Report: Google added billions to NY economy

Apart from the value to everyday users in finding things in an instant, Google also added $6.3 billion to New York State's economy last year, according to a new report based in part on calculations by Google's chief economist.

That reflects $6.2 billion in economic activity for 114,400 businesses and website publishers using Google AdWords and AdSense, as well as the commerce that comes through the organic nonpaid search function.

Add to that the $24.6 million in free advertising provided through Google's grants program to 650 New York State nonprofits.

That averages out to $321 per person in the state, Eileen Naughton, Google director of media operations, said Tuesday at a media briefing. "It's not trivial."

The breakdown is part of a state-by-state analysis, which estimates Google's national economic impact at $54 billion.

Google based its calculations on the assumption that advertisers get a $2 return on every dollar spent, which is conservative, Naughton said. The methodology is based on a sample of advertisers' "cost-per-click activity" detailed in the May 2009 issue of the American Economic Review. Google also estimated that clicks done as a result of an organic search, apart from sponsored links, represented a 70-cent value to businesses and website publishers.

Not figured in to the calculations were values brought by other products, such as Google Maps and YouTube, as well as the impact of jobs and the company's presence in Manhattan.

Andrew Hazen, founder and chief executive of Prime Visibility, a Melville Internet marketing company, said the results are not surprising, but still, he sees considerable variation in the value of AdWords among his clients. One, a makeup manufacturer, can see a $10 return on each advertising dollar spent, he said, while the return for a client selling plasma televisions is far less.

Certainly Google represents "a win-win for everyone. They offer an incredible service," said Peter Goldsmith, chairman of the Long Island Software & Technology Network, a Melville group that supports and promotes the area's technology community. "Who doesn't use Google? Who doesn't use AdWords and AdSense?"

Still, he said, he would like to see the company become more actively involved in the Long Island technology scene.