How Spider Web Effect Supports U.S. Economic, Job Growth

by Laurie Sullivan, Oct 1, 2012, 4:45 PM

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Similar to a social graph, the infrastructure of the Internet supports a Web-effect connecting economic and job growth across the ad industry. At least that's how Harvard University Business School researchers explain it in a study commissioned by the Interactive Advertising Bureau (IAB).

The ad-supported Internet, including search services, takes responsibility for 5.1 million jobs, but it's the sole proprietors or very small firms contributing the most to job growth, according to the study. It estimates the ecosystem contributed $530 billion to the U.S. economy in 2011 -- nearly doubling 2007 figures, and accounting for 3.7% of the U.S. gross domestic product (GDP), an uptick from 2.1% four years ago.

Sole proprietors and very small firms were cited as contributing 375,000 full-time jobs to the 2 million in the Internet ecosystem in 2011. Contributing more than Google, Yahoo and Bing, the study suggests that service supported growth through Amazon, eBay, Etsy, Craigslist, YouTube, and Square, as well as social networks, recommendation engines, and search.

Search remains the foundation and success for commerce and content, according to the study. Although Google has more than doubled its revenue since the 2007 study, the findings credit much of Google's employment growth to areas adjacent to search technology. According to its latest 10-K report, Google's search site earned $26.1 B, of which 46% originated in the U.S. The report does not identify YouTube revenue separately. The study contributed $1.6 billion to YouTube globally, and $0.64 billion in the U.S., deducting this amount from the Search Internet revenue total. (More details here.)

The study puts a value on the Internet and workers by breaking down the industry into 12 types of companies within four categories. They include the Infrastructure Layer, Infrastructure Support Layer, Consumer Support Services Layer, and Consumer Services Layer.

The study lists Microsoft as the largest software firm in the Infrastructure Support Layer, which also appears as a hardware manufacturer and provider of advertising services. In the software sector, Microsoft employs an estimated 14,680 people in the United States. Of its $69.9 billion global revenue, the study attributes 20% of the Windows and Windows Live segment revenue of $19 billion to the Internet.

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