Despite the clear, measurable benefits of search to the economy, it would be a mistake to think about
search only in terms that are easy to quantify. For example, search helps people find information in times
of emergencies and helps them seek out people with similar interests—perhaps a support group for
those coping with disease. Search also shifts the balance to empower individuals or small organizations
with something to share that would otherwise reach only a small audience. None of these types of
benefits may be easy to measure, but they are powerful nevertheless.
There are, of course costs associated with search. Though we do not examine them deeply in this
report, we do recognize potential negative impacts, particularly for individual businesses - e.g., many of
the gross benefits come at the expense of other companies, or potential losses where search facilitates
piracy or undermines intellectual property protection.
Search continues to evolve rapidly as a result of changes in user behavior; the content that is
searchable; search technology; where search occurs—for example, within social networks and on new
devices; and the arrival of new participants in the search market.
The size of search can be hard to conceive. More than onetrillion unique, worldwide URLs were indexed
by Google alone by 2010.
of online users use search engines, and search represents
10percent of the time spent by individuals on the Web, totaling about four hours per month.
workers in enterprises spend on average five hours per week, or 12percent of their time, searching for
The list could go on. People and organizations are in love with the utility of search.
In retrospect, it was inevitable that search would become so big. The power of Moore’s and Metcalfe’s
meant that it became easy and cheap to capture, digitize, and store massive amounts of information;
the explosive growth of Internet usage meant the creation of still more Web content; and the efficiency of
online transactions lured commerce and business online. As a result, a mechanism for discovering and
organizing Internet information became imperative, and search was born. Users could now find what they
wanted, and providers of information, products, and services could locate the right audience at negligible
cost, encouraging still more content.
But the way people search has since added another dimension to its utility. When people search online,
they are signaling information about themselves: what they are looking for, when, and in what context—for
example, the Web page they visited before and after the search. Such information can be harnessed by
those seeking to deliver more relevant content or advertising, often a source of value to providers and
search users alike, though it is this dimension that also raises debate about privacy.
How should one think about the value of all this search activity? Often, it is considered in terms of the
profits made by the search industry—that is, those that provide search capabilities and search marketing
services. A very rough estimate of the industry’s profit margins
would indicate that, in the United States,
an average search is worth three cents in profit to these companies. Yet the figure comes nowhere near to
capturing a sense of the real worth of search if you consider even for a moment the very different ways in
3 http://googleblog.blogspot.com/2008/07/we-knew-web-was-big.html [Retrieved April 29, 2011].
4 ComScore qSearch.
5 McKinsey & Company for IAB Europe, Consumers driving the digital uptake: The economic value of online
advertising-based services for consumers, September 2010.
6 The hidden costs of information work, IDC white paper, March 2005, corroborated by McKinsey primary
7 Moore’s Law, ﬁrst described by Intel cofounder Gordon Moore, states that the number of transistors that
can be placed on an integrated circuit doubles approximately every twoyears. In other words, the amount
of computing power that can be purchased for the same amount of money doubles about every twoyears.
Metcalfe’s Law, attributed to Ethernet inventor Robert Metcalfe, states that the value of a telecommunications
network is proportional to the square of the number of connected nodes in the system.
8 Typically, Internet search engines and classiﬁed search generate proﬁt margins in the range of 20 to
40percent, and search engine optimization (SEO) companies generate 10 to 20percent proﬁt margins (based
on McKinsey analysis of returns from public companies in 2008).
The impact of Internet technologies: Search
which individuals and organizations use it. Much more value is being created in the “search value chain” and
captured by market participants outside of the search industry.
How search unlocks value
Most literature to date has looked at and quantified only three ways in which search creates value: by saving
time, increasing price transparency, and raising awareness.
Our research suggests this underestimates value creation from search, because there are additional
sources of value. Some of these can be estimated in financial terms. Others cannot, either because they
are difficult to measure or because they create value to society that may not have direct financial worth. For
example, it is hard to gauge the value of search, financial or otherwise, to students in developing economies
who find course materials made available online by world-class universities.
In all, we identified nine sources of search value:
Better matching. Search helps customers, individuals, and organizations find information that is more
relevant to their needs.
Time saved. Search accelerates the process of finding information, which in turn can streamline
processes such as decision making and purchasing.
Raised awareness. Search helps all manner of people and organizations raise awareness about
themselves and their offerings, in addition to the value of raised awareness from an advertiser’s
perspective that has been the focus of most studies.
Price transparency. This is similar to “better matching” in that it helps users find the information they
need, but here, the focus is on getting the best price.
Long-tail offerings. These are niche items that relatively few customers might want. With the help of
search, consumers can seek out such offerings, which now have greater profit potential for suppliers.
People matching. This again entails the matching of information but this time focusing on people, be it
for social or work purposes.
Problem solving. Search tools facilitate all manner of problem solving, be it how to build a chair, identify
whether the plant your one-year-old has just swallowed is poisonous, or advance scientific research.
New business models. New companies and business models are springing up to take advantage of
search. Without search, many recently developed business models would not exist. Price comparison
sites are a case in point.
Entertainment. Given the quantity of digital music and video available, search creates value by helping
to navigate content. For a generation of teenagers who pass on TV to watch videos on YouTube instead,
search has also enabled a completely different mode of entertainment.
This list is not exhaustive —and there are other sources of value that result from the nine above, e.g.,
lowering production costs, and speeding innovation, through better matching,
The value of search: Who benefits and how?
Search affects the activities of individuals and all sorts of organizations, so we cast our research net wide
when trying to assess its value. We wanted to look at its impact on businesses, individuals, and public
service entities, and so we examined 11 constituencies within these main groups—for example, advertisers
9 Proﬁts by search industry are BOTH an over and underestimate of search’s value: some proﬁts come at
expense of other media; much of value does not convert to proﬁt, e.g., value that accrues to consumers and
and retailers in business, and health care and education in public services—analyzing how the nine sources
of value affected each.
