Today, the internet is an essential part of our daily routines. In fact, people are spending twice as much time online as they did a decade ago. In the UK for example, internet users said they spent nearly 10 hours online each week in 2005, whereas by 2014 this figure had grown to 20 hours and 30 minutes, according to a study by Ofcom (a regulator for the communications sector). And this trend is accelerating rapidly. Between 2013 and 2014 time spent online grew by three and a half hours online per week. Furthermore, in the same report, the biggest increase is cited among 16-24 year olds, whose time online has increased threefold to 27 hours and 36 minutes.
Because access to the internet is faster and easier than before, the time people spend online while away from home or work - has increased fivefold over the past ten years. In the UK, nine in ten adults now have access to the internet.
The emergence of social media as a communications channel is a notable corollary of greater internet usage. Again according to Ofcom, social media use has tripled since 2007, with nearly three quarters of internet users aged 16 and above saying they have a social media profile. Some 81% of these access social media at least once a day - using services such as Facebook, Twitter, LinkedIn, Instagram or Tumblr. Interestingly, social media use is not the sole preserve of youth, with nearly half of online 55-64 year olds having a social media profile.
For 16-24 year olds, life without a connected mobile phone is inconceivable. When asked which device they couldn’t live without, some 59% of this age group said they would miss their mobile phone the most, with TV ranking a distant second (17%). Generally, consumer confidence in the online world has grown steadily over time, even if some concerns remain around security, fraud or privacy. People are increasingly more likely to go online when searching for information, goods or services or to engage in public or civic activities.
The digital economy powers up
The European Commission’s DAE (Digital Agenda Europe) Review studied the influence of digital technology on jobs and growth. The findings emphasise just how much technology is shaping businesses of all kinds. Evolving ICT technologies coupled with widespread diffusion mean that the digital economy can no longer be considered to be a subset of the mainstream economy.
The rise of digital technology
• Half of all productivity growth deruves from investment in ITC.
• Internet traffic is doubling every 2-to-3 years and mobile internet traffic is doubling every year.
• Wirelessly connected devices to double globally to 50 billion by 2020.
• Mobile data traffic expected to increase twelvefold between 2012 and 2018.
• More than 4 million ICT workers (across many sectors) in Europe.
• ICT employment is growing by 3% annually despite the financial crisis.
Source : European Commission Expert Group on Taxation of the Digital Economy, Working Paper: Digital Economy - Facts & Figures, March 2014
While exact measurements of the digital economy remain challenging, some high-profile studies by McKinsey Global Institute and Boston Consulting Group do shed light on the scale of the digital revolution.
McKinsey examined data from the G8 and five other countries (Brazil, China, India, South Korea, and Sweden) and calculated that the internet accounted for 3.4% of GDP, and had fuelled 21% GDP growth in the preceding five years. Internet usage by SMEs was estimated to create a 10% rise in productivity.
Boston Consulting Group estimated that by 2016 internet-driven economy will be worth USD 4.2 trillion (up from USD 2.3 trillion in 2010) in the G-20 economies. To put that into perspective: if the internet were a country, it would rank fifth in the world in terms of its GDP. The Boston study noted an annual rate of 8% for internetdriven economic growth in G-20 countries, which outstrips growth in more traditional sectors. They estimated the internet’s contribution to GDP to increase to 5.7% in the EU by 2016. Overall, it is estimated that the digital economy in the G-20 will double in size between 2010 and 2016.
Retailers have been at the forefront of the move online. Europe’s e-commerce sector recorded an average annual growth rate of 17.4% during the 2009-2013 period. Turnover grew to reach €352bn by 2013, according to EMOTA.
Compared to other regions, Europe leads with a global market share of 33%, just above the Asia-Pacific (32%) and ahead of the Northern American market, which totalled €318bn. Eurostat figures indicate that the share of e-commerce in the total turnover of European businesses was around 14%.
The share of individuals buying online in Europe reached 47% in 2013. And take-up is rising fast. On average, for every year over the past decade an additional 3% of the population bought online. Levels of up to 75% are being observed in leading online markets in Europe.
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