Google: $54 billion impact of search and search ads in US

Google's AdSense and AdWords products have a huge effect on state economies, the company says

Google's search service and search advertising products generated an estimated US$54 billion for U.S. businesses, Web site publishers and nonprofit groups in 2009, according to a study the company has released.

The Internet giant on Tuesday released its first state-by-state breakdown of the economic activity it enables through search and search advertising, ranging from a $14.1 billion impact on California's economy in 2009 to $15.9 million in Alaska. Six states -- California, New York, Florida, Illinois, Texas and Washington -- accounted for $32.8 billion of the $54 billion of economic activity Google identified in the study.

The Internet and Google advertising "level the playing field" for U.S. small businesses wanting to compete with larger rivals, said Claire Hughes Johnson, vice president of global online sales at Google.

Business owners from Louisiana, North Carolina and Washington, D.C., also talked about huge benefits of Google search advertising during a press conference in Washington.

ShoppersChoice.com has grown from a small brick-and-mortar grill and fireplace store in Baton Rouge, Louisiana, started in 1998, to an online business that expects to have $26 million in sales in a wide range of products this year, said Michael Hackley, the company's CEO.

The company began using Google's AdWords search advertising service in 2004, Hackley said. "We have the best corner in every city in the United States with Google," he said.

Sales have "increased rapidly" for the Georgetown Frame Shoppe in Washington, D.C., since the art gallery and custom frame shop began using Google AdWords in 2004, said owner Peter Bortz. Recently, Bortz sold a $20,000 Andy Warhol print to a customer in Switzerland he had never met, through the company's Web site.

Tools like search advertising are important for U.S. small businesses, added Senator Mary Landrieu, a Louisiana Democrat and chairwoman of the Senate Small Business and Entrepreneurship Committee. Less than 1 percent of U.S. small businesses export their products, but Internet-based advertising could help them expand their markets, she said at the press conference.

Google based its estimated economic impact on three numbers: the amount of money Google paid out to Web sites using the Google AdSense product, the value of free advertising Google gives to nonprofits, and estimates on the amount of money made by advertisers. Google's estimates of the amount of money advertisers make from Google ad programs are based on two studies, one by the company's own chief economist, Hal Varian.

(Contact Grant Gross at grant_gross@idg.com. He's on Twitter at GrantusG.)

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