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Ei-Report-2013.Pdf Economic Impact United States 2013 Stavroulla Kokkinis, Athina Kohilas, Stella Koukides, Andrea Ploutis, Co-owners The Lucky Knot Alexandria,1 Virginia The web is working for American businesses. And Google is helping. Google’s mission is to organize the world’s information and make it universally accessible and useful. Making it easy for businesses to find potential customers and for those customers to find what they’re looking for is an important part of that mission. Our tools help to connect business owners and customers, whether they’re around the corner or across the world from each other. Through our search and advertising programs, businesses find customers, publishers earn money from their online content and non-profits get donations and volunteers. These tools are how we make money, and they’re how millions of businesses do, too. This report details Google’s economic impact in the U.S., including state-by-state numbers of advertisers, publishers, and non-profits who use Google every day. It also includes stories of the real business owners behind those numbers. They are examples of businesses across the country that are using the web, and Google, to succeed online. Google was a small business when our mission was created. We are proud to share the tools that led to our success with other businesses that want to grow and thrive in this digital age. Sincerely, Jim Lecinski Vice President, Customer Solutions 2 Economic Impact | United States 2013 Nationwide Report Randy Gayner, Founder & Owner Glacier Guides West Glacier, Montana The web is working for American The Internet is where business is done businesses. and jobs are created. Google is helping. Across the U.S., Google’s search and advertising tools Find out more at provided $111 billion in economic activity in 2013.1 google.com/economicimpact 97% of Internet users look online for local products and services.2 2 times as many jobs and twice as much revenue through exports were created by web-savvy SMBs.3 Sources: 1. Google, “Economic Impact,” 2013 2. BIA/Kelsey, “Nearly All Consumers (97%) Now Use Online Media to Shop Locally,” March 2010 3. McKinsey Global Institute, “Internet matters: The Net’s sweeping impact on growth, jobs, and prosperity,” May 2011 4. The Internet Association, “Internet Enabled Part-Time Small Businesses Bolster U.S. Economy,” October 2013 *Note: The total value that U.S. Google advertisers and website publishers received in 75% 2013 is the sum of the economic impact of Google Search, AdWords and AdSense. The value of Google Search and AdWords for businesses is the profit they receive from clicks of the economic value created by the Internet is captured by companies on search results and ads minus their cost of advertising, 3 estimated as $8 profit for every $1 spent. This formulation in traditional industries. is derived from two studies about the dynamics of online search and advertising, Hal Varian’s “Online Ad Auctions,” (American Economic Review, May 2009) and Bernard Jansen and Amanda Spink, “Investigating customer click through behavior with integrated sponsored and non sponsored results,” (International Journal of Internet Marketing and Advertising, 2009). The economic impact of AdSense is the estimated amount Google paid to website publishers in 2013 for placing our ads next to their content. Please note that these estimates do not allow for perfect reconciliation 9 out of 10 with Google’s GAAP-reported revenue. For more information 4 about methodology, visit: www.google.com/economicimpact/ part-time business owners rely on the Internet to conduct their businesses. methodology.html © Copyright 2014. Google and the Google logo are trademarks of Google Inc. Google Economic Impact Report, United States 2013 | Nationwide Report Economic Impact | United States 2013 Where we get the numbers Briana Warner, Owner Maine Pie Line Portland,5 Maine Where we get the Google Search and AdWords numbers google.com/adwords Google directs many potential customers to businesses for free via our search results. Through a program called AdWords, Aside from being a well-known Google also directs many potential customers to businesses search engine, Google is also a via the sponsored links you see above and to the right of the successful advertising company. search results. We make most of our revenue To use AdWords, businesses create short text ads and bid in an from the ads shown next to our online auction for the keywords they want those ads associated with. So a yoga teacher might bid on the phrase “beginner yoga search results, on our other classes denver.” When someone types those words into Google websites, and on the websites they will see the yoga teacher’s ad next to the search results. of our partners. Through these tools we help many others Google AdSense make