Google’s Economic Impact

No one can deny Google’s tremendous impact on our use of the web and web advertisements. But they got a little carried away recently with a much-circulated report celebrating their economic impact on the U.S. They’ve influenced our economy, to be sure, but the economic impact they celebrated is not down to them alone—they owe a debt to the research behind their pay-per-click algorithm, and much more to the small business owners and entrepreneurs who use Google ads.

Google’s report touts the company’s economic impact on the United States, calculating $54 billion of economic activity for American businesses, website publishers and non-profits. They focused on small business growth: entrepreneurs placing ads on Google search results to increase the size and scope of their businesses, and website owners making profits on their own sites with targeted ads.

Google’s AdSense and AdWords employ the pay-per-click concept, originally conceived by Goto.com‘s Jeffrey Brewer. Unlike traditional mass media advertising, pay-per-click displays ads that bear some relationship to a query’s words or the search results on the page. Google helped it along, but pay-per-click itself deserves partial credit for changing the online world.

The bigger economic impact, however, belongs to those who place ads with Google and those whose website use ads to generate revenue. It amazes me how business owners, no matter how small the business or remote the location, find a way to keep up with the state of the art. In Google’s report, for example, they estimate $863 million generated for the state of Minnesota, including ad revenue from curbly.com, an online community owned and run by a single employee. Even the tiny Salvadorean bakery in my San Francisco neighborhood, which has awesome pastelitos but no Web site, has a Google ad. These businesses can swing the cost, thanks to pay-per-click, and they reach the customers they’re looking for, thanks to Google. Win-win-win. And delicious.

Have you placed an ad online for your business? Do you have ads placed on your own web site?

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