Wednesday, July 27, 2011

Mobile India could lead the world

India could become the first mobile digital society. Although just 7 percent of its people currently have Web access, Indians consume—offline—an average of 4.5 hours of digital content daily. By charging fees to load it onto mobile devices, some businesses in effect serve as physical iTunes stores, a market estimated at more than $4 billion a year. If demand were unleashed through the mobile Internet, McKinsey research forecasts, the number of users would soar to 450 million by 2015, and digital-content consumption would rise as high as $9.5 billion. To learn how the country could blaze a trail for other developing markets, read “Can India lead the mobile-Internet revolution?” (February 2011).

Also of Interest
April 2011
How new Internet standards will finally deliver a mobile revolution
As the Web experience evolves, smartphones may soon live up to their name, and every business’s mobile strategy will grow in importance.
August 2007
Tracking the growth of India’s middle class
Over the next two decades, it will rise from about 5 percent of the population to more than 40 percent, creating the world’s fifth-largest consumer market.[includes audio and interactive]
September 2005
Winning the Indian consumer
Multinationals that successfully adapt their products to the country’s largely untapped market will have the advantage.
February 2005
The right passage to India
Companies attracted to the country’s potential must do more than merely transplant products and systems that have succeeded elsewhere. [includes audio]
Did you miss last month’s Chart Focus?
A coming credit crunch?
The new roads, ports, and other infrastructure that developing countries need will cost vast sums of money. A recent McKinsey Global Institute analysis finds that as a result, by 2030 the supply of capital will fall short of demand to the tune of $2.4 trillion—slowing global GDP growth by one percentage point a year, even if China and India cool off. Businesses and investors must adapt to a new era in which capital costs more and most of it goes to the world’s developing regions.

