There's no recession on the internet
Getting traditional businesses online will play a significant role in our economic recovery, writes Google's Ronan Harris
Published 19/06/2011 | 05:00
Governments everywhere are finally waking up to the importance of the digital economy to global economic success. May's G8 Summit in France included, for the first time ever, discussions focused on the economic impact of the internet and to what extent is it a motor of transformation and growth.
Consider these numbers: two billion people -- or one in three people on this planet -- are using the internet; 800 million people are social networking; 1.4 million emails are exchanged every second and three billion YouTube videos are watched daily. No other revolution has had a greater impact on how we live and work than the internet revolution.
A recently published McKinsey report on the impact of the internet, measuring its contribution to GDP growth in 13 countries, found that the internet has delivered substantial economic growth and has created jobs on a large scale. If the internet's consumption and expenditure was a sector, its weight in GDP would be bigger than agriculture or energy.
In truth, its findings were no surprise. Our near neighbour, the UK, is one of the most advanced internet economies. There, the internet economy was worth £100bn in 2009, according to the Boston Consulting Group. That is roughly 7.2 per cent of GDP. It is projected to reach 10 per cent by 2015 -- and that is a conservative estimate. There is no reason why Ireland's internet economy shouldn't grow as quickly, or even more quickly in the same timeframe.
This is not a pie-in-the-sky claim. Think about it for a minute. We know that Irish people are online in ever growing numbers (77 per cent in 2010, up from 66 per cent in 2009) and that over 75 per cent of Irish consumers use the internet as their primary tool for researching companies and products. We also know 71 per cent of Irish consumers have actually bought online. With the Irish economy still on shaky ground, much of the talk focuses on collapsed banks and budget turmoil, so it is easy to overlook the internet as a key source of solid growth.
Yet, among over 800 commercial SMEs in Ireland, across various sectors surveyed by Ipsos MORI on behalf of Google, nearly 40 per cent did not have any online presence while 60 per cent did not have an entry in an online directory. A staggering 97 per cent of commercial SMEs online are still using the company website as brochureware, a place to look at pictures only, without the ability to purchase goods direct from the website. This is a huge lost opportunity.
That is why Google, together with partners Blacknight Hosting Solutions, the County and City Enterprise Boards and An Post has launched a national campaign to get businesses online. www.gettingbusinessonline.ie will, we hope, become a national movement which will gather momentum across the country. At the heart of Getting Business Online is removing the barriers that are stopping these traditional businesses from taking advantage of the economic opportunity presented by the internet.
At a time when Ireland's economic recovery is dependent on job creation, building a broad digital ecosystem will help our export-led recovery and deliver sustainable jobs at local, regional and national level throughout our economy.
There are increasing numbers of what are called "micro-multinationals". These are businesses with up to 10 employees who from an early stage start serving different markets. The growth of these companies has been enabled by the internet. People like Rosie Sheehan who set up Broadway Bagels in Dungarvan when she moved from New York to Waterford and couldn't find an authentic US bagel. Today she employs seven people manufacturing 12 kinds of bagels that are exported to the UK, Italy, Spain and France. "My website is my shopfront and being online has opened my business to the world," she says.
Ennis-based Maureen Harrison started her Seoidín jewellery business as a small shop in Ennis, Co Clare in April of 1996. Today she employs eight people, has three shops and is targeting increased sales in the United States through the company website www.seoidin.com
At the other end of the country, Mark Walton of Sligo-based Voya.ie now employs 11 people and has expanded his company. A decision to revive the tradition of seaweed baths in Strandhill led to six-years of research and development to create a new type of cosmetic: the first genuinely organic seaweed-based cosmetic products in the world.
Since establishing this online sales business in 2008, Mark has seen sales of Voya seaweed based cosmetics grow annually by 70 per cent.
"Online sales is a dynamic model which rewards the inventive and creative entrepreneurs. We are growing this continually and branching into complimentary online market methods to support the overall activity", he says.
Ireland is fortunate that we have an innovative and entrepreneurial culture. But for every Rosie, Maureen and Mark, there are hundreds more Irish entrepreneurs who could be expanding their businesses by being online and taking advantage of the economic opportunity of the internet. I have no doubt that if we succeed in getting businesses online, Irish small businesses, the backbone of our economy, will play a significant role in our economic recovery.
Ronan Harris is director of online sales at Google
Sunday Indo Business