Web plays key role in France

11 March 2011

PARIS: Ecommerce, internet advertising and other online categories are playing a key role in driving economic growth, job creation and retail sales in France, a report has suggested.

In research part-funded by Google, management consultancy McKinsey assessed the web's financial impact on the country.

The analysis covered direct and indirect effects, and considered technical areas such as voice over internet protocol and software to ecommerce and advertising expenditure.

Overall, online activities added €60bn ($83bn; £51.4bn) to GDP in 2009, a 3.2% share, and €72bn in 2010, a 3.7% share.

"Since 2000, this contribution has greatly accelerated. It was 10% over the last fifteen years, and 20% over the period 2005-2009," the study argued.

Looking forward, it was predicted the web should generate €129bn in 2015, or 5.5% of GDP.

The sector has also yielded 1.15m jobs in 15 years, either directly or indirectly due to processes following on from the digital output and habits of companies and consumers.

Elsewhere, the study revealed every euro invested by small-and-medium-sized enterprises in technologies like websites, email and software was translated into an operating margin on €2.5.

Similarly, each euro allocated to online marketing delivered a €2.5 return, according to McKinsey.

More broadly, the organisation estimated €10bn in surplus value has emerged, €7bn of which is tied with netizens utilising free services such as email and instant messaging.

Another €2.8bn can be linked to the cost savings that come from shoppers purchasing products via this route, McKinsey stated.

Some €28bn worth of sales in bricks and mortar outlets also resulted from investigations originally conducted on the web.

"The internet industry already weighs more than key sectors of the French economy, like energy, transport or agriculture, value added," said Eric Hazan, associate director of the of McKinsey.

But the consultancy concluded greater opportunities exist to exploit France's full digital potential, as it currently lags behind the US and Japan in terms of formal efforts to develop the web's role.

Data sourced from Les Echos; additional content by Warc staff