Digital Economy - What is it and why is it important

Digital Economy - What is it and why is it important

What is Digital Economy?

Definition

The digital economy is the economy that comes from the digital conversion of traditional economic activities driven by the internet, electronic means, and data. The transformation of traditional economic activities, products, and services into digital form results in the digital economy.

In the traditional economy, businesses depend on print advertisements and word-of-mouth to reach their targeted audience, whereas the digital economy uses digital platforms, social media strategies, search engine optimization (SEO), and other digital marketing techniques to promote their businesses and reach their targeted audience.

Billions of connections between people, devices, data, and businesses result in the digital economy, which, since it is a global and interconnected economy, is not limited by geographical boundaries.

Features of the digital economy

Digital economy-1

Types of the Digital Economy

The digital economy has created business opportunities and had a positive impact on the global economy. There are mainly three types of operators in the digital economy that have helped operate the business in different ways.

There are three main types of digital economy operators:

Platform providers: Companies that provide online platforms and allow users to interact are considered digital economy operators. Example of digital economy platform provider includes social media companies, online dating sites, and online marketplaces.

Content providers: Companies that provide digital content to users are considered digital economy operators. Examples of content providers include streaming media companies, online publishers, and app developers.

Infrastructure providers: The companies that can provide the basic infrastructure that powers the digital economy Examples of infrastructure providers include cloud computing companies, data center operators, and telecommunications companies.

 

How does Digital Economy work?

The digital economy works in a similar way to the traditional economy, but it has some key differences. Now business operations have also changed, there are new business models and innovative products and services.

The traditional way of doing business is dependent on word-of-mouth referrals and advertising through print media. The traditional economy includes the exchange of currency notes for goods and services, whereas, in the digital economy, the business, products, channels, and currency are all digitized.

Digital Economy Components

The key components identified by American statistician and economist Thomas Mesenbourghg are:

- E-Business Infrastructure

The E-business infrastructure component of the digital economy refers to electronic systems that are used by businesses to conduct their operations. This contains the hardware, software, networks, and data storage systems that collectively help in defining E-business infrastructure.

- E-Business

E-business is the use of electronic systems to carry out business activities. The process of buying and selling and the marketing, production, and delivery of goods and services on digital platforms comes under E-business.

- E-Commerce

E-commerce refers to the buying and selling of goods and services through electronic systems. Exchanging money, goods, and services between businesses and consumers is part of the E-commerce component.

The digital economy is more complex than these above-mentioned components, e-governance, e-banking, and many more are being added with the advancement of technology and emerging business models.

 

What is the importance of the Digital Economy?

Digital economy-2

 

The traditional economy's constraints were completely overcome by the digital economy, whether it is in terms of manufacturing, marketing, or trade.

Business operations are being transformed by the digital economy, which has also created immense opportunities. Additionally, it has influenced consumers and changed their behavior.

Today, it is one of the most important catalysts for innovation, growth, and job creation.

The rise of the digital economy is important as it covers different aspects of business, which include:

-Cost reduction: The digital economy, which comprises the latest technology, has made it possible to reduce costs for businesses with respect to marketing, production, and supply.

It has replaced traditional business methods with digital ones by reducing costs in many areas of business operations.

-Aids in reaching more people: Businesses are exposed to a large platform that allows them to reach new markets and customers. Because of the internet's global nature, the digital economy easily connects people and allows businesses to reach people all over the world.

-Improves Efficiency: Because businesses now have access to better tools and technology, they can work more efficiently and use data to improve their market performance by making data-driven decisions.

-Leads to Innovation: Since the digital economy digitizes business processes, it leads to innovation. The business can experiment with innovative ideas and use technology to produce, market, and sell its products and services.

-Creates New Jobs: Because of the digital economy, businesses are digitized, which has produced new job opportunities. The new businesses and startups have created new job roles like digital marketing, data mining, big data analysis, data science, etc.

 

What are Examples of Digital Economy?

Various companies have upended their respective markets, resulting in the digital transformation of the current economy. All the successful organizations in the 21st century are driven by digital technology.

Some of the most notable examples are listed below:

Uber

Uber is a call-to-trip service where, with a tap of a button, users can book a ride. The company uses technology to connect riders to drivers with an application on a smartphone. The company was founded in 2009 and is now providing service in 71 countries and more than 890 cities.

The company has replaced the traditional taxi industry by incorporating technology into the usual taxi booking settings. It has given rise to an entirely new business model called the aggregator business model.

Netflix

It is a popular streaming service that is available as an app and offers a wide range of TV shows, movies, and documentaries with access to the internet. Today, Netflix has over 222 million subscribers in 190 countries. Recently, the company has successfully produced its own content.

Airbnb

It is an online marketplace where people can list, find, and rent vacation homes. The company was founded in 2008 and is available in 220 countries and more than 100,000 cities.

The online platform has disrupted the traditional hotel industry and given rise to the sharing economy.

Amazon

Amazon invented the idea of e-commerce and introduced markets and commerce to the Internet. The business began as an online bookstore but quickly expanded into other markets, including the sale of electronics, apparel, food, and other products.