Banking on Social Media

Retail banks can use Facebook, YouTube, and other new platforms to better reach their “Generation C” customers.
Web 2.0 technologies have transformed the way people live and work by making it easier to connect and engage online. They have also enabled major changes in customer behavior, which in turn has revolutionized industries that have successfully incorporated these technologies into their distribution models. In travel, for example, sites such as TripAdvisor combine trip planning with social networking features, and in telecommunications, Internet services such as Skype are finding success by undercutting traditional telephone operators. Yet even as these industries and others have embraced Web 2.0, retail banking has largely remained on the sidelines.
The Internet has already significantly changed many aspects of banking. For example, online banking has grown substantially over the past decade, with online bill payment particularly strong in the United States. But most banks have yet to seize the true potential of today’s abundant new technologies and tools. And as consumer preferences and expectations continue to adapt, the imperative for banks to respond with new offerings will only increase. To retain their competitive edge, retail banks need to reach out to younger, more Web-savvy customers (we call them Generation C, or the Connected Generation), devising new products and services that are simpler and more transparent, and using the power of social networking and other digital platforms to improve their marketing. (See “The Rise of Generation C,” by Roman Friedrich, Michael Peterson, and Alex Koster, s+b, Spring 2011.)
The traditional banking model has long been made up of discrete segments — for example, retail banking, mass affluent banking, and small and midsized enterprise banking. Each segment depends on several sales and distribution channels, including ATMs, branches, contact centers, the Internet, and, more recently, mobile banking. Each segment also offers a range of traditional products, including checking and savings accounts, consumer and small business credit and mortgages, and investment products and advice. These products and services are marketed through traditional centralized functions, including brand management, promotions, and sponsorships.
Now, however, several factors are converging that will force banks to reconsider every aspect of their distribution systems. With Web 2.0 technologies, consumers are changing their behavior, and they are demanding a more user-friendly, networked banking experience, one that provides a greater level of trust, transparency, and interactivity. The banks’ goal, ultimately, is to attract new, digitally savvy customers by building their confidence in banks through increased involvement. The greater loyalty such efforts will generate, across all customer segments, will help banks increase revenues and compete more successfully. We have identified three key opportunities that await those banks that are willing to take the leap.
1. Reaching customers. In developed markets, virtually every member of Generation C uses the Internet — and almost two-thirds use social networks — to access information, entertain themselves, and stay in touch with friends and family. Already, 12 percent of this cohort read dedicated finance and investing blogs and participate in online investing forums. Despite these changes in consumer behavior, most banks still use their websites primarily to provide information and enable standard transactions, limiting real communication to branches and contact centers.
New Web technologies have significantly opened up the possibilities for better communication over the Internet and through smartphones. Banks could start blogs, for example, enabling discussions of specific economic developments, new services, or the latest research of interest to target customers. Active participation in social networks could increase loyalty among existing customers and attract new ones. Wells Fargo in the U.S. is an early adopter of these technologies. Its website offers several blogs covering such topics as general financial information and environmental sustainability, and includes a blog especially for students. It also offers YouTube videos about the company, Facebook pages, and the ability to contact the bank through Twitter.
In Europe, Spain’s BBVA now offers a personal financial management tool (calledTú cuentas, or “You count”) that aggregates account balances and transactions in one place, categorizes the transactions, and automatically generates special offers keyed to customers’ financial needs. Since the tool’s introduction, the amount of time customers spend on the bank’s website has doubled. And Fidor Bank, a German startup, relies heavily on technologies, using blogs, forums, and an active presence on social networking sites to communicate with customers. Fidor also offers them such services as e-wallets, which enable fast and secure account access and electronic transactions, and a bonus program for those who participate actively in its community functions.
The benefits of such efforts will have an impact on both the top and bottom lines. Revenue growth will be enhanced as increased transparency, trust, and convenience encourage customers to engage online and compare, evaluate, and discuss different products and offers. Banks will also benefit by using the direct, unfiltered feedback they receive from their customers to further develop and improve their services.
2. Reducing costs. By closing the online communication gap, banks could make real gains in efficiency and effectiveness, since shifting communication to the Web has the potential to drive down the frequency of more costly methods of communication. The most innovative banks will find ways not just to communicate with customers, but to use these new channels to boost loyalty and develop cross-selling and up-selling opportunities.
The classic approach to channel management aligns the complexity of a product with the cost of selling it over a particular channel. Typically, for example, banks try to sell low-margin products through low-cost channels. Web 2.0, however, offers banks the opportunity to change this dynamic, by using the inherent low cost of online channels to sell complex, high-margin products.
Banks can leverage a variety of technologies to reduce the cost of sales. Online forums that bring customers together to discuss various products and explain them to one another can reduce reluctance among buyers. Blogs can be set up to target particular customer segments, introducing them to relevant products and using case examples to help explain those products. Both Deutsche Bank and BBVA already let customers speak directly to bankers and financial advisors through video chat, providing greater convenience at a significantly lower cost than a branch setting.
3. Restoring confidence. Given the turmoil in the financial-services industry over the past several years, it should come as no surprise that consumers have lost confidence in their banks and bankers. The cause isn’t just lack of faith; dealing with banks remains inconvenient, and products are often overly complex. The “I love my bank” marketing campaign and “straight talk” blog of U.S. online entrant Ally Bank symbolize the industry’s eagerness to win back skeptical consumers.
Web 2.0 technologies can play a major role in building customers’ confidence in their banks, simplifying the process of conducting transactions and finding information, and helping customers understand complex financial products. One recent survey indicated that growing numbers of consumers are turning to online advice from peers as a source of valued financial information. Banks could also produce video clips for their websites to explain products and offer access to financial advisors through video calls. And they could host online communities and finance-related forums on their websites that would enable customers to discuss financial products with one another and with bank representatives.
One U.S. bank set to launch in 2011, BankSimple, sees its competitive advantage in providing straightforward, transparent banking services online. Its home page proclaims, “We’re not a bank. We’re better.” It says it will offer free online bill payment, free online and telephone support, and even the ability to deposit checks through a smartphone, and it promises that there will be no hidden fees. Online account information and transactions are designed to be as simple as possible, and the bank has a blog that already boasts a lively assortment of comments.
Although some banks have begun incorporating Web 2.0 technologies into their customer offerings, few have succeeded in integrating all their various channels into a seamless customer experience. Indeed, providing customers with a fully integrated experience will not be easy; it means designing a new operating model along with the IT and operational capabilities needed to implement it. Too often, new modes of online communication seem like ad hoc add-ons that are poorly integrated with other online and mobile banking offerings or with branches and contact centers. A consistent user experience must be created across all channels, together with seamless customer contact across channels. This experience must be enhanced by the development of suitable products and service levels for different customer segments. And the entire effort must be tied together through powerful customer analytics, a clear understanding of the key drivers of value, and the ability to measure success.
As the world becomes more and more digitized, new technologies will become particularly attractive to the next generation of “prosumers” — those professional, productive, and proactive consumers who typically offer the most long-term value to retail banks. In their determination to seek out sound advice and good deals, these individuals are especially likely to turn to financial institutions with a strong Web 2.0 presence.
Reprint No. 11202


