Google reports $906M economic impact on Michigan
Google said today that its advertising and search services produced an economic impact of some $905.9 million for the state of Michigan in 2009 - a figure the Internet giant says it derived from a “conservative” calculation of the value of its paid ads and free search results.
Google said it counts 39,600 Michigan companies and organizations among its clients. Companies that advertise through AdWords get a 2-to-1 return on their investment, according to an estimate by Google’s chief economist, Hal Varian. But Google says that companies also get additional benefits from free search results.
The economic impact report, which Google conducted itself, does not attempt to estimate how much of the revenue is new spending in Michigan versus existing ad spending that was redirected to Google from other businesses, including media companies.
Mike Miller, leader of Google's Ann Arbor office, said the local operation continues to hire new employees but declined to offer specific projections.
But Mike Miller, Google’s Ann Arbor office leader, said the company plays a key role in boosting Michigan’s economy.
“It’s a place that’s had very tough economic times over the last decade. Generating almost a billion dollars of economic impact is pretty substantial given the economic times,” Miller said in an interview.
In its economic impact report - released today in conjunction with similar reports detailing figures for the other 49 states - Google specifically highlighted its effect on Ann Arbor-based Zingerman's.
The gourmet deli’s mail order operation has reported a 4-to-1 return on its AdWords investment, according to the report.
Google also said that it had donated $2.6 million in ads through its Google Grants program to 140 Michigan nonprofits. That includes organizations like Ann Arbor-based Michigan Innovators, which was founded by Eastern Michigan University professor Bud Gibson.
Meanwhile, Google declined to offer specifics about its hiring plan in Ann Arbor, where the Internet giant established its AdWords headquarters in 2006. Google said in 2006 that it would hire 1,000 workers at the office by 2011, but the firm  has come under scrutiny for falling short of the hiring pace it promised.
Google hired close to 800 workers globally in the first quarter, Miller said, and the company currently has several jobs posted for its Ann Arbor office.
Miller said Google currently employs “more than 250” workers at its offices in Ann Arbor and Birmingham. He declined to offer specific figures for the individual offices, but the Ann Arbor personnel count is believed to be more than 200.
“Our economic impact on Michigan bas been both the hiring and also the economic impact we’ve had for the small, medium and large sized businesses that operate here in the state,” Miller said.
"We continue to have open roles and continue to hire," Miller said.
The downtown Ann Arbor AdWords office, which is based at the McKinley Towne Centre at Liberty and Division, focuses mostly on sales to small and medium-sized clients. The Birmingham office handles sales to automotive clients.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
Sam
Thu, May 27, 2010 : 7:24 a.m.
This isn't a "news story" it is a press release. Whatever happened to journalism? If you are going to publish a story like this, how about some digging on the facts? AnnArbor.com appears more like a blog then a newspaper.
Karen Sidney
Wed, May 26, 2010 : 10:28 a.m.
Google won't tell us the number of Ann Arbor employees but the city should know the number of parking spaces they are paying for. Maybe Nathan can ask the city for the number of Google parking spaces and find out what process the city uses to determine that Google is not getting more parking spaces than employees.
Moose
Wed, May 26, 2010 : 10:24 a.m.
It's impossible to assess Google's claim unless it's put in perspective with what would the economic impact be if Google had not provide its "service". But we all know that Google's specious claims will be accepted as fact and thus enticing other communities to give them tax breaks and feed their mythological story. Ann Arbor SPARK and the MEDC come from the same bag of taxpayer subsidized giveaways to businesses based on unsubstantiated spin. The head of SPARK makes about $250,000 a year... For what? MEDC is just another place for business to pig out at the public trough. Hey! Where is my Google Fiber?
jtwilkins
Wed, May 26, 2010 : 9:44 a.m.
What a crock. How do you claim your profit making business model as economic impact to a state? If so there economic impact for every state is in the millions. That is like Walmart coming out and saying because our prices are lower then our economic impact on the state is XXX millions of dollars because people are saving money. Product efficiency does not equal economic impact.
Dave66
Wed, May 26, 2010 : 7:38 a.m.
I'm curious to know what "impact" means, too. Taking the Zingerman's example, say it's lunch time and I'm hungry. I go to Google and search for a sandwich, and I end up at Zingerman's. Google can reasonably claim some measure or responsibility for helping me find somewhere to get lunch. But even without Google, I still have to eat, right? Does Google claim credit for me buying my lunch? Or just for helping me find the closest deli? What exactly was their "impact" in this scenario?
Dan Simms
Wed, May 26, 2010 : 12:58 a.m.
The real story here is that google hasn't hired HALF of the people it's supposed to since it got here, and has received double digit millions in tax breaks that are going unused for things such as parking spaces. You even did a story on this http://www.annarbor.com/business-review/google-declines-to-discuss-ann-arbor-hiring-promise-as-new-exec-moves-in/
townie
Tue, May 25, 2010 : 7:47 p.m.
Show me the math. How do they define "impact?" The impression given is that there was $906 million dollars generated by Google's Michigan operations, the taxes on which, theoretically were paid to Michigan and went to our schools, roads, and other needs, right? Sounds more like they took the amount spent on ads by their clients, and the number of clicks and came up with a figure. Did the google ad income actually stay in Michigan or are the checks sent to Mountain View, CA? I'm glad Zingerman's theoretically achieved a 4-1 ROI on their google ad investment, but isn't that what advertising is supposed to do? I mean, I think I'd be pretty ticked off if I didn't get at least 4-1 return for my advertising dollar. Are they claiming that none of that money would have been spent at Zingerman's if it wasn't for a google ad? I am suspicious that this is much like the made-up job-creation statistics coming from SPARK and the MEDC. Like I said, show me the math.