Widely reported last week from the Guardian, the World Advertising Research Council (Warc) and new media age magazine, among others—were the results of a study commissioned by Google from the Boston Consulting Group (BCG). The headline figure brought a broad smile to faces more often creased with worry in recent months. According to BCG, the internet was worth £100 billion ($139 billion) to the UK in 2009. That was 7.2% of the country's gross domestic product—not far behind the 9% contributed by the financial industry.
Moreover, a partner at BCG named Paul Zwillenberg said that the £100 billion figure was a very conservative estimate. The report claims to represent the first-ever attempt to quantify the value of the UK’s internet sector.
Whatever the industry’s precise value, consumers play a huge part in its success. Online buying by UK residents accounted for £50 billion ($69 billion) in 2009, BCG calculated.
For advertisers and marketers, three key messages emerge from the research.
1. The rock-solid foundations of UK ecommerce
The UK has taken to ecommerce like no other country. Even the US cannot match the UK in some measures of ecommerce activity.
Over two-thirds of UK consumers ages 14 and older—roughly 26 million people—bought goods, travel or other services online at least once per month in 2010, eMarketer estimates.
Other sources have put the number of those buying online (not necessarily monthly) in 2010 at 31 million. BCG, working with this figure, concluded that average annual online spending per person was roughly £1,600 ($2,224), higher than anywhere else in the world. Saving money is a primary motivation; the average UK household saved £1,000 ($1,390) in 2009 by shopping online, BCG reported.
Business-to-business ecommerce—which BCG did not factor into its estimate—was itself worth an estimated £360 billion ($500 billion) in 2009.
BCG also found that the UK is a net exporter where online sales are concerned. Ecommerce goods and services worth £9.5 billion ($13.2 billion) were exported in 2009, while imports totaled just £3.4 billion ($4.7 billion). This suggests that companies selling through digital channels have overcome many of the challenges faced by the economy as a whole, and may serve as models to other firms.
2. A confidence boost for advertisers
The Google-BCG report confirms beyond doubt the digital future of the UK: the essential role played by the internet in all aspects of life and in virtually all consumer decision-making. This is no surprise to most marketers but should reassure any advertisers who have yet to embrace digital and cross-channel marketing wholeheartedly.
3. The long-term economic value of the internet
The BCG study forecast an increasingly vital role for the internet in the UK economy. If growth rates continue and broadband becomes near universal, the report predicts the internet could account for between 10% and 13% of GDP by 2015.
The internet’s contribution to national life takes many forms, of course. Internet technology brings higher productivity and efficiency, which translates directly into cost savings. The online industry is also creating jobs when the payrolls of many industries and the public sector are shrinking. In addition, a high proportion of internet-related positions are in small and midsize businesses, which were among those hardest hit by the financial turmoil of 2009 and 2010.
The steadying influence and growth of the internet sector are especially important at a time when the UK is faced with economic uncertainties and government-imposed cost-cutting of many services.
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