Tag Archives: Economic Impact of the Internet

Google is a growth engine for European business

Last month I got an email from a proud daughter in the UK whose mother Tricia Cusden used Google tools to launch a makeup business called Look Fabulous Forever. She used Search to find suppliers; she built a following using YouTube to show older women makeup tips; and she’s using Google Adwords to find customers online. To date, her YouTube channel has racked up over half-a-million views, and her company now exports products to 24 countries around the world.

Today we are launching an initiative spotlighting hundreds of European entrepreneurs like Tricia who have used Google products as a growth engine for their businesses. We’re also announcing that Google will train 1 million Europeans to learn crucial digital skills by 2016. Not long ago, small businesses could only afford to source and sell locally. Global marketing and distribution were out of reach for all but the biggest. Today, any business can reach a global market using the Internet, allowing even the smallest businesses to be a multinational.

If you have a product or service, Google AdWords can connect your business with potential customers. Take Berto Salotti, a furniture-maker who has shared his story as part of our project. In 2002, after 30 years of production, Berto had six employees based in Meda, Italy, where they sold most of their furniture. Today, after marketing online through Adwords, they’ve quadrupled in both size and revenue and have customers worldwide.

Eumelia is an ecotourism farm and guesthouse based in rural Greece that uses Google tools to reach out to prospective visitors as far away as Japan and Australia. The company’s founder, Frangiskos, said AdWords is “the best way for a small, local business to have global impact.” And Dutch office supply company DiscountOffice said Adwords "levels the playing field", allowing them "to compete with big multinationals from the beginning.”

But it’s not just online marketing through AdWords that helps businesses grow; YouTube has helped European creators and entrepreneurs attract fans and customers using the power of video. Marie Lopez is like many 19-year-old Parisians. She loves fashion, design and makeup. But what makes Marie different is that she has more than one million people around the world who subscribe to her YouTube channel, EnjoyPhoenix. Having amassed over 120 million views, Marie is now developing her own line of products and working with top brands like L’Oreal. Today, thousands of YouTube channels are making six figures annually and total revenue amongst our YouTubers has grown by 50 percent in each of the last two years.

Google Play is also a huge growth engine for European developers, connecting them to a booming global app economy. Launched in Spain, WePlan is a free Android app that looks at how people use their phones, and recommends the best carriers for their needs. Today it has more than 100,000 users in 24 countries. And WePlan has gone from five to 18 employees in just two years. Last year, Google paid out more than €4.4 billion to developers like WePlan.

We are excited that businesses all around Europe are using the technology we provide as an engine for their growth. To see more of these stories, check out this video:

It’s clear that the opportunities for businesses in the digital age are immense--there are many more ways to reach customers than anyone could have imagined not that long ago. But, for Europe to reach its full potential, we need to clear the way for companies online. We need a single market in the digital world that reflects the single market we enjoy in the physical world already. With over two dozen regulatory and frameworks to contend with, businesses stumble when they seek to sell, grow or hire across borders. The European Commission has rightly identified the digital single market as one of Europe’s top priorities.

Of course, the opportunities afforded by the digital economy are still limited if people don’t have the right skills. At current rates, the EU predicts a shortfall of 900,000 jobs by 2020 due to a lack of digital skills, and there are many businesses that want to get online but don’t know where to start. At Google we’re playing our part. Over the last year we have have helped tens of thousands of German entrepreneurs export through partnerships with DHL, PayPal and Commerzbank. We have trained tens of thousands of young, unemployed people in Spain with free courses on subjects like web development, digital marketing, and ecommerce. And, we have shown thousands of traditional Italian craftspeople how to sell and market their wares online.

But we want to do more. So, today we’ve announced that Google will train 1 million Europeans in crucial digital skills by 2016. We will invest an additional €25M to broaden our current programs and take them to new markets across Europe to train more small businesses on the digital skills they so need. We’ll build a Europe-wide training hub to support businesses anywhere in Europe to get training online.

