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 at the Harvard Business School.
The study, “The Economic Value of the Advertising-Supported Internet Ecosystem,” commissioned by IAB, 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.
Currently 86 percent of the ad-supported internet economy’s direct employment and value lie outside the conventional centers of internet industry concentration. Below is the state by state breakdown. Click on each state for more details.
Major industries have blossomed in the past four years:
- Online video – The most significant driver of new internet traffic between the 2012 study and this report, as Over-the-Top (OTT) Television began to enter the mainstream. This video delivery mechanism—in contrast to traditional broadcast and cable television transmission—relies on the open internet, supplied by a household’s internet service provider, and permits unprecedented control over what video to watch and when.
- E-commerce – On its own it accounts for 976,000 jobs, almost a quarter of the entire direct employment base of the ad-supported internet ecosystem.
- On-demand platforms – These platforms match workers to employers in a range of industries. Part-time workers in the so-called gig economy, are in aggregate a full-time equivalent workforce of 147,000 people and likely to grow much larger.
- User content – An umbrella term for self-publishing operating at much larger scale than at the time of the last report. There is an industry of individual content creators, their agents and distribution networks specializing in influencer marketing.
- Music – The transformation from downloading to streaming is almost complete
- Cloud computing – In the time since our last study, cloud computing has begun to deliver software as a service, which allows it to be consumed more flexibly and without substantial fixed cost. It enables digital firms to tailor information technology costs to needs.
- Internet Infrastructure – Since the previous study internet infrastructure has begun to evolve its backbone-and-branch pattern into one built around data centers, enabling co-location of data generator firms and data distributors. In the last four years, particularly as a result of the growth of demand of data-intensive services such as streaming video, much of the internet’s data no longer travels on the backbone. Instead it moves on the edge of the network, from data suppliers to distribution nodes and on to homes.
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. See previous releases of the study here.