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Tuesday, November 28, 2006
Google expects major Web business growth in decade
Convenience to fuel move, exec says
Google Inc., the world's most-used Internet search engine, expects as much as 40 percent of business transactions to be conducted on the Web, or influenced by it, in 10 years time as more consumers go online.
Use of the Internet will continue to increase with wider access, more opportunities to create user-generated content and increased storage capacity, Google's vice president for European operations, Nikesh Arora, said Monday at a Confederation of British Industry conference in London.
Only 16 percent of the world's population, or about 1 billion people, are online, but that 16 percent represents 85 percent of the world's gross domestic product, he said. In Britain, broadband penetration may rise to 75 percent by the end of the decade from 60 percent now, Arora said.
"There was a time when people were loath to touch the Internet because they were scared of credit-card fraud" and misuse of data, Arora said. "Now what is fascinating is people are beginning to use the Internet when they are looking for convenience. The first port of call happens to be the Web."
Consumers haven't yet decided which brands they like on the Internet, which gives businesses a huge opportunity, Arora said.
"You can go ahead and create a brand preference in their minds if you actually spend some time thinking about how to treat the Internet as part of the overall media-making, as part of the overall customer-engagement opportunity," he said.
Google bought YouTube Inc. this month for $1.65 billion to tap the market for online video, the fastest-growing segment of Internet advertising. Internet video ad spending in the U.S. is projected to more than triple to $1.3 billion in 2008 from $410 million this year, researcher EMarketer Inc. said this month.
The Internet also gives businesses the chance to target consumers in different countries, Arora said. In the future, businesses may center around using the "most competent" regions to carry out particular tasks, he said.
"It is not unreasonable to expect that in five to 10 years it may not be companies competing with each other, it may be supply chain models competing with each other," he said.
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