Some people look at the state of the economy in Europe and are pessimistic. We see something else: a huge diversity of businesses and entrepreneurs with creativity, ambition, and talent -- all using digital tools to create jobs and boost the economy.

Competition drives Europe’s mobile market

IBM launched the first smartphone only 20 years ago. Nicknamed Simon, it weighed more than a half a kilo, cost more than EUR1400 in today’s money, and lacked a touch screen or web browser.

Today, at a Lisbon Council event in Brussels, The Boston Consulting Group released a new study we commissioned showing that, fueled by stiff competition, the mobile Internet economy in the Europe’s five largest economies generates annual revenue of EUR92 billion -- encompassing sales of devices, access, advertising, and everything you do on the mobile web. This slice of the economy has also created 250,000 jobs in Germany, the UK, France, Italy, and Spain.

By 2017, mobile revenue in these five countries will have more than doubled to about EUR230 billion - an annual growth rate of more than 25 percent. This boom doesn’t come from rising prices. To the contrary, it’s propelled by increasing affordability and accessibility. The average selling prices for smartphones in Europe are projected to fall almost 38 percent by 2017.

Importantly, BCG found competition occurring “at every layer of the mobile ecosystem - among service providers, enablement platforms and companies providing apps, content and services.” Competition is particularly intense among phone manufacturers and operating systems. As recently as 2010, the BlackBerry and Symbian platforms accounted for almost half of smartphone sales; today they represent less than five percent. Apple’s iOS, Google’s Android, and Microsoft’s Windows are locked in fierce competition, while new entrants include Amazon’s Fire, Xiamo MIUI, Firefox OS, and Tizen.

A big part of this success story is the flourishing app economy. More than 100 billion downloads took place in 2013 around the globe - about 20 billion in the European Union. Leading app store operators paid developers more than EUR12.2 billion between June 2013 and July 2014. Many of the world’s most dynamic app developers and mobile game operators are based here in Europe, including Finland’s Rovio, the developer of Angry Birds, UK-based Shazam, Wooga in Germany, and Sweden’s Spotify.

All told, the mobile economy is driving economic growth and jobs. The mobile web informs, entertains, and helps us navigate the world. I have no doubt that further innovation and new growth opportunities will mark mobile’s next 20 years!

Powering Italy’s exporters with the web

Before the Internet, almost all exporters were big, powerful companies. Exporting was expensive and time-consuming, requiring large sales, marketing and distribution networks. Today, thanks to the Net, almost any company, anywhere, and of any size, is able to reach a global market with a few clicks of a computer mouse. Italy represents a powerful case study and that’s why we are working with Unioncamere, Symbola Foundation and the Ca ‘Foscari University to expand our pathbreaking “Made in Italy Digital” program.

Italy needs to rediscover growth and increasing exports can help. The country’s powerful network of small and medium sized, family-owned companies are homes to craftsmen who produce niche products. Our program gives them tools to bring them online, aiming to help them export and reach global markets. Numerous studies have shown that companies that use the web to promote their business grow twice as fast as those who are not online.

On the program’s website,  a new section demonstrates how Google Trends, Global Market Finder, Consumer Barometer and Translate, allows companies to launch foreign subsidiaries. The Giovine family which has produced wines since 1850, recently started a blog and increased its social network activity - boosting sales by 5%. Galassia Ceramics gained 13,000 new visitors to its website, half from France and Spain. Ghirigoro T-Shirts & Accessories created a website - and boosted sales by 40 percent in 2014.

Along with the association of the Chambers of Commerce, Unioncamere, we have trained and supported with a scholarship 104 youthful “digitizers” and sent them in 51 chambers of commerce across Italy, where they provide face-to-face advice on how to approach and leverage the Internet. Our online portal offers another guide for companies wishing to meet the challenge of foreign markets. It is self-service. The eLearning path shows quick, easy solutions to selling online, launching social media marketing campaigns and much, much more, while the export toolkit to help SMBs understand their potential on several global markets and draft their export plan.