The results should be regarded as case studies that demonstrate the value of search rather than as a
fully exhaustive analysis. If the task of quantification was too uncertain for some sources of value—such
as calculating the value of better matching for retailers—or if the value was likely to be minor, it was not
included in our analysis.
The study showed that value accrues to all constituencies. The three most-studied sources of search
value—time saved, raised awareness, and price transparency—are important. However, the study
illustrated the additional impact of the other six sources of value, emphasizing the extent to which previous
views of how search creates value have been too narrow. Exhibit1 describes the sources of value for each
Here are some examples of how the different constituencies benefit from search:
The value of search to retailers was estimated in 2009 at 2percent of total annual retail revenue in
developed countries and 1percent in developing ones. That is equivalent to $57billion to $67billion in
the United States and $2.1billion to $2.4billion in Brazil.
Search-enabled productivity gains enjoyed by knowledge workers in enterprise were worth up to
$117billion in 2009 in the five countries studied. The figures ranged from $49billion to $73billion in the
United States to $3billion to $4billion in Brazil.
10 Estimated based on three methods: the methodology in Hal R. Varian, “Online ad auctions,” American
Economic Review: Papers & Proceedings 2009, Volume99, Number2, pp.430–34; McKinsey primary research
in its digital marketing survey in 2007; and comScore and Nielsen data on total searches with an applied
11 Estimated based on 10 to 15percent productivity gain for knowledge workers in each country; number of
knowledge workers based on International Labor Organization ﬁgures for France and Germany and McKinsey
estimates; hourly wages based on IDC data.
Primary sources of value from search
Individual content creators
Individual information seekers
New business models
Sources of value
The impact of Internet technologies: Search
We calculated that the value created for consumers was worth around $20 per consumer per month in
France, Germany, and the United States in 2009, and $2 to $5 in India and Brazil.
Depending on geography, 30 to 60percent of all Internet users—that is, some 204million people in
the five profiled countries—create their own content.
The shares are higher in developing countries
than in developed countries. It is hard to measure the value of search to these people, to the extent it
helps make their voices heard. However, the sheer number of those who create content to express
themselves in one way or another helps explain the power of social networks to influence social
dynamics around the globe.
The economic value of search
Just how much is search worth? To date, no one has looked at its economic contribution at a country level,
let alone a global level.
The analysis showed that search activity had measurable impact approaching gross annual value of
$780billion in 2009,
similar to the GDP of the Netherlands or Turkey,
and making each single search
worth around $0.50.
It should be remembered that this is only a partial estimate of the gross value of
search, limited as our research was in terms of the number of constituencies and sources of value analyzed.
In addition, the speed at which the search environment grows makes it likely that this figure has already
been surpassed. Exhibit2 shows how the value was divided among the five countries studied.
13 Estimated in 2009 dollars, calculated by applying averagepercentage of GDP attributed to search of France,
Germany, and the United States to all developed countries and averagepercentage of GDP attributed to
search to all emerging countries; McKinsey analysis. Note that this gross annual value includes value that is
not captured in GDP statistics (e.g., consumer surplus), and that the portion that is captured in GDP statistics
includes both the direct contribution of Internet sales and the indirect contribution of ofﬂine sales inﬂuenced
by the Internet.
14 International Monetary Fund.
15 ComScore qSearch estimates 1.6trillion searches conducted per year.
Gross value created by search across countries, 2009
1 These are only estimates and should not be taken out of context of the accompanying text.
2 These values are conservative. They include only quantified estimates and do not include value that we did not quantify, such
as the improvement in the quality of a consumer’s shopping experience from better matching.
Not all of this value shows up in GDP
—e.g., many consumer benefits, such as lower prices or the time
consumers save, are not captured in these numbers. Some of these are likely to have an indirect impact
on GDP. Some sources of value in education and health care that we did not quantify also boost GDP
indirectly. The estimate of GDP impact should therefore be taken as conservative. It is nevertheless
significant. The research showed gross value of $540billion, or 69percent of the measurable value, flowing
through to GDP. This is roughly the nominal size of the global publishing industry in 2010
GDP in 2010.
Exhibit3 shows that this represents between 0.5 and 1.2percent of GDP in each of the countries studied.
The difference in the extent to which search contributes to GDP in developed and developing countries—
around 70percent and 40percent, respectively—can be explained by the much largerpercentage of
total value that is captured in developing countries as a consumer surplus, which is not included in GDP.
This is reflected in Exhibit4, showing that in the developed countries studied, individuals capture around
30percent of measurable search value. In developing countries, the figure is around 60percent. The exhibit
also indicates the extent to which search value is underestimated if the gauge to profits earned by the
search industry is narrowed. Only 4percent of the value measured is captured by that industry globally.
Despite the clear benefits of search to the economy, it would be a mistake to think about search only in
monetary terms. Search assists people in myriad ways in their daily lives. It helps them to find information
in times of emergencies, for example, and to seek out people with similar interests—perhaps a support
group for those coping with disease. Importantly, it also shifts the balance to empower individuals or small
organizations with something to share that would otherwise reach only a small audience. None of these
may have economic value, but they affect people’s lives.
16 We estimated GDP impact using an income approach.
17 Global Insights, Q2 2011 forecast. Includes publishing of books, brochures, musical books, newspapers,
journals and periodicals, recorded media, and other publishing.
18 International Monetary Fund.
Value created by search across countries, 2009
Contribution to GDP1
1 Represents only the portion of value that is attributable to GDP(e.g., the 73% of $242 billion in the United States).
%; USD billions
Documents you may be interested
Documents you may be interested