NEW YORK--(BUSINESS WIRE)--The ad-supported internet ecosystem generated $1.121 trillion for the U.S. economy in 2016—more than doubling the contribution it made in 2012, according to a comprehensive study led by Prof. John Deighton, the Baker Foundation Professor and the Harold M. Brierley Professor of Business Administration, Emeritus, at the Harvard Business School.
The study, “The Economic Value of the Advertising-Supported Internet Ecosystem,” commissioned by IAB (Interactive Advertising Bureau), found that the ad-supported internet is responsible for 10.4 million jobs in the U.S., accounting for 7.3 percent of the country’s total nonfarm employment. That is twice the number of jobs the industry supported in 2012. In addition, the annual growth rate of employment in the ad-supported internet economy was 19.6 percent from 2012 to 2016, far exceeding the U.S. total nonfarm employment annual growth of 1.8 percent over the same four years.
The ad-supported internet ecosystem today accounts for 6 percent of the U.S. gross domestic product (GDP), representing a 20 percent compound annual growth rate from 2012 to 2016—five times the average American GDP growth during the same period.
This is the third iteration of “The Economic Value of the Advertising-Supported Internet Ecosystem” study, building upon earlier reports released in 2012 and 2009.
Perhaps most surprising, 86 percent of the ad-supported internet economy’s direct employment and value currently lie outside the conventional centers of internet industry concentration—the San Francisco Bay Area, New York’s Manhattan, Virginia’s Arlington County, Boston’s Route 128, and Seattle/Tacoma. California’s Silicon Valley, which is composed of five congressional districts, accounts for only 4 percent of jobs directly attributed to the ad-supported internet.
The research shows that every U.S. Congressional district boasts jobs created by the ad-supported internet, with some of the biggest numbers of jobs in states such as North Carolina, Texas, and Utah.
The report also spotlights several major sectors that have increased the value of the ad-supported internet in the past fours years. For example, online video was the most significant driver of new internet traffic between the 2012 study and the latest report, as Over-the-Top (OTT) television entered the mainstream. Other notable growth sectors that are transforming business models and consumption patterns include e-commerce, on-demand platforms, user-generated content platforms, music-streaming services, and cloud computing.
“This study makes clear how crucial the ad-supported digital sector is to the expansion of the broader U.S. business landscape,” said Professor Deighton, who directed the current and earlier versions of the study. “The internet fills an ever-widening role as market-maker to the U.S. 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 percent per year.”
Drilling deeper into the jobs data, 4.1 million of the total 10.4 million jobs created by the ad-supported internet ecosystem were directly tied to the industry. Mid-sized and small firms, and a sizable number of self-employed individuals, account for 44 percent of those 4.1 million direct jobs in the digital advertising economy. The ecosystem's largest firms accounted for the other 56 percent.
In addition, internet firms that provide products or services directly to consumers experienced the largest growth in jobs since the last study in 2012, creating a total of 734,000 new jobs directly tied to the industry.
“The ad-supported digital ecosystem has proved to be a powerful economic driver and job creator in the U.S.,” said Randall Rothenberg, President and CEO, IAB. “This research underscores the industry’s ability to touch lives and support families across the country, fueling the economy from coast-to-coast, whether through big-name companies or mom-and-pop operations that depend on the internet for their livelihoods. I’m proud to say that IAB members make up the lion’s share of companies responsible for the largest uptick in new jobs since 2012, and we’ll work together to ensure that digital provides strong economic value to the U.S. in the years to come.”
“The internet has become central to Americans’ day-to-day lives as they read, watch, shop, and connect on digital screens,” said Dave Grimaldi, Executive Vice President, Public Policy, IAB. “In turn, the U.S. economy has reaped the benefits, becoming increasingly data driven, stimulating growth at an accelerated pace—the rapid rise associated with the take-off phase of an industry, rather than one that has been established for over two decades.”
To read the complete findings of the 2017 “Economic Value of the Advertising-Supported Internet Ecosystem,” please visit iab.com/economicvalue.
Methodology
Similar to the previous studies released in 2009 and 2012, the 2017 report primarily adopts an employment-based methodology by identifying large firms in each layer of the internet and using a range of public and private sources to estimate each firm’s revenue and employment as well as estimates of aggregates of small firms and self-employed people. In addition, the report also uses a top-down method based on the U.S. Census Bureau’s databases to decide how to allocate the employment to geographies at the state and congressional district level.
About IAB
The Interactive Advertising Bureau (IAB) empowers the media and marketing industries to thrive in the digital economy. It is comprised of more than 650 leading media and technology companies that are responsible for selling, delivering, and optimizing digital advertising or marketing campaigns. Together, they account for 86 percent of online advertising in the United States. Working with its member companies, the IAB develops technical standards and best practices and fields critical research on interactive advertising, while also educating brands, agencies, and the wider business community on the importance of digital marketing. The organization is committed to professional development and elevating the knowledge, skills, expertise, and diversity of the workforce across the industry. Through the work of its public policy office in Washington, D.C., the IAB advocates for its members and promotes the value of the interactive advertising industry to legislators and policymakers. Founded in 1996, the IAB is headquartered in New York City and has a West Coast office in San Francisco.
