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Iab Report September-24-2012 4clr v1

Iab Report September-24-2012 4clr v1

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Published by John Cook

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Published by: John Cook on Oct 01, 2012
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09/30/2013

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Economic Value of theAdvertising-SupportedInternet Ecosystem
September 2012
This study was directed by John Deighton, Harold M. Brierley Professor of BusinessAdministration, Harvard Business School. The Principal Investigator was Leora D. Kornfeld,Research Associate, Harvard Business School.The study was commissioned by the Interactive Advertising Bureau, 116 East 27th Street,7th Floor, New York, New York 10016. The Interactive Advertising Bureau wishes to thankGoogle, 24/7 Media Inc. and ValueClick for their generous support of this research.
 
Acknowledgments:The work of Will Rogers of Hamilton Associates on the earlier studywas foundational to this study and is gratefully acknowledged.
 
1
Summary of Findings
D
irect employment in the U.S. Internet ecosystem doubled in four years.A million new jobs were added to the million that existed in 2007. Whenindirect employment is added, the number of people who owe their jobs to theInternet is 5.1 million. Through the years of the ‘Great Recession’ and the very
slow climb back, the Internet has deed the general pattern of unemployment
and business revenue stagnation.While growth was fast in the consumer-facing layer among the household nameslike Facebook, YouTube, and Twitter, it was even faster in the less glamorouslayer that supports them. Jobs grew fastest in digital advertising agencies, ad
networks, ad exchanges, customer analytics rms, and listening platforms. Theengine of growth was not just rms like Twitter, but rms that used their data.
The consumer support layer is thus the unsung hero of the last four years of 
U.S. innovation. Consumers get the benets of the Internet at low cost, and often
for free, because entrepreneurs are building out analytical tools and supportservices to run them leaner, and to create new revenue sources that let even free
services be protable.The consumer-facing layer contains many more rms, smaller rms, and youngerrms, than those lower down the tree. In absolute terms it added more jobs
(365,000) than the consumer support services layer (245,000). The consumer-facing layer is where entrepreneurs come face to face with consumer demandor its absence, so it is the layer where all growth originates. But it grew from alarger base, so it grew at a slower rate in the past four years (70%) than theconsumer support services layer (229%).

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