Recession-Proofing: 101 Tips to Survive the Credit Crunch

JupiterResearch: Affiliate Marketing Spend to Grow to $3.3 Billion by 2012

Coming Soon: Azam Marketing’s Exclusive Top Tips for Online Marketers to Survive the Economic Downturn. Subscribe to our blog updates.

Keynes predicted: "…for the first time since his creation man would be forced to confront his real and permanent problem, how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him to live wisely and agreeably and well" (Keynes 1972, p. 328).

He believed we would be working two hours a day.

Madeline Bunting’s polemic delves into the plight of the British, where full-time workers put in the longest hours in Europe at an average 43.6 a week, ahead of the EU average of 40.3.

Bunting would do well to read some statistics about office life: 40 per cent of all casual drugs users in the US (people who use drugs just once a month) still choose to do it at work. One in three midweek visitors to the UK theme park Alton Towers has taken the day off work on a dishonest pretext. One in five US workers has had sex with a co-worker during work hours – full sex, that is. 44 per cent of men and 35 per cent of women have had at least some sexual contact at work. One third of young professionals in Britain are hungover at least twice a week on working days. Two thirds admitted to having called in sick due to alcohol at least once in the previous month. 70 per cent of Internet porn sites are accessed during the 9 to 5 working day.

According to the first American Time Use Survey, conducted by the Bureau of Labor Statistics, on an “average day” in 2003, people in the U.S. age 15 and over slept about 8.6 hours, spent 5.1 hours doing leisure and sports activities, spent 1.8 hours doing household activities, 4.8 hours eating, drinking, studying and shopping and only 3.7 hours working.

Because of the dog-eat-dog nature of the capitalist superstructure, the worker who prizes quality of life over material output ends up being shoved into the gutter. Over 500,000 Brits. have bought properties in France and priced the French out of buying properties in the villages, towns and cities they were born in.