  • Johannes Bussmann is a Booz & Company partner based in Munich. He leads the firm’s financial-services and IT efforts in Germany, Austria, and Switzerland, and focuses on business strategy, sales channel optimization, and IT innovation.
  • Paul Hyde is a Booz & Company partner based in New York. He consults with senior executives in the U.S., Asia, and Australia on a range of strategic and organizational issues, primarily serving the financial-services industry.
  • Jörg Sandrock is a Booz & Company principal based in Munich. He specializes in IT-driven strategy in the financial-services industry, next-generation distribution, go-to-market strategies, and operating model/transformation programs.

Monday, July 25, 2011

WPP's Martin Sorrell on what's next for advertising

WPP CEO Sir Martin Sorrell at the World Economic Forum meeting on January 26, 2011.
WPP CEO Sir Martin Sorrell at the World Economic Forum meeting on January 26, 2011.
  • Emerging markets and technology is the future of advertising and marketing
  • Traditional media is being consumed alongside new media with a "twin peaks" effect
  • Social media is becoming more important in public relations and public affairs
CNN spoke to WPP's Martin Sorrell on the future of the advertising and marketing industry. These are edited extracts from the conversation.
(CNN) -- What will drive growth in the advertising industry over the next 10 years?
I think there are three things -- our strategy is new markets, which are the BRICs and next 11; new media, which is running from PC, through mobile to video content, to social networking; and then, last but not least, consumer insight, which is about data analytics and application of technology. It's apple pie and motherhood in a sense because we have been preaching this for at least the last decade but I think this is going to continue.
What influence will the BRICs and other emerging markets have on the advertising industry in the near future?
I think their importance continues to be underestimated. If I'm looking at the first five months of this year, whilst many people are worried about euro contagion, in the last the few weeks people have got increasing worried about the U.S. [Meanwhile] Asia and Latin America, Africa and the Middle East, even with its problems, and central and eastern Europe continue to power ahead. The fundamental thing is to understand and realize the world is moving at different speeds.
It is true that it is all interlinked and it is also true that the American economy is $15 trillion against the Chinese economy, which is getting up to $6 trillion. It is still the case if America sneezes we may not catch influenza but we will catch a heavy cold.
The thing that I am concerned about is not so much 2011 or 2012 but what's going to happen in 2013, when the U.S. administration and a re-elected [President] Obama have to deal with the deficit, and you can't kick the can down the road any more. In that context the BRICs and next 11 as engines of growth for our business become more and more important.
Will the 30-second slot still be relevant? If so how will it evolve and why?
Post-Lehman and post-recession the number of hours viewed by the consumer in the mature markets on classical television has actually increased not reduced. The explanation could be that there is greater unemployment, with people spending more time at home; we certainly see that with the food industry with take home meals.
But if you observe people watching television they are doing two things. They are watching live events, or "Britain's Got Talent," or "China's Got Talent," or "Ugly Betty" or whatever it happens to be, and at same time they are using other devices, so you have almost like a twin peaks [effect] here.
The media that are really growing are classical television and television in its new forms like cable and satellite, and then new media in all its forms.
The media that are suffering are not so much the 30-second commercial [but] newspapers, periodicals, magazine to a slightly lesser extent, radio.
Just like the world is moving at different speeds the media is moving at different speeds. It's not black and white it's shades of gray.
--Martin Sorrell
Just like the world is moving at different speeds the media is moving at different speeds. It's not black and white it's shades of gray. But to say that television would die is wrong.
How will advertising agencies tread the line between use of personal data for targeting, and privacy issues?
As long as consumers are aware of what is involved and it's not hidden for them, we prefer opt out to opt in -- meaning people can opt out if they wish to. I think generally legislators go along with that but you have to be explicit and not opaque about what data is available and how that data might be used.
Consumers are happy with adverts and editorial content merging as long as there is a little note on top of it saying this is advertorial and not being mislead into thinking what looks like editorial is actually an advert. Like product placement on television; as long as it's sophisticated and people understand what's going on and not crude it can work very well.
