Ad-supported internet is worth $1tr+

16 March 2017

NEW YORK: The ad-supported internet contributed $1.121 trillion to the US economy last year, or more than twice what it did in 2012, according to a new academic study.

The report, entitled The Economic Value of the Advertising-Supported Internet Ecosystem, was led by Prof John Deighton from Harvard Business School on behalf of the Interactive Advertising Bureau (IAB).

It calculated that the ad-supported internet now accounts for 6% of total US gross domestic product (GDP), representing a compound annual growth rate of 20% over the past four years, or five times the average US GDP growth over the same period.

Furthermore, the industry is responsible for 10.4m jobs across the US and not just in the areas famous for their technology hubs, such as the San Francisco Bay Area, Boston's Route 128 or Manhattan in New York.

Indeed, even Silicon Valley in California accounts for just 4% of jobs directly related to the ad-supported internet, while some of the biggest number of jobs are to be found in states such as North Carolina, Texas and Utah.

And out of the 10.4m jobs created by the ad-supported internet, 4.1m are directly tied to the industry, with small and medium-sized companies accounting for 44% of these directly linked jobs.

The report also noted that online video has been the most significant driver of new internet traffic since 2012, especially as over-the-top (OTT) TV became mainstream.

Commenting on the findings, Prof Deighton said: "This study makes clear how crucial the ad-supported digital sector is to the expansion of the broader US business landscape.

"The internet fills an ever-widening role as market-maker to the US economy, first as a retail platform, next complementing traditional advertising media, then becoming a mobile platform to reach people on the move, and now as a platform to make markets in on-demand services. It is little wonder that it's growing at 20% per year."

Data sourced from IAB; additional content by Warc staff