Digital innovation: the dynamics of the Italian market

Andrea Lamperti
Direttore di Ricerca degli Osservatori Digital Innovation del Politecnico di Milano

Digital innovation is the most important lever through which Italian companies can gain competitiveness.

But what are the areas in which it is impacting the most? An exhaustive overview comes from the data collected by the Observatories of the Politecnico di Milano on the Italian digital market. Let's see them:

  • The Italian e-commerce market

Digital has revolutionized the consumer’s buying process, and this is not limited to the purchase of products and services on the Web but also includes the habit of looking for information on digital channels before making a purchase choice.

The Italian online market came to be worth 27 billion euros in 2018, registering a 15% growth compared to the previous year. One third of the digital expenditure occur in the Tourism & Transport sector, which reaches almost 10 billion euros (+5% compared to the previous year).

Other sectors that are growing a lot include Informatics & Electronics, Clothing, Furniture & Home Living, and especially Food & Grocery, with rates that reach 40% and more. This indicates how the purchase of these products and services passes increasingly through digital channels and not only in physical stores.
 

  • The Italian digital media market

Digital innovation has also revolutionized content sharing on media channels. We are talking about services like subscriptions to video and music streaming, podcasts and online news.

In Italy, the sector is driven by videos: in fact, subscribing to video sharing services (think of Netflix for example) has become a widespread habit, and there’s been a significant growth of new Italian broadcaster services. This area is worth 122 million euros.

The way we watch TV series, programs and look for information has changed a lot, but we can say with certainty that videos have had an impact on the entire online communication: think of how central this type of content is in Digital Marketing strategies.

 

  • The Italian advertising market

How is the expenditure of the advertising market distributed in Italy, across the various media? And how did it use to be?

Comparing 2018 and 2008, we can highlight several changes: while TV remains quite stable (it still occupies the first position, with a budget going from 54% to 48%), which confirms the importance of video content. The Internet channel has virtually replaced press, in the last ten years.

If 10 years ago 30% of the total expenditure was destined to printed adv, now 34% (so a third of the total) is destined to online adv. We are talking about OTT platforms, big international players such as Google and Facebook, which alone hold more than 70% of the advertising market and therefore collect a large part of the advertising budget of companies.

 

  • The IoT (Internet of Things) market in Italy

The world of connected objects, which allows us to communicate with them to simplify our everyday life, in 2017 was almost worth 4 billion euros in Italy, with a growth of over 32% compared to the previous year.

The most significant investments in IoT occur in the Smart Metering&SAMs- the so-called smart counters - so in the Utilities sector. Also growing are the budgets for Smart Cars (+47%), Smart Logistics (+45%) and Smart Cities (+40%), and especially Smart Asset Management (+75) with the appearance of advanced home automation enabled by smartphones.

 

  • Internet of Value: the blockchain

We are witnessing an important paradigm shift: we are moving from a network of connections to a network that transmits value. It is the so-called Internet of Value: a digital network of nodes that transfer value, in the absence of trust from a central entity; through a system of algorithms and cryptographic rules, it allows to get consensus to make changes on a shared register that keeps track of value transfers through unique digital assets.

In practice, it is a network that self-certifies itself. The technology behind this paradigm is the blockchain: in it, information is structured as a shared chain of blocks. Its advantages include high traceability for transactions and security.

Although the blockchain is usually applied to the world of finance, investments have also been made in application projects in other areas such as government, logistics, media and communication. One could certify, for example, that an advertising investment was successful, and has been positioned exactly on the desired website and place.