With almost 600 million active users per month, Amazon is now the most popular e-commerce site worldwide. The business has also created a line of goods that are well-liked by its customers.

Conclusion

The article shows how the digital economy has taken the place of traditional economics and how business operations have changed to reach targeted customers.

The digital economy has compelled businesses to improve their services and give customers exactly what they want. New business and employment opportunities are made possible by platforms like the digital economy.

Check out the Digital Marketing Masters Program Certification Training offered by Sprintzeal. This course is highly reputed to help candidates begin a successful career in digital marketing.

Read more blogs to cover

SEO in Digital Marketing - How Does It Work?

Top Digital Marketing Tools 2022

The future of Digital Marketing

Subscribe to our Newsletters

Niharika Chaurasia

Niharika Chaurasia

Niharika is a technical content writer in the education niche with vast experience in creating content for certifications and training programs. She creates engaging, easy-to-understand, and valuable content for both beginners and professionals aspiring to enhance their careers.

Trending Now


Top Google Chrome Extensions for Online Marketers in 2024

ebook

11 Most Common Misconceptions About SEO in 2024

ebook

Guide to Banner Advertising for Google Ad Sense and Other Ad Networks

ebook

Brand Managers Guide 2024

ebook

Digital Marketing – Benefits, Types, Certifications and Jobs

ebook

Red Bull's Extreme Marketing Strategies: Gives You Wings

Article

Latest Digital Marketing Manager Interview Questions and Answers 2024

ebook

Top SEO Topics and Concepts – Role of SEO, Google, and AI with SEO

ebook

Digital Marketer Interview Questions and Answers 2024

ebook

Fundamentals of Digital Marketing 2024

ebook

Best Digital Marketing Books for 2024

ebook

On Page SEO Guide

Article

Digital Marketing Plan - How to Create and Execute it

ebook

Brand Marketing Strategy Guide

Article

YouTube Marketing Guide 2024

ebook

Career in Digital Marketing - A Complete Guide

ebook

SEO Optimization Tips for 2024

ebook

Career in Advertising - The Beginner's Guide

ebook

Affiliate Marketing - A Comprehensive Guide for Beginners

ebook

CPA Marketing Guide 2024

ebook

Search Engine Marketing - A Guide for Beginners

ebook

Top Digital Marketing Tools 2024

ebook

The future of Digital Marketing

ebook

Conversational Marketing - The Ultimate Guide 2024

ebook

Coca Cola Marketing Strategy - A Case Study

ebook

Tesla Marketing Strategy: Key Lessons to Learn

ebook

Digital Marketing Challenges & Solutions in 2024

ebook

SEO in Digital Marketing - How Does It Work?

ebook

How to Create a Social Media Marketing Strategy

ebook

Email Marketing for Beginners - Tips, Tools and Advantages

ebook

Colors for Marketing: Psychology of Colors for Your Brand

ebook

LinkedIn B2B Marketing Guide

ebook

What is PERT? How to use PERT in Project Management?

ebook

A Beginners guide to LinkedIn Marketing in 2024

ebook

Traditional Marketing vs Digital Marketing: How to Choose?

ebook

Types of Infographics - When and How to Use

ebook

What is Digital Leadership? A Brief Guide

ebook

Digital Marketing Tips for 2024

ebook

Online branding - Examples & Strategies

ebook

Amazon Marketing Strategy – A Brief Guide

ebook

Netflix marketing strategy- An overview on marketing tactics of Netflix

ebook

IKEA Marketing Strategy - An Inspiring Finding from the Case Studies

ebook

Nike Marketing Strategy 2024 - 7 Effective Findings from Case Studies

ebook

Discover Starbucks Marketing Strategy: The Success Secret

ebook

McDonalds marketing strategy: Inspiring Findings from a Case Study

ebook

What is Online Networking? How Can It Benefit Your Career Success?

ebook

Microsoft’s Market Success Strategy: A Case Study

Article

Career Opportunities in Digital Marketing - A Complete Guide

Article

Social Media Marketing Fundamentals for Business Growth

ebook

Crafting an Effective Social Media Strategy

Article

PepsiCo's Marketing Strategies: Battle of the Colas

Article

Trending Posts

CPA Marketing Guide 2024

CPA Marketing Guide 2024

Last updated on Nov 27 2023

Affiliate Marketing - A Comprehensive Guide for Beginners

Affiliate Marketing - A Comprehensive Guide for Beginners

Last updated on Jul 10 2023

Red Bull's Extreme Marketing Strategies: Gives You Wings

Red Bull's Extreme Marketing Strategies: Gives You Wings

Last updated on May 29 2024

Career Opportunities in Digital Marketing - A Complete Guide

Career Opportunities in Digital Marketing - A Complete Guide

Last updated on Nov 3 2023

Digital Marketing Challenges & Solutions in 2024

Digital Marketing Challenges & Solutions in 2024

Last updated on Feb 5 2024

A Beginners guide to LinkedIn Marketing in 2024

A Beginners guide to LinkedIn Marketing in 2024

Last updated on Feb 27 2024