How will social media impact on advertising and marketing in the future?
Advertising and marketing services is a trillion-dollar industry -- advertising is $500 billion mostly in its classical form, there is another $500 billion which is in consumer insight, market research, public relations, public affairs, digital, branding ... and other forms of specialist communications.
Social networking has probably had its biggest impact on public relations and public affairs. Those industries become more important, firstly because there is a lot of data to analyze, so you do better research, and secondly because social networking is really editorial influence.
People use social networks to communicate with one another, not necessarily to buy or sell or do commercial things. They are trying to build relationships, usually social relationships. You invade that social process at your peril.
What you are trying to do is build communities that have a favorable impression of your product or your service or your company or your brand.
How will innovations such as apps impact on advertising and marketing in the future?
They've already impacted.The problem is that many of them are free and you can't give away content and have a sustainable business approach. There are three things that are probably happening. The first and probably most important is that consumers have to pay for content that they value. The second is that inevitably there will be consolidation amongst the media. The third is that probably there have to be some form of public subsidy of professional media.
What surprises do you think the industry may throw up in the next 10 years?
I don't think the agenda is going to change. There are two things that dominate the industry: Geography and technology. And in the new markets it's about geography. New media is about technology and consumer insight is about technology too. I don't think those trends are going to go away I think they will become more intense.
There will be high volatility; five years ago we would have been in rhapsody about Second Life. Myspace a few years ago was in the lead, now it's been eclipsed.
One thing is certain. A couple of young bright sparks, probably more likely from India and China -- with 2.5 billion people between them, and with intelligence being distributed on a normal bell curve -- [will have] brilliant ideas, they will come from those countries as well as the west.

Sunday, July 24, 2011

The wingtip vortex

IMB_WingtipAnyone who has ever taken flight lessons knows about a problem called the wingtip vortex. Described online as “the twin tornadoes formed by the difference between the pressure on the upper and lower surfaces of an airplane’s wing” – the wingtip vortex actually creates quite a dangerous situation for any plane because if you fly too close to a plane in front of you, you could get caught in this twin tornado and lose control of your aircraft. When it comes to commercial flight, it is the wingtip vortex keeping flights from landing closer together, which would speed up landings and takeoffs – helping with the new crushing volume of flights happening right now.
As it turned out, an engineer from NASA back in the 60s had already pioneered a simple solution to this problem which no one was using because it seemed too complicated to implement on already built aircraft. He demonstrated that by turning the end of a wing up in a vertical direction, you could reduce the wingtip vortex to almost nothing. More importantly, turning the wing in this direction made flying vastly more fuel efficient. As fuel prices spiked dramatically in the 90s, domestic airline carriers refitted thousands of aircraft with these vertically turned “winglets” to take advantage of the new design.
What does the story of the winglet have to do with your small business? It is a reminder that sometimes a simple and obvious solution can streamline how you operate, save you money and perhaps even reinvent your entire industry. Winglets in business can come from anywhere. They can be a pioneering new business model like what eBay had when they created a website and anyone could name the price that they were willing to pay for anything, and the seller would decide whether to accept it.
James Dyson created a winglet  when he imagined a new vacuum cleaner which provided better suction and operated without the bags. Sometimes winglets are hard to think about because they often solve problems that people have learned to live with. Pilots had been compensating for the wingtip vortex for decades. Vacuum manufacturers were happy with the status quo of making their money on the replaceable bags and consumers didn’t know any better.
The real challenge for any of us is to find enough time to step back enough from the day to day pressure of running our businesses to think about where our own winglets might be. My challenge to you is to try and find the time to do it … because the impact to your small business could be huge.
This post is republished from the original article I wrote for the American Express Open Forum website. It is part of "Small Business Friday" on this blog - a featured series on ideas and marketing techniques for small businesses.

