Google Generated $54 Billion For Economy

Google is well-known as a search engine, but the company would also like to be thought of as an economic engine.

At a media event in Oakland, Calif., on Tuesday, Google revealed its economic impact on the U.S.

In 2009, the company generated $54 billion worth of economic activity for American businesses, according to a report that Google released.

Whether "generated" is a more appropriate word than, say, "channeled," remains open to debate. Google is basing its financial impact estimate on its claim that businesses make an average of $2 in revenue for every $1 spent on AdWords, a finding published by Google's chief economist Hal Varian last year.

"For the first time, Google is announcing the economic impact that we have in the State of California and in 49 other states," said Dennis Woodside, VP of Google's North American and Latin American advertising sales and operations teams. "People think about Google as a search engine. The reality is Google is an engine of economic growth for small businesses."

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Woodside described Google's decision to release the information as part of its effort to operate with transparency, a goal also reflected in the company's disclosure on Monday that it shares 68% of AdSense for content revenue and 51% ofAdSense for search revenue with its publishing partners.

Google's Economic Impact report can also be thought of as complementary to the company's outreach to quiet calls for antitrust action against the company.

The venue for Google's announcement was one of the businesses that Google's advertising has helped: Happy Hound, a boarding facility for dogs in Oakland.

Suzanne Gotter, owner of the 33-person company, started her business six years ago with an empty warehouse. Realizing that she needed to advertise to attract pet-owning clients, she turned to Google AdWords.

Within twelve months, she had more dogs than she could accommodate and within two years, she had a waiting list of clients. She's planning to open a second location in 2011.

She says she's getting from 5 to 15 new clients a week, 70% of whom discover her business through Google.

Currently, she says she's spending $400 per month on AdWords and the ROI is "phenomenal."

David Crane, special advisor for jobs and economic growth to California Governor Arnold Schwarzenegger, attended the event and spoke briefly in support of Google's contributions to the state. Google, he said, is producing $14 billion for the State of California and people don’t know it.

People also don't realize that small business growth drives employment in California, he said.