An additional £1.4 billion revenue may be generated through website sales, if the Government’s Digital Britain Universal Service Commitment (USC) to ensure that every home in the UK has access to 2Mbps broadband by 2012 goes ahead. This is according to research published by the IPA today (25th February 2010).
This figure is based on extrapolations from existing statistics by the Office of National Statistics (ONS). These show that while there were website sales totalling £104.7 billion in 2008, 4.9 per cent of UK internet users were still relying on slow dialup connections.
New evidence* provided by the IPA’s Search Group experts reveals that visitors with a high speed internet connection (DSL,Cable, T1, OC3) are 36.9 per cent more likely to make an online purchase than those with low speed internet connection (dialup).
Under the Government’s USC strategy, the 4.9 per cent of dialup users would be provided with a much faster connection which, on the basis of existing user behaviour, would have a dramatic effect, increasing their internet website visit to conversion rate by 36.9 per cent and leading to an increase in e-commerce of £1.4 billion.
Rob Taylor, Founder, TST Digital, who carried out the research on behalf of the IPA Search Group, says: “It’s evident from this research that the Government’s Digital Britain initiative represents a great opportunity to drive economic growth and competitive advantage. Not only could the higher connection speeds result in £1.4 billion more money directly entering the digital economy, it is also likely to lead to more jobs and greater digital expertise, not to mention a fantastic return on investment.”
Says Mark Fagan, chairman of the IPA Search Group: “Clearly we’re assuming that the behaviour of the 4.9% who currently use a slow internet connection is going to follow the pattern of those who have gone before in graduating to the fast internet experience. But even if they only increase their online purchasing by half that of their peers, it would still represent an enormous amount of additional e-commerce. Having observed how quickly even the most unlikely people adopt new online behaviours when it’s a much more user-friendly experience, I know where my forecast lies!"
Says Nigel Gwilliam: “It has been known for some time that access to broadband fundamentally changes internet behaviour, but this is the first time we have been able to put a plausible estimate on the direct business effect of universal access in the UK. Obviously these forecast e-commerce revenue increases will be largely at the expense of the bricks and mortar businesses, but given the efficiencies involved, these should be more profitable sales, and will increase the ability of newly emerging companies to build a business despite the power of the multiples which dominate so many market sectors. ”
Says Hamish Pringle: “We very much hope that the IPA Search Group forecast gives the Government a bit more confidence in delivering on Lord Carter’s vision and that his fellow peers will see the potential financial benefits that will accrue to UK plc. From the advertising, media and marketing communications industry perspective we also see the Universal Service Commitment as a key element in maintaining our leadership position as ‘Creative Britain.”
View the methodology here.*Based on 26 anonymised data sets representing a total of 63,497,522 visits to websites, which converted to 2,403,032 sales. A feature of the website analytics systems used for monitoring e-commerce performance is the ability to segment visitors to the website by internet connection speed and view how well each of those convert to sale.