a living, too. This report google.com/adsense presents a conservative estimate AdSense is a program website publishers can use to run of Google’s economic impact ads on their websites and make money from their content. For example, if you publish a website or blog about dog names on businesses across the U.S. and puppy training, your readers may see an ad for dog based on three core parts of our grooming or other dog services next to your content. Website business: Google Search and publishers large and small receive a majority of the revenue earned from every ad—an important source of income for AdWords, AdSense, and Google many content creators. Ad Grants. Google Ad Grants google.com/grants The Google Ad Grants program offers free advertising to non- profit 501(c)(3) organizations. Ad Grants recipients can spend up to $10,000 a month on ads that they use to fundraise, educate the public, and more. Since the program began in 2003, Google has supported non-profits worldwide with more than $2 billion in advertising. Google Economic Impact Report, United States 2013 | Where we get the numbers How we calculate Google and AdWords Google AdSense Google’s economic To estimate the economic impact of Google Search and The economic impact of AdSense is simply the estimated AdWords, we rely on two conservative assumptions. First, that amount we paid to website publishers in each state in 2013 impact businesses generally make an average of $2 in revenue for for placing our ads next to their content. every $1 they spend on AdWords. Our Chief Economist, Hal Varian, developed this estimate based on observed cost- We derive a conservative per-click activity across a large sample of our advertisers; his Google Ad Grants estimate of Google’s economic methodology was published in the American Economic Review Similarly, the impact of Google Ad Grants is the total amount in May 2009. Our second assumption is that businesses overall impact in each state by spent by grants recipients in 2013 out of the $10,000/month receive an average of 5 clicks on their search results for every awarded to them. examining the economic value 1 click on their ads. This estimate was developed by academic provided by Google Search and researchers Bernard Jansen and Amanda Spink based on sample search log data and published in the International AdWords, Google AdSense, and Total economic value Journal of Internet Marketing and Advertising in 2009. Google Ad Grants in 2013. Total economic value for each state is estimated as the If search clicks brought in as much revenue for businesses as economic activity provided for local businesses, website ad clicks, these two assumptions would imply that businesses publishers, and non-profits by Google Search and AdWords, receive $11 in profit for every $1 they spend on AdWords. Google AdSense, and Google Ad Grants, respectively, in 2013. This is because if advertisers receive 2 times as much value from AdWords as they spend on AdWords, and they receive 5 times as much value from Google Search as they do from What’s not included AdWords, then the total profit they receive is 11 times what This is an attempt to estimate the economic impact of they spend, or Google’s core search and advertising business. In search 2(spend) + 5 x 2(spend) - (spend) = 11(spend) and advertising, we’ve derived a conservative estimate of the impact of our tools on businesses, website publishers, However, clicks through search results may not be as and non-profits, but we’ve left out such estimates as the cost commercially valuable as ad clicks, so we want to be savings for consumers now able to find the information they conservative: we estimate that search clicks are about 70% need more easily than before. We also have not estimated as valuable as ad clicks. This means advertisers overall the economic impact our employees provide, or that of other receive 8 times the profit that they spend on AdWords, or major products like Google Maps and YouTube. So while we’re confident in our estimates, consider them a lower bound on 2(spend) + .7 x 5 x 2(spend) - (spend) = 8(spend) Google’s true economic impact. Therefore, we conservatively estimate that for every $1 For more information about our methodology and to down- a business spends on AdWords, they receive $8 in profit load the cited studies, please visit: through Google Search and AdWords. Thus, to derive the economic value received by advertisers, we multiply our www.google.com/economicimpact/methodology.html AdWords revenue on Google.com search results in 2013— what advertisers spent—by 8. 7 Google Economic Impact Report, United States 2013 | Where we get the numbers Economic Impact | United States 2013 Reports by State Madhu Natarajan, CEO Food Service Warehouse Greenwood8 Village, Colorado The web is working for Alabama businesses.
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