Despite these successes, much work remains to be done. According to Unioncamere, only 16 percent of its members have websites and engage in e-commerce. This means that the growth potential for Italy’s small and medium enterprises remains enormous. The task ahead is to embrace the opportunities offered by the Internet and spread global wings.

Promoting social mobility through the Internet

Policymakers often worry that the Internet creates a small number of winners and too many losers in the economy. At the same time, we have heard stories about the rise of self-employment and the creation of fast-growing companies in garages (like Google). In order to investigate the Internet’s impact on social mobility and equality, we asked British economist and former Chief Secretary to the Treasury, Kitty Ussher, to investigate.

Her new research, published this month, analyzed government data and Google Apps customers, and reached a surprising conclusion. Rather than worsening inequality, the Internet is improving the lot of economically vulnerable people across the United Kingdom. One example: the report shows that parents of young children are more likely to engage in online selling from home than singles. In other words, the Internet allow potentially vulnerable families convenient alternatives to traditional employment.

Interestingly, Internet success no longer requires PhDs. Nearly half of Google Apps customers surveyed whose highest qualification is a GSCE high school diploma, secured incomes of over £45,000. Another 20 percent earned between £30,000 and £45,000. These people achieved above average incomes through online selling, impossible before the Internet.

Success on the Internet can be achieved anywhere, with businesses from more remote parts of the UK taking advantage. As Ms Ussher concludes, “It is not just the uber-professional elite that is exploiting the commercial opportunities that the Internet has to offer.”

The Internet is a leveler. It offers new options to make a living regardless of one’s background or education. This new opportunity is paying dividends for families across the UK.

Seizing the digital opportunity in France

All too often, fast-moving, disruptive digital innovation is presented as the enemy of Europe’s enviable social system. The reality, according to a new study published this week in Paris by consultants Roland Berger, is that digital companies not only boost economic growth - they also increase worker satisfaction.

Launching the new Roland Berger Internet report
Berger studied 505 companies, all with more than 50 employees, classifying them in four categories by how much they use the Internet. Its study focused not on sexy Internet startups, but on traditional industries such as chemistry, energy or manufacturing. The conclusion was striking: new digital technologies are just as important in these traditional sectors as for high tech startups. The most “digital” grow six times faster than the “least digital”.

Given this finding, it is unsurprising that French companies sense the opportunity: some 57% interviewed put digital transformation as one of their medium term strategic priorities. Unfortunately, actions do not follow these intentions. Only 36% of French companies have a formal digital strategy and French corporate Internet engagement lags far behind French consumer use. While nearly six in 10 French people shopped online in 2013, only one French company in 10 sold online.

If more French companies embarked on the digital journey, Berger argues they would not only improve their performance - they also would please workers. Employees of the most digitally mature companies feel at least 50 percent more involved and happier in their professional life than those of the least matures ones. In a country famed for its quality of life, this is indeed an impressive finding!

Creating value from data

At Google, we like to experiment. Today we are experimenting with a guest blogpost from the UK innovation charity Nesta. Although we had no involvement in this study of how companies best can benefit from the information age, we think it offers a valuable contribution on Europe’s skills debate and wanted to share the conclusions.

We are living in the middle of a data explosion – a rich opportunity, but also a much
misunderstood one. In previous research, we showed that businesses which analyse their data intensively become 10% more productive than their average competitor. By contrast, collecting data on its own has little impact on performance.

Our newly published research, ModelWorkers, the first report in a project in collaboration with Creative Skillset and The Royal Statistical Society, looks at the data skills that businesses need to produce these impacts.

Model Workers
Interviews with 45 experts in UK data-driven companies reveal that all types of companies are converging into the ‘big data’ space. from pharmaceutical giants to small retailers and manufacturers. All are all experimenting with bigger, messier and faster data, and catching up with leading players in software, advertising, games and finance.

