Google's Economic Impact Report: Just A PR Ploy?

Today Google announced that it had generated $54 billion worth of economic activity in the US in 2009. The report, which shows state by state economic contribution, bases Google's total value on three factors: 1) Sales driven through AdSense and AdWords; 2) Ad revenue generated for publishers through AdSense; and 3) Google grants. As a research analyst, I'll admit that you can make numbers tell any story you want to, and my gut here is that this report is principally a PR effort to: 1) Communicate some altruism about the Google brand that has been getting some bad press of late; 2) Simplify the complex transformation Google has brought to advertising into a simple, single number; 3) Shift the focus away from questionable strategic decisions that Google has recently made. I wholeheartedly believe that Google has transformed advertising and is almost singularly responsible for the phenomenon of biddable media buying which I think will ultimately replace relationship-facilitated media buys across channels. But I don't believe that Google stimulated $54 billion worth of business. I think what Google did do is provide a new revenue stream to small businesses and site owners, catalyze some new sales, and take a share of commerce and media expenditures that would have happened anyway.

Comments

Google's impact

Your points are right on. It helps also to see Google as the agent of productivity. Each month we are told by way of Gov't metrics whether productivity changes in the American economy. By creating a simplistic funnel through which to send the existing business and making it newly accessible to small businesses everywhere, Goggle has freed up different kinds of capital in many economies. This cuts both ways of course but over time it will focus incremental creative energy on innovation. And while everyone worries whether or not Google (and other innovators) have gotten too big, these benefits are being spread out to every economy that allows its people to Google freely. These benefits are very clear from the macro perspective and harder to see from the inside looking out. Search gave us Choice to do many new and old things easier. One brand is winning , for now.

So who would have belled the cat?

Anyone who reads the Google Public Policy blog at length will be able to discern that I am skeptical about many things that Google claims, particularly in the area of net neutrality. But as far as thinking that this would have happened anyway - I'm reminded of Wal-Mart's contributions during the aftermath of Hurricane Katrina. The response of the government and virtually every other business was the same: it was an "ultra-catastrophe" that "exceeded the foresight of the planners, and maybe anyone's, foresight."

Wal-Mart's focus on process led store managers to act on their authority to distribute diapers, water, baby formula and ice to residents. Ultimately Wal-Mart sent in a total of 2,498 trailer loads of emergency supplies and donated $3.5 million in merchandise to area shelters and command centers...while virtually every other business was still shut down.

I think of that story because I can't think of another company that would have had embraced the search paradigm so completely, acquired whatever IP was necessary starting with GoTo.com, and leveraged that model so completely and efficiently. Having met the early teams behind the search efforts of Microsoft, Yahoo, Excite/Architext, AltaVista, Idealabs and so on (many of whom drank deeply from the same Kool-Aide of local search), quite frankly I'm at a loss to think of who would have possibly picked up the slack with anywhere near the same singular sense of purpose and investment of capital.