Methodology

How we calculate Google's economic impact

We derive a conservative estimate of Google’s economic impact in each state by examining the economic value provided by Google Search, Google Ads, and Google network properties such as AdSense and Admob, Google Ad Grants, YouTube, and Google Play.

Google Search and Ads

To estimate the economic impact of Google Search and Ads, we rely on two conservative assumptions. First, we assume that businesses generally make an average of $2 in revenue for every $1 they spend on Google Ads. Our chief economist, Hal Varian, developed this estimate based on observed cost-per-click activity across a large sample of our advertisers; his methodology was published in the American Economic Review in May 2009. Our second assumption is that businesses overall receive an average of five clicks on their search results for every one click on their ads. This estimate was developed by academic researchers Bernard Jansen and Amanda Spink based on sample search log data and published in the International Journal of Internet Marketing and Advertising in 2009.

If search clicks brought in as much revenue for businesses as ad clicks, these two assumptions would imply that businesses would receive $11 in profit for every $1 they spend on Google Ads. This is because if advertisers receive 2x as much value from Google Ads as they spend on Google Ads, and they receive 5x as much value from Google Search as they do from Google Ads, then the total profit they receive is 11x what they spend: 2(spend) + 5 x 2(spend) - (spend) = 11(spend).

However, clicks through search results may not be as commercially valuable as ad clicks, so we want to be conservative. We estimate that search clicks are about 70% as valuable as ad clicks. This means advertisers overall receive 8x the profit that they spend on Google Ads: 2(spend) + .7 x 5 x 2(spend) - (spend) = 8(spend).

Therefore, we conservatively estimate that for every $1 a business spends on Google Ads, they receive $8 in profit through Google Search and Ads. Thus, to derive the economic value received by advertisers, we multiply our Google Ads revenue on Google.com search results in 2019 — what advertisers spent — by 8.

Google Network Properties, YouTube, and Google Play

The economic impact of Google Network Properties, YouTube, and Google Play is simply the estimated amount we paid to publishers, creators, and developers in each state in 2019 for placing our ads next to their content and from app monetization.

Google Ad Grants

Similarly, the impact of Google Ad Grants is the total amount spent by grant recipients in 2019.

Total economic value

Total economic value for each state is estimated as the economic activity provided to businesses, publishers, nonprofits, creators and developers by Google Search, Google Play, YouTube, and Google advertising tools in 2019.

What's not included

This is an attempt to estimate the economic impact of Google’s core search and advertising business. In search and advertising, we derive a conservative estimate of the impact of our tools on businesses, publishers, nonprofits, developers, and creators. We leave out estimates, such as the cost savings for consumers who are now able to find the information they need more easily than before. We also do not include the economic impact our employees provide or that of other major products, such as Google Maps and Google Analytics. So while we are confident in our estimates, consider them a lower end of Google’s true economic impact. For more information about our methodology and to download the cited studies, please visit www.google.com/economicimpact/methodology