As a result, everyone is looking for the same ‘perfect data analyst’, or ‘data scientist’: a creative worker with analytical, coding and business skills, team working and charisma. These people are hard to find. Four out of five of the companies we interviewed say they struggle to find data scientists.

In Model Workers we identify interventions to remove these shortages. They include up-skilling established professionals such as statisticians, programmers and social scientists, developing vocational training in universities and encouraging more crossover between computer science, statistics and business disciplines. We also need to build up communities of data practice, and develop training and professional standards. Policymakers should make it easier for foreign students to work in Europe after completing data analysis courses.

In the longer term we need to improve the teaching of maths at schools, and change false perceptions of data work as boring and dull. Some of the most exciting and creative jobs across the economy today – from developing new games to discovering new drugs – are based on data, and we need to make sure everyone is aware of this crucial trend.

Driving Europe’s digital road to economic growth

For the past few years, Europe’s financial crisis has dominated economic debate. The Lisbon Council attempted this week to shift the discussion at its Europe 2020 summit to what policies are needed to move beyond the immediate crisis and build the foundation for future prosperity.

Google supports this agenda. We have worked with the Lisbon Council to launch its Innovation Economics Centre of excellence committed to shedding light on and providing scientific evidence of the profound impact of the Internet and digital technologies. At the Europe 2020 summit, our European policy head Nicklas Lundblad explained how the Internet represents a core component of any European growth strategy.

Top European officials participated, including European Commission President Jose Manuel Barroso and European Commissioner Neelie Kroes. European startups and innovators including Simon Schaefer, founder and CEO of Germany’s leading startup lab Factory, angel investor Sherry Coutu, and Spotify's Head of Product, Tech, IP and Policy Mark Silverstein urged them to end the continent’s present fragmented regulatory regimes, that forces companies must obtain separate permission to access each of the European Union’s 28 national markets.

At the summit, a new Digital Single Market study “Productivity and Digitalisation in Europe: Paving the Road to Faster Growth” was released. Written by Bart van Ark, chief economist of the research association called The Conference Board, it argues that Europe’s productivity, which is key to growth,is falling far behind America because it lags in intangible investments (see chart below) and adoption of digital technology across all sectors of the economy. As van Ark stressed “ the potential of digitisation to accelerate growth will come primarily from the use of these technologies by industries in non-ICT sector.” This should be a vision for the next European Commission.

In the addition, Dirk Pilat of the OECD, presented new evidence on contribution of young companies to the economy. 42% of new jobs come from startups and high-growth firms, which shows that policymakers in Europe should focus on enabling entrepreneurship and experimentation, rather than focusing only on SMEs and incumbents.

The event underlined how Europe enjoys a giant opportunity for the Internet to support economic growth and employment in Europe - as well as the risks of Europe being left behind related to lack of the digital single market and global scale, digital skills gap, excessive regulation or risks of emerging digital protectionism in Europe.

Google is committed to doing its part. We’re supporting a range of initiatives that help Europeans -- entrepreneurs, startups, and youth -- tap the potential of the net to start a business, reach global markets, and learn new skills and become employable. In Germany, we’re helping the country’s famed exporters find new customers, grow their businesses and maximize their online presence through a suite of digital tools. In Italy, we’re bring Italy’s famous artisan producers online. In Spain, we’re working with partners to create a 21st century workforce by helping people of all ages acquire new digital skills including coding and computer science. All the efforts are meant to send a single important message: in order to prosper, Europe needs to embrace the internet.

The real story behind high-tech jobs

We’ve all heard the damning indictment - technology destroys jobs. While it is true that the digital revolution disrupts the workplace - just as the Industrial Revolution swept away many artisan professions such as weavers - a new report by University of Leuven researchers tells a fascinating story of how the high tech revolution is, surprisingly, creating an explosion in non-high tech jobs in Europe. Indeed, for every one high-tech job created, more than four additional non-high tech jobs are created in the same region.