5 Must-Read Marketing Blogs

I read lots of marketing blogs. Some are good; some are less good. But a few stand out for consistently outstanding content. Post after post, year after year, they teach, challenge, and inspire readers with insightful perspectives and actionable advice. I’m not sure how they keep doing it, but as long as they do, I’ll keep bloggers like these on my must-read list.

1. The Generalist: Influential Marketing Blog
Rohit Bhargava has practical strategies anyone—whether corporate executive or small business owner—can implement today. He often finds inspiration in unlikely places, such as the Memphis drum shop that racked up 20 million YouTube channel views with videos demonstrating cymbals to virtual customers.

2. The Oracle of Email: No Man is an IlandMark Brownlow—an Englishman based in Vienna—uses a conversational style for the serious analysis of email marketing topics, with data-driven conclusions and recommendations. The blog also serves as an occasional sounding board where he theorizes and invites discussion.

3. The B2B Strategist: Marketing InteractionsArdath Albee might write for a B2B audience at Marketing Interactions, but even B2C marketers will benefit from her common sense insights. You might not even realize your marketing strategy has gone awry until she reminds you to focus on correct priorities and goals.

4. The Web Analytics Maven: Occam’s RazorFind out just how much your analytics can—and should—tell you with guidance from Avinash Kaushik’s aptly named Occam’s Razor. His real-world analogies and sense of humor make the sometimes-mysterious topic accessible to all but the most tech-challenged layperson.

5. The Mentalist: NeuromarketingMarketing is an art—but it’s also a science. And Roger Dooley’s Neuroscience blog takes a close look at the scientific reasons people do what they do. In a recent post, for instance, he profiled a study that demonstrates just how far an apology will go toward appeasing an offended customer.

Digital Cameras Satisfy Owners

jdpower-digital-camera-july-2011.JPGOwners of digital single-lens reflex (DSLR) cameras indicate they are highly satisfied with thepicture quality of their cameras, but are notably less satisfied with durability and shutter speed/lag time, according to the J.D. Power and Associates 2011 Digital Single-Lens Reflex Camera Online Buyer Study. Overall, online DSLR buyers indicate they are well satisfied with their cameras, with satisfaction averaging 887 on a 1,000-point scale.

Nikon Pro Captures Shutterbug Hearts

The Nikon Pro Series ranks highest in online buyer satisfaction with a score of 914. The Nikon Pro Series performs particularly well in shutter speed/lag time, durability and reliability and ease of operation. The Canon Mark-Series follows in the rankings with a score of 909, and performs particularly well in performance and picture quality. The Canon D-Series and Nikon D-Series rank third in a tie, each with a score of 889.

Pic Quality Beats Speed, Durability

Responses were collected by PowerReviews, a social commerce network, and reflect the attitudes of actual DSLR camera owners who conducted their purchase using an e-commerce site. The study measures satisfaction among DSLR camera owners across five factors (listed in order of importance): picture quality (including picture clarity, sharpness and color); durability and reliability (including damage resistance, battery life and sturdiness); variety of features (including zoom, image stabilization and low light settings); ease of operation; and shutter speed/lag time (overall speed of the camera, including shutter lag time).
Among the five factors, camera owners are particularly satisfied with picture quality (917), but are least satisfied with the shutter speed/lag time and durability of their cameras (866 each).

