Inside Google

Google’s growth into an advertising powerhouse is well-known to Impaq — an online marketing agency based in Green Tree.

Impaq has 40 clients, including Mercedes-Benz, Chase Bank and Tiffany & Co., which together spend $85 million a year with Google, the Internet search engine giant.

Impaq CEO Richard Hagerty estimated the return on their investment in search campaigns run through Google could be as high as $600 million.

“And all you’re doing is moving those little words up and down” on a computer monitor page that displays search results, Hagerty said Tuesday. “It’s the fastest-growing and most successful advertising method. It just goes up and up and up.”

Yesterday, Google issued a report that detailed its claimed economic impact on businesses and states nationwide.

The report said 48,500 businesses in Pennsylvania that advertise through Google or website publishers who feature Google ads shared in almost $1.28 billion in revenue generated last year. The dollar figure is based on estimates of sales generated from searches and ads, plus money the Mountain View, Calif.-based company paid to online publishers.

Generally, for every $1 spent on Google advertising, the report estimates, a business brings in about $8 in revenue.

Pennsylvania’s section of the state-by-state report noted Google’s growing presence in Pittsburgh, with 100 employees who work on advertising quality and product search functions and who develop products — such as Google Sky, which provides a view into outer space. The office will move in August from the Carnegie Mellon University campus to the new Bakery Square development in East Liberty.

Nationwide, Google said it generated $54 billion in “economic activity” last year. That’s revenue, plus free ads that are provided to nonprofits. In Pennsylvania, 150 nonprofits got $3.3 million worth of advertising, it said.

The report drew mixed reactions yesterday. The nonprofit Consumer Watchdog organization dismissed it as hype based on “cooked accounting” that counts benefits, but doesn’t consider the impact on some content providers and competitors who suffer from Google’s “monopolistic control of search.”

Lorrie Cranor, a professor of computer science and engineering and public policy at CMU, wasn’t surprised by Google’s figures. The company “has become one of the top tools out there today for advertisers and publishers,” she said. “It’s one of the main search engines, obviously, and people looking for things don’t remember specific Web addresses. They Google it.”

Microsoft Corp. said yesterday it doesn’t break down economic impact figures for its Bing search engine or other products. The Seattle-based software maker has a North Side office with 40 employees who work with small, local partner companies that, for example, build business applications or conduct training based on Microsoft products.

Based on market research, “For every $1 of revenue that Microsoft earns, our partners earn $8.70,” spokeswoman Catherine Collins said. There are 3,700 partner companies nationwide.

Claire Johnson, a vice president with Google, said the company’s products based on key word searches have helped smaller businesses “compete on a level playing field so they can grow.”

Brett Satterfield said the Hard-to-Find Items website that he founded with his brother Derek beats Google’s estimate. “For every dollar we spend on Google advertising, we basically make around $9,” he said.

They launched Hardtofinditems.com in March 2008 as an outgrowth of the family’s Rollier’s Hardware business in Mt. Lebanon.

Traffic to the site featuring a range of merchandise, from garden tools to Steelers Crocs shoes, breaks down like this: One-third comes from Google search results. Another third is through Google “cost per click” paid advertising. The rest comes from Yahoo and other sites.

“You’ve got to be relevant on Google to drive traffic,” Satterfield said.