A recent study caught our eye, because it addresses the growth in Internet advertising – which at one time, many in traditional media had questioned as a reliable source of revenue.
The study (“Economic Value of the Advertising-Supported Internet Ecosystem”), released by the Interactive Advertising Bureau but authored by Hamilton Consultants Inc. with Harvard Business School professors John Deighton and John Quelch, shows interactive advertising is directly responsible for $300 billion of economic activity in the U.S.
According to the study, advertising-supported Internet sites:
• represent 2.1 percent of the total U.S. gross domestic product;
• directly employ more than 1.2 million Americans with above-average wages (over 500,000 of them in the e-commerce sector alone); and
• employ an additional 1.9 million people that work to support directly Internet-related jobs.
Advertising-supported Internet is also driving new opportunities for new kinds of economic growth. Consider the following information found in the study:
Jobs: Some 20,000 small businesses operate on the Internet, 120,000 individuals are primarily employed as eBay sellers, and 500,000 individuals have part-time businesses on eBay. In addition, there are several examples of Internet companies that have risen to prominence within the last 10 years to become major employers. Amazon, Cisco Systems, Symantec, Google and eBay collectively employ 75,000 people.
Retail profit: In 2007, the business-to-consumer e-retailer segment grew six times faster than total retail sales, reaching $165.9 billion - a 21.8 percent increase from 2006. Consumer e-commerce comprises about 10 percent of all U.S. retailing. However, the volume of business-to-business e-commerce is even larger - about half of the $3.5 trillion of supply-chain purchases are handled over the Internet.
The report also states the Internet is a bigger advertising medium today than radio, outdoor advertising (such as billboards) and the Yellow Pages. Consumer magazines were cited as a similarly sized medium.
This rise was attributed to the fact that paid advertising on content sites can increasingly be targeted to individual Internet users based on information collected about or supplied by that user, and routinely allows consumers to click through and receive more thorough information.
There’s no question that the Internet has produced large social consequences far different in scope and scale from any we’ve ever seen. It is an infrastructure and a platform, and its benefits are broad and open-ended. The research we’re seeing lately here at the Knight Center of Digital Excellence is proving that.