Other Findings

  • Online buyers spend an average of $937 on their camera.
  • Online buyers report taking an average of 918 photos per month using their DSLR camera.
  • A vast majority of online buyers (87%) say they “definitely will” recommend their DSLR camera to friends and family.
  • One-third of online DSLR buyers use their camera for shooting video.
  • While overall performance is cited as a reason for purchasing a particular DSLR model 31% of the time, online buyers cite previous ownership and brand reputation nearly as often.

BIGResearch: Consumers Consider Big Ticket Items More Carefully

A look at consumer plans for big ticket purchases in the next six months shows similar intentions to July 2010, when consumers generally had lackluster intentions in this area, according to data from BIGResearch. Consumer plans to purchase digital cameras, vacations, major home improvements and jewelry/watches all notably decreased, while plans to purchase TVs slightly decreased.
About the Data: The 2011 Digital Single-Lens Reflex Camera Online Buyer Study is based on responses provided by PowerReviews from nearly 4,500 verified buyers who purchased a DSLR camera online. The study was fielded by J.D. Power and Associates from October 2010 through April 2011 and is the source of the enclosed chart.

Getting to 10 million users: Google+, Facebook, Twitter [graph]

Tech evangelist Leon Håland has put together a simple graph showing the astounding growth of Google+ compared to that of Facebook and Twitter.
Of course Google joined the social networking party a bit late, so the comparison loses some of its wow value, but still an interesting way to look at the growth data.
Full story at TechCrunch Europe. (H/T @brandonmullins)
What's happening in the world of social media.

Why Harley-Davidson's Earnings Are (Finally) Roaring

Amidst all the economic anxiety gripping Washington and the rest of the nation, more new Hogs are hitting the road.
On Tuesday Harley-Davidson reported stellar growth: income for the second quarter was $190.6 million, up 36.8% compared with the second quarter of last year. In the U.S., unit sales of new motorcycles rose 7.5%, the first year-over-year quarterly rise since the fourth quarter of 2006.  Harley Davidson generated $1.34 billion in sales, well ahead of a consensus expectation of $1.263 billion in sales. The company's second quarter earnings per share  - $0.81 - also exceeded expectations ($0.71).

The company says it now expects to ship between 228,000 to 235,000 Harley-Davidson motorcycles worldwide in 2011: in April, the company said it planned to ship between 215,000 and 228,000 bikes.

In late-2009 and 2010, many consumer goods companies saw their first year-over-year sales rises since the recession. After all, things bottomed out in late-2008 and 2009: there was nowhere to go but up. What took so long for motorcycles to pick up? For any company, this seems like an odd time for a first strong quarter in over four years, since the pace of economic recovery has certainly slowed.

Several factors may explain the motorcycle lag. First off, a $15,000-20,000 Harley is a big-ticket discretionary purchase. Harley's core customers are not the stereotypical tattooed, blue-collar biker dudes. They're affluent white men over the age of 35, with average incomes around $80,000. "The Harley customer has changed," says Rommel Dionisio, analyst at Wedbush Securities. "Baby boomers are particularly important for Harley. The motorcycles are luxury toys for them."

These white-collar customers are less anxious about their job security and retirement savings - the Dow is back over 12,500 - than they were during the worst of the recession, or the months coming out of it. Plus, as bigger ticket items, the Harleys may be benefitting from pent-up demand. Consumers eased back into the luxury market, spending money on smaller ticket items like clothes before splurging on a bike.

Plus, the dynamics of the motorcycle market worked against Harley-Davidson. During the downturn, cheaper used Harleys seemed like a much better deal than a new motorcycle, especially since the economy depressed the values of trade-in vehicles  (63% of U.S. Harley buyers had previously purchased a Harley motorcycle). “The used bikes were an easy sell,” says James Hardiman, analyst at Longbow Research. Not only was Harley competing against itself, but Japanese competitors like Kawasaki, Yamaha and Suzuki were discounting their vehicles, even through the 2010 recovery, says Dionisio. Now, the March earthquake in Japan has challenged the supply chain of these companies. So Harley is picking up market share.

