Europe Blog
Our views on the Internet and society
The Internet - the engine of European economic growth?
Thursday, October 28, 2010
We’ve all heard the stories of companies that find a niche product they can sell via the Internet to large numbers of people. Companies that maybe started out around a
farmhouse kitchen table
or in
someone’s bedroom
and are now fantastically successful global Internet businesses.
Amazingly, despite more than 10 years of constant growth in ecommerce, neither the EU not a European Government has yet tried to get to the bottom of these stories and work out what the real economic impact of the Internet is.
At a time of global economic uncertainty, establishing the difference that the Internet makes to our local economies seems like a sensible thing to do. So we asked
The Boston Consulting Group
, a well respected adviser on business strategy, to make a start on the real facts and figures here in the UK.
After many months of data-crunching, their
Connected Kingdom report
reveals for the first time some surprising and significant facts. Here are some of the headline figures they’ve established:
In 2009, the Internet contributed £100 billion to the UK economy. That represents 7.2% of GDP.
The Internet’s contribution to UK GDP is bigger than that of many other industries, for example utilities or transport.
The UK is the no1 country in the world for e-commerce and is a net exporter of ecommerce goods and services: we export £2.80 for every £1 we import.
The companies that enable the online economy (ie, provide the infrastructure, access and services that constitute the Internet) employ an estimated 250,000 people in the UK and have revenues of over £50 billion.
The Internet economy is expected to grow by 10% per year
BCG’s research also highlights the fact that not all economic activity is captured by GDP measures, and so the significance of the Internet to the UK economy is actually greater than £100 billion. For example: consumers benefit from the Internet by purchasing products in the high street which they researched online (valued at around £40 billion per year), by saving money through online shopping (around £18 billion per year) and by consuming free online content (around £5 billion per year).
In truth, the headline numbers are bigger than any of us thought when we first commissioned the report. It’s very exciting to see that UK companies that are becoming global success stories through their innovations on the Internet. From companies
exporting tartan
to those building
online games for kids
, these are the home-grown success stories that we need to celebrate and foster here in the UK.
This report is just the start. The tough policy questions have yet to be answered. How do we ensure this 10% growth really happens? What barriers are these UK companies facing in trying to grow their start ups into global businesses? And we know that some of the answers will also have to come from the EU.
The next step has to be a conversation between the UK’s Internet sector and the Government about how to make the online economy a Government priority and a UK success story. In November, we’re running an event with the
Oxford Internet Institute
to discuss the policy implications of BCG’s report. And if you’d like to get involved yourself, please do have your say about the way forward on
www.connectedkingdom.co.uk
.
Posted by Sarah Hunter, Senior Policy Manager, Google UK
Unlocking the Internet’s potential for SMEs
Thursday, October 21, 2010
Here’s an unusual question: what do an agricultural exchange, time tracking software and a social radio start-up have in common? The answer is, of course, the Internet.
Agroterra
(from Spain),
Timr
(from Austria) and
Spreaker
(from Italy) are three young companies that use the Internet to create, distribute and market their products and services across Europe and around the world.
Their founders recently outlined their successes and challenges at the Google Brussels office during a seminar organised by
PIN-SME
, the small business association that represents over 50,000 SMEs in Europe’s ICT sector. The event focused on the importance of the Internet as a driver of innovation and competitiveness in Europe, a theme that the Commission identified earlier this year in its Digital Agenda and more recently in its
Europe 2020 Innovation Union Flagship Initiative
.
Speaking at the event, Joanna Drake, the European Commission’s SME envoy, highlighted how the Internet is currently underexploited by European small businesses - and emphasised the EU’s target of getting
33% of all SMEs to buy and sell online by 2015
. She also outlined the EU’s efforts to promote innovative use of ICT and the Internet by entrepreneurs, and how the
Small Business Act
aims to help SMEs access global markets - and succeed on them.
Agroterra, Timr and Spreaker had some suggestions that they felt would help European SMEs perform better: better broadband access, especially in rural areas; better information on and harmonization of tax regimes; improved cross-border transactional systems; a single market for music rights; campaigns to build consumer trust in the Internet; and more help in learning to take advantage of the opportunities of the Internet.
At Google, we often hear about these sorts of challenges from the small businesses that use our services - from
online advertising
to cost-effective online applications such as
Gmail, Calendar and Docs
. Of course, the companies using our services have already launched themselves into the online world, but many entrepreneurs in Europe have not yet taken advantage of the potential of the Internet.
Eurostat figures
show that 85% of Danish small businesses already have a website, but in France, Italy, Spain, Portugal, Hungary and elsewhere, less than 55% are already online.
To help European SMEs bridge this digital divide and participate in the global online economy, we’re
working with public- and private sector partners in the UK
and
in Poland
. We’re running joint initiatives that make it easier for small businesses to get online for the first time, giving them a simple website and online tools - for free - that boost their sales and their long term growth.
The results speak for themselves: since the start of this year, nearly 90,000 British businesses with no prior online presence now have websites and are generating new opportunities for themselves. In Poland, more than 30,000 businesses have signed up since the campaign launched, and on average, a small business is going online for the first time every 20 minutes.
