What is Google's Economic Impact?

August 14, 2014

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Google is an engine of economic growth, generating $111 billion in economic activity through more than 1.5 million businesses and non-profits nationwide. So argues the company’s latest report, which profiles its impact in every state of America.

The report assumes that for every $1 a business spends on its AdWords service it reaps $8 in profit. Those figures are based on work previously done by Google’s researchers beginning in 2009 looking at revenue and clicks (whether from search or the ads themselves) gained by each corporate ad buyer.

California and New York sit atop Google’s list, enjoying positive economic impact of roughly $25 billion and $18 billion, respectively. These totals are each more than double that of the next highest state on the list, Illinois. Other winners include Florida ($6.5 billion), Massachusetts ($5.8 billion), and Texas ($5.6 billion).

Perhaps even more interesting is Google’s per capita impact, as seen in the chart below. Washington, DC’s residents receive by far the biggest boost from Google’s presence, though that’s perhaps unsurprising due to the city’s density and high profile. While America’s northeast also does well, what really strikes me is Nebraska and North Dakota’s ranking. Each resident in those states benefits to the tune of $700 a year thanks to Google’s tools, far above the average of $220. That’s a definite impact from Google in America’s heartland that casual observers may not have known prior to this report.

Roughly three-quarters of the economic value from Google Search and AdWords actually goes to companies in traditional industries (rather than, say, high-flying tech startups). What’s worth pointing out here is less that the outsized heft of traditional industries necessarily leads to a greater share of gains, but that nearly every company these days can be called a Big Data company. It doesn’t matter whether the industry has been around for centuries; the gains from Big Data are real enough to entice all manner of companies into its embrace.

Some may quibble with Google’s particular method of calculating economic impact, but credit goes to the company for quantifying something that is too often ignored. That is, the gains from the digital revolution are often seen as intangible or incalculable. Pageviews don’t boost GDP; neither does Wikipedia. We’re just left mostly with a feeling of being better off technologically than we were a few years ago, and the growing sense that business has gained in some important way from having the world (and its customers) delivered in a simple search field. Google’s economic impact report gives us a better idea than most of how much you and I are gaining from the datafied era we live in.

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