Do these Harley results say something more about the economy? Yes, says Dionisio. “We're really seeing a bifurcation of retail,” says Dionisio, who also covers luxury brands like Sotheby's and Estée Lauder. “The ultra low-end is doing well, and so are the high-end luxury goods. Harley shows that this discretionary spending is getting healthier by the day.”

The performance of Harley's financial services arm is also a good sign for the economy. The unit earned $82 million in income, the highest quarterly total on record. More importantly, thirty-day delinquencies fell to 3.5%, from 4.5% last year. America may go bankrupt. But at least the bikers are paying their bills.

Sean Gregory is a staff writer at TIME. Find him on Twitter at @seanmgregory. You can also continue the discussion on TIME's Facebook page and on Twitter at @TIME.

Read more:

The mind of a mass murderer

Oslo:  The suspect in Norway's twin attacks that killed at least 92 people admitted responsibility and said the carnage was long planned as the nation mourned victims of its worst violence since World War II.

Anders Behring Breivik, 32, was arrested for allegedly shooting at least 85 people dead at a youth Labour Party meeting on an island and killing seven more in a car bomb explosion which ripped through government buildings in Oslo.

"He admitted responsibility," Behring Breivik's lawyer Geir Lippestad told Norwegian media. While there was no official confirmation of the man's identity, he was widely named as Anders Behring Breivik by local media.

"He feels that it was cruel to have to carry out these acts but that, in his head, it was necessary," Lippestad said. Oslo police spokeswoman Viola Bjelland told AFP on Sunday that the suspect was "cooperative."

King Harald V, Prime Minister Jens Stoltenberg and other ministers were to attend mass at Oslo cathedral on Sunday morning.

A rambling 1,500-page tract apparently written by Behring Breivik said he has been preparing the "martyrdom operation" since at least autumn 2009.

The Internet document -- part diary, part bomb-making manual and part political rant in which he details his Islamophobia -- explains how he set up front mining and farming businesses to prepare the attacks for which he was arrested on Friday. 

"The reasoning for this decision is to create a credible cover in case I am arrested in regards to the purchase and smuggling of explosives or components to explosives -- fertiliser," the tract says.

As harrowing testimony emerged from the summer camp where scores of youngsters were mown down, Norway was struggling to understand how a country famed as a beacon of peace could experience such bloodshed on its soil.

"Never since the Second World War has our country been hit by a crime on this scale," premier Stoltenberg told journalists as police searched for more bodies on the idyllic Utoeya island near Oslo.

"Many of those who have died were friends. I know their parents and it happened at a place where I spent a long time as a young person... It was a paradise of my youth that has now been turned into hell."

The toll could rise further as the search continued for four or five people still missing from the island, aided by a mini-submarine and Red Cross scuba divers.

Blond-haired Behring Breivik described himself on his Facebook page as "conservative", "Christian", and interested in hunting and computer games like World of Warcraft and Modern Warfare 2, reports said.

He also described himself as director of Breivik Geofarm, an organic farm that may have given him access to chemicals used in the production of explosives.

Police spokesman Roger Andersen described the suspect as a "Christian fundamentalist", adding that his political opinions leaned "to the right". 

The head of the populist right-wing Progress Party (FrP) confirmed Behring Breivik had been a party member between 1999 and 2006 and for several years a leader in its youth movement.

He stopped paying his subscription before ending his membership, according to the party.

Anti-fascist monitors meanwhile said Behring Breivik was also a member of a Swedish neo-Nazi Internet forum named Nordisk, which hosts discussions on topics ranging from white power music to political strategies for crushing democracy.

The attacks on Friday afternoon were western Europe's deadliest since the 2004 Madrid bombings, carried out by Al Qaeda.

Friday's attacks began with a car bomb which seared through landmark buildings including Stoltenberg's office and the finance ministry. It is thought that the car-bomber then caught a ferry to nearby Utoeya island wearing a police sweater.

On arrival, he claimed to be investigating the bomb attack and began opening fire with an automatic weapon. The shooting spree lasted for an hour and a half.

Witnesses described scenes of horror among the more than 500 people attending the youth camp. Some who tried to swim to safety were even shot in the water.