UK Internet Industry – A Google Report

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Google and Boston Consulting have produced a fantastic website, video and report on what the internet has done for UK business and economy entitled The Connected Kingdom.

Here are a few findings from the report. If you are a UK business we strongly encourage you to visit the website and download the full report for yourself (40 pages packed with info!).

• The UK exports £2.80 for every £1 it imports (ecommerce)
• The share is larger than that of construction, transportation, or utilities.
• In 2009, the Internet contributed approx £100 billion (7.2% GDP) to the U.K. economy.

The significance to the UK economy is greater than the above suggests…

Packed with information and statistics, the report has a lot to say. This is just some of the data;

• research showed that SMEs active online are more successful and grow faster
• broadband use has more than doubled since 2005
• the UK is the largest per capita e-commerce market

• around 25 million UK consumers are on Facebook
• time spent on the internet has increased 65% in three years
• around a quarter of UK internet time is spent on social networks and blogs

• Amongst 16-24 year olds more time is spent on the internet than watching TV
• 62 (31 million) percent of adults bought goods/services online in 2010
• 38million accessed eBay

• 20% UK never go online (mainly rural areas)
• 31% of UK internet users have went online with their phone – up form 23% in 2009!
• in the 16-24 age group this rises massively to 44%

• over half of smartphone users access the internet using them “regularly”
• by the 2nd quarter of 2010 smartphones accounted for 25% market share

The report goes on to illustrate how the UK internet is actually worth more in “real terms” than some of the figure. Many internet income figures were not included in the GDP calculation. I’de suggest downloading the report and making a good cup of coffee (a big one!).

• today the internet is helping strengthen the UK economy
• the repord deducts that if the internet where a “sector” it would be 5th larges in the UK
• the UK exported £9.5 billion e-commerce goods and imported £3.4 billion – a ratio of 2.8 to 1 (the reverse of the rest of the economy!)

• they estimate the value of goods and services researched online but purchased offline at £40 billion in 2008
• it is estimated that “online purchases” have saved “online households” £1000 annually

And the bad…

• Microsoft Security Intelligence Report estimates that 97% of emails globally are unwanted
• The Interactive Media in Retail Group (IMRG) estimates that online fraud costs the UK £3.5 billion annually

How the UK compares…

• In a ranking of 23 OECD nations on broadband speed, the UK finished near the bottom at 17
• 15% of UK have connection speeds above 5MBps, compared to 65% in South Korea, 60% in Japan, 40% in most of the Scandinavian nations, and 25% in the United States

• the UK is a clear leader in expenditure
• the UK was central in the “engagement” analysis
• internet usage increased with population density

• The Internet has altered almost every industry it has touched (see report)
• BBC’s iPlayer  generates about 5% of the UKs internet traffic at peak times

SMEs – Flowers? Clothes? Worms? (yes!) Games?

It seems UK SMEs are beginning to embrace the internet…overall; the internet is paying dividends for SMEs which take advantage of it.

• online sales grew by 43%t annually from 2004 – 2008
• the survey shows that overall sales of “high-web” businesses grew by 4.5% annually over the past 3 years, while those of low/no-web businesses grew by 0.6/0.5% respectively

• London, the East of England & Scotland have the largest share of “high-web” businesses, whilst Northern Ireland, the North East, and Wales have the lowest
• Marketing/advertising & leisure/recreation have the highest percentage of high-web business. Real-estate & trades (plumbers, electricians, and the like) have the lowest share

• More than 60% of high-web businesses use search engine optimisation (SEO) or online advertising

Continued UK Economic Growth?

The report had to make several projections which it deemed as “conservative” however it clearly stated that “several underlying trends…will have a strong and un- predictable influence on growth and value”.

• it is estimated that the UK internet economy will grow by about 10% per year
• If GDP grows annually by 4% the internet economy will make up about 10% of GDP by 2015 (could reach 13%)

The determining factors…

• internet access speeds
• universal access ie getting the 20% of non-users online
• blurring of the offline/online eg mobile phone technology
• embedded technology – machine to machine communication
• micro-payment system
• consumer confidence (eg fraud)
• openess

Conclusion

This is a fantastic report. I would highly recommend visiting the website and downloading it yourself for all the juicy details – you may require more than one coffee

http://www.connectedkingdom.co.uk

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