The Internet advertising supported economy doubled its number of jobs in the last four years, according to a study by researchers at the Harvard University Business School, commissioned by the Interactive Advertising Bureau. Some 5.1 million workers now toil in roles related directly or indirectly to the digital ad mills, contributing $530 billion to the U.S. economy last year, the report said.
These numbers are almost double those of 2007 and account for 3.7 percent of the U.S. gross domestic product, compared to 2.1 percent four years ago.
Unsurprisingly, California and New York headquartered the most Internet companies, employing 239,000 and 215,000 respectively, with Washington, Massachusetts, and Illinois as the next biggest digital employers. Nine states, including Minnesota, Pennsylvania, Arkansas and Colorado, have headquarters of companies that account for 72 percent of attributed employment, although the jobs themselves were dispersed across other states, as well.
The study, Economic Value of the Advertising-Supported Internet Ecosystem, divided the Internet industry into 12 different types of companies, including those in the infrastructure layer, infrastructure support, consumer support services and consumer services. It found the biggest increase in jobs over the four-year period in infrastructure (300 percent) and consumer support service (229 percent). That said, consumer services, such as content sites, e-commerce and social networks, accounted for 885,000 jobs.
"I was surprised that infrastructure and consumer support services saw so much more substantial growth than consumer-facing services," said John Deighton, Harold M. Brierley Professor of Business Administration, Harvard Business School, who directed the study. This was in part attributable, he thought, to the data being spun off by consumer-facing companies. "This data turned out to be gold. Firms are coming into existence to take that data and sell it to brand advertisers, for example, Crimson Hexagon doing that with data from Twitter."
The other big economic contributor, he said, is the increased efficiency of media selection and placement at ad networks and ad exchanges that this data enables.
Another surprise, according to Deighton, was the volume of sole proprietors in this economy: Almost 20 percent of the 2 million directly-employed Internet workers run single-person shops. If extending the definition of "job" to include people who make at least some income online, doing things like selling on eBay or Amazon, the total number of jobs rises to almost 6 million.
Sherrill Mane, SVP of research, analytics and measurement, IAB, added, "I was pleasantly surprised by how much we grew, and by the number of jobs that rely on this marvelous interactive ecosystem that has sprung up. It means we are an engine for the overall economy - not just certain kinds of jobs. Thanks to [this study], you see this in a clearly documented fashion."
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Susan Kuchinskas has covered interactive advertising since its invention. The former staff writer for Adweek, Business 2.0, and M-Business covers technology, business and culture from Berkeley, CA.
March 19, 2014