How Digital Investments Differ by Industry

A number of industries will be spending much higher than the cross-industry average ($113 million mean, $11 million median per company). The big spenders include telecom (by far the most, at $189 million), banking and financial services ($142 million), and high tech ($122 million). (See Exhibit lll-6.). Media and entertainment ($38 million), CPG ($47 million), and utilities ($55 million) are the industries that will spend the least.

Exhibit lll-6: 2014 Spending on Digital Initiatives by Industry

Exhibit lll-6 2014 Spending on Digital Initiatives by Industry

However, ranking spending as a percentage of average company revenue, the biggest spenders by industry look a little different:

  • Media and entertainment: At 0.7%, these companies have the highest digital spending per dollar of firm revenue. This is likely because their products are quickly taking a purely digital form.
  • Telecommunications is next, at 0.6%, as the number of wireless customers has fast outstripped the number of landline customers. The number of wireless service subscriptions worldwide in 2013 was 6.8 billion – six times the number of landline phones.24
  • Banking and financial services, high tech, and retail companies are tied for third (0.5%). Banks have been digitizing their products through, for example, mobile
  • payments, as well as shifting their data into digital form online.
  • Across all 13 industries, digital spending as a percentage of total spending ranged from 0.2% (CPG) to 0.7% (media and entertainment). (See Exhibit lll-7.)

Exhibit lll-7 (Global Industries): Digital Spending as a Percentage of Company Revenue

Exhibit lll-7 Global Industries Digital Spending as a Percentage of Com

Industries spending the most on digital initiatives now expect to stay in the lead through 2017. Telecom, high tech, and banking forecast they will spend the most by 2017, along with energy companies. (See Exhibit lll-8.)

Exhibit lll-8 (Global Industries): Digital Spending by 2017

Exhibit lll-8 Global Industries Digital Spending by 2017

A global financial services executivetold us the company’s annual digital spending ($150 million in largely platform costs) might double or even quadruple after it develops a differentiated strategy. An executive from a major media company told us it is spending heavily on digital initiatives to remain relevant to its audience, which is increasingly consuming its content through digital channels such as smartphones.

Published reports about The Walt Disney Company have quoted stock analysts’ estimates of the cost of a single digital initiative, started three years back, in its Disney Parks and Resorts unit to be as much as $1 billion.25 Split equally over the last three years, that spending would account for about 2% of revenue annually at the $14 billion Parks and Resorts unit.26 Disney’ digital initiative, called MyMagic+, will let the 30 million visitors to Walt Disney World in Orlando preorder rides, seats for parades, and tickets for other events even before they arrive. Once they get there, they will wear digital bracelets called MagicBands that will function as room keys, credit cards, and tickets to rides.

Something Lost, Not Enough Gained
Industries Bringing Digital Products and Services to Market