IAB: The Economic Impact Of The Market-Making Internet

The internet economy grew seven times faster than the total US economy during the past four years and now accounts for 12 percent of the US GDP, that’s according to a new study from Interactive Advertising Bureau (IAB) and Harvard Business School.

To be exact, the internet economy’s contribution to the US GDP grew 22 percent per year since 2016, in a national economy that grows between 2 to 3 percent per year. In 2020 alone, the internet economy contributed $2.45 trillion to the nation’s $21.18 trillion GDP.

IAB’s 136-page report, “The Economic Impact of the Market-Making Internet – Advertising, Content, Commerce, and Innovation: Contribution to U.S. Employment and GDP,” is the fourth in a series of reports that measure the economic value of the commercial internet, published every four years since 2008.

Since IAB began measuring the economic impact of the internet in 2008, the internet’s contribution to GDP has grown eightfold, from $300 billion to $2.45 trillion.

The commercial internet generated more than 17 million jobs in the US, 7 million more than four years ago. This marks a dramatic increase compared with just 3 million jobs when IAB began measuring employment growth in 2008.

IAB’s research estimated that 850,000 people are self-employed and 450,000 work for small businesses in jobs that couldn’t exist without the internet.

The study also found that the commercial internet directly generated 7 million jobs and indirectly provided jobs to another 10.65 million people fulfilling service needs created by internet-based companies.

In addition, more internet jobs—38 percent—were created by small firms and self-employed individuals than by the largest internet companies, which generated 34 percent.

Upon analyzing thousands of smaller firms as aggregations, IAB estimates that those with annual revenues over $40 million created 27 percent of the internet’s jobs, and firms under $40 million created 19 percent of the internet’s jobs. Self-employed individuals and people working in small teams of five or fewer people made up a further 19 percent of the internet job total.

In the online creator economy alone, there are 200,000 full-time equivalent jobs (FTE), just short of the combined memberships of craft and labor unions SAG-AFTRA (160,000), the American Federation of Musicians (80,000), the Writer’s Guild (24,000) and the Authors Guild (9,000), according to the IAB.

That 200,000 figure, when combined with Airbnb hosts, Uber and Lyft drivers, Amazon flex drivers, Instacart workers, Amazon sellers, eBay sellers, Esty sellers, Craigslist sellers, Shopify-enabled websites and WooCommerce-enabled websites, adds up to a total of 1.3 million FTE self-employed jobs and jobs in teams of five or fewer people.

Platforms like Airbnb, Uber, DoorDash and Instagram directly employ more than 26,000 people in the US and sustain over 632,000 FTE jobs among independent workers on the platforms.

In 2020, podcasting, streaming video and digital gaming, which IAB notes “barely existed as industry segments when we did our first study in 2008,” employed 34,000 people and generated more than $40 billion of US revenue from internet-related activities. 

IAB also found that more than half of the employment in the advertising and media fields is internet-related, while digital entertainment companies doubled their employment during the last four years.

Additionally, news and information companies like Bloomberg and Thomson Reuters, digital publishers like Vox and The Knot, and multi-platform publishers such as Reddit and Hearst employed more than 142,000 people in internet-derived jobs in 2020, three times the 46,000 they employed in 2008, and 73 percent more than they employed in 2016.

With 2020 US ecommerce revenues of $213 billion, Amazon is the largest ecommerce firm. The next nine US ecommerce companies generated $118 billion in revenue, which is 46 percent of total 2020 US ecommerce revenues, according to the report.

The study also highlights congressional districts’ dependence on internet-dependent jobs. Seven congressional districts have at least 10 percent of their residents working directly in the internet ecosystem, accounting for 9 percent of total US internet employment. The remaining 91 percent of internet employment is spread across 425 congressional districts. Of those, 272 districts have at least 10,000 internet-dependent jobs.

So too was the human resources (HR) function. Prior to 2016, IAB found no firms producing internet software for use by corporate HR departments. In 2016, IAB attributed 5,600 jobs to HR software development. Four years later in 2020, IAB found 83,000 jobs, a 13-fold increase.