Posted by Sarah Greenwood, Policy Manager, Google Brussels
A Polish Internet Revolution
Monday, May 10, 2010
Poland is one of the few countries that is emerging from Europe’s financial crisis relatively unscathed. While many European Union members struggle to raise funds, Poland’s zloty remains stable and interest rates low.
During my recent visit, my former Dow Jones colleague, now Bloomberg bureau chief Dennis McQuaid, told me how the government just had sold off a large state-owned insurance company – and the offering was seven times oversubscribed, making it the country’s biggest ever IPO. Poland’s economy has kept growing and the streets of Warsaw bustle with well-dressed shoppers and the clatter of construction.
Personally, this success is gratifying. As a journalist, I covered Poland during the 1980s when it laboured under communism. Stores were empty then. But the Polish spirit amazed me – how a courageous people could undertake a successful non-violent, spiritually-based, worker- and intellectual-led revolution. In 1989, I watched some Solidarity supporters set up the country’s first free newspaper in a day care centre. It was called Gazeta Wyborcza.
Today,
Gazeta Wyborcza
is Poland’s top paper, part of the giant Agora group. It operates out of an airy, sparkling, shiny steel headquarters building. Grzegorz Piechota, the paper’s special projects editor, presented an upbeat outlook for the future. While Gazeta hasn’t escaped the pain of the transition online, it has embraced the web, starting dozens of sites targeted to different audiences, from teenage girls to senior citizens. “We know we have no choice except to move online,” Piechota said.
For Google, Poland represents a successful laboratory for bringing business online. Nimble, small, family owned companies dominate the economy. Yet most have little or no online presence. While four in every five consumers are searching for information online about products and services, a Google-sponsored study last year showed that fewer than half of small Polish businesses have any online presence.
In order to get Poland online, we launched an
Internet Revolution
campaign at the end of last year, supported by the Ministry of Economic Affairs. The program offers advice on how Polish companies could get online using both Google and non-Google tools, including a free package to help them establish a web domain, create a website and launch their first domestic or international online advertising campaign.
The success of this initiative has exceeded our expectations. Last week, we announced at a press conference that over 10,000 small entrepreneurs had signed up. The Polish economy may ‘only’ rank 21st globally, but it’s clear that the country has a healthy appetite for making the internet an integral part of doing business and driving growth for the future.
Posted by Bill Echikson, Head of Communications, South, Eastern Europe, Middle East and Africa
Reaching Consumers Across Borders
Thursday, May 7, 2009
The European Commission is hosting the first ever
EU SME week
. The tagline - "Small Business, Big Ideas" - aptly captures the excitement of a small business, and Google was one too just a few years ago. Now we offer online advertising
solutions
that many of today's SMEs use as part of their marketing strategy. While the local or national market is a great start for any business, clearly the single market (and beyond) should be the ultimate growth ambition of European entrepreneurs.
And the opportunity is clearly there. We've noted on this blog before that - according to recent Commission
estimates
- only 7% of EU consumers had shopped cross-border. How does the picture look from the seller's perspective?
SMEs that use
AdWords
, Google's online advertising product, can reach consumers who are searching for products and services in multiple languages, across borders, all from a single online advertising account paid for in one currency. Advertisers may target ads to users in more than 40 languages or use location targeting to direct ads to different countries, regions, or cities. The biggest bonus though, is that advertisers only pay if someone interacts with their ad. In simple terms, if there is no click, there is no payment.
AdWords offers the ability for SMEs to show ads to consumers using several methods, such as matching country or language targeting to Google domains (.fr, .de, etc) or by specific geographic search terms ("
London plumbers"
would show to users in London). Another component of targeting is by an analysis of the user's IP address. IP addresses can give a general sense of a user's physical location, based on the regional assignment of IP addresses. Such advertising targeting capabilities give advertisers a reasonable sense of control that they are not wasting precious advertising euros on clicks from potential customers that they are unable to serve.
Many European SMEs have successfully grown their businesses across national borders thanks to the global targeting capabilities in AdWords. Having found success in the UK with AdWords, the footwear retailer
Cloggs
launched a French-language website coupled with ads targeted to French consumers which has generated an average of 100 sales daily.
What we see is that the proportion of our EU customers' AdWords budget spent on cross-border prospects is about double the Commission's 7% figure for cross-border consumer purchases. That difference is not surprising - AdWords advertisers can more easily target consumers across borders compared to traditional media. Further, our figures include B2B sellers, and some may have set up local fulfillment operations such that consumers are unaware that the ultimate seller is in fact based abroad.
In any event this is a figure that both we and the Commission would like to see increase. And more choice for consumers is a good thing too. To that end, we have increased our efforts to educate AdWords advertisers about how they can attract consumers from across borders to their websites by expanding their advertising campaigns internationally. AdWords specialists recently held online web tutorial sessions in 4 languages open to advertisers in 7 EU countries, offering tips for how to expand their reach across borders. We invited thousands of advertisers in the EU to these live sessions and will make recordings of these trainings available online. This month, we're going to post international campaign expansion tips on Google's European Inside AdWords blogs (check out the Swedish Inside AdWords
blog
for an example), spreading the word for how AdWords can support the entrepreneurial ambitions of SMEs in the EU.
Posted by Rich Flanagan, Product Marketing Manager
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