That’s not the only good news, either. Across the European economy, the high-tech sector is showing impressive signs of growth. The new research shows that high-tech employment grew 20 percent in the EU-27 between 2000-2011, while total employment increased by just eight percent.

Growth in high-tech jobs also has a positive spillover effect in local economies. The presence of high-tech workers in a region is likely to create additional work for a wide range of occupations - from lawyers, doctors and school teachers to taxi drivers, waiters and technicians.

This spillover is not limited to Europe’s biggest economies. While Germany contributed the most to total high-tech employment in Europe, it is relatively unexpected regions in Europe that saw the fastest growth in high-tech jobs. For example, Bratislava, Slovakia is one of the fastest growing regions for high-tech employment, growing at nearly 56 percent from 2000-2011. This contributes to the region’s high level of per-capita income and contrasts with assumptions that high-tech jobs are only in traditional hubs.

Not only is the high-tech sector outperforming other sectors in total employment growth, but its workers enjoy high rates of employment, a substantial wage premium (over 65% in some countries, like Portugual and Romania) and higher wage growth. With many economies struggling with stagnant wages, a vibrant high-tech sector makes a strong contribution to these countries.

So what lessons should we take from these findings?

First, that the EU’s pursuit of high-tech and digital job growth is worthwhile. The Europe 2020 strategy and recent agreements at the European Digital Council provide the opportunity to build on the success of the past ten years to support this vibrant part of the economy.

Second, we know that supporting high-tech jobs will benefit the wider economy. The high-tech sector is generating faster, higher-paying job growth across the EU-27, the knock-on effect of which is positive across the economy.

Third, investing in high-tech and digital skills will pay dividends. The difference in wages between STEM (science, technology, engineering and math) jobs and non-STEM jobs is high right across Europe. And with the high-tech jobs multiplier, supporting skills development in high-tech fields should create benefits beyond traditional high-tech industries.

As these jobs spread across the continent, it is clear that supporting high-tech industries will benefit the whole economy and make a substantial contribution to resolving the unemployment crisis facing many economies.

Made in Italy goes digital

Italy long has been famed for its quality of life, its fashion, its heritage and its food. We believe the Internet can help promote the Made in Italy lifestyle brand and the Google Cultural Institute has worked with the Italian Agriculture Ministry, Union of Chambers of Commerce, the University Ca' Foscarithe Symbola Foundation to launch an online platform designed to help bring Made in Italy online.

On the new platform, anybody, anywhere can discover hundreds of digital displays, stories, pictures, videos, and historical documents about Italian craftsmanship. Many of Italy’s most famous culinary and handcraft products are represented, from Parmigiano Reggiano cheese and Prosciutto di San Daniele ham to Murano glass and Montappone Hats. Little-known gems also can be uncovered such as Vercelli accordions and Ascoli Piceno lace.
Discover Montappone Hats
Many of the best Italian producers are small and medium sized, family-owned companies. They are homes to craftsmen who produce niche products. By bringing them online, we hope to help them export and reach global markets. Before, an American or Chinese buyer would have found it hard to obtain many of these Italian gems. With the new site, niche products no longer are forced into niche markets.

Online interest is growing in Italian “cultural” products. Google searches in these categories grew by 12 percent last year; fashion is the most searched category, followed by tourism and food. Even so, Made in Italy producers still lag with their digital activities: only 34 percent  of Italian SMEs have their own website and only 13 percent use it to do e-commerce.

Media partner Gruppo Editoriale L'Espresso, excited about the economic potential of the internet, dedicated an entire section to the project, focusing on examples of successful Italian entrepreneurs going digital. Savor this new digital platform - and encourage more and more Italian purveyors of the sweet life to benefit from the Internet.