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Google in The Midwest

Determined to keep ahead of rivals Microsoft and Yahoo in the search business, Google  today said it will build a corporate office in Ann Arbor, Mich., to prop up its online advertising program.

The sales and operations center for Google's AdWords program will create 1,000 direct and roughly 1,245 spin-off jobs in its first five years, generating more than $2 billion in personal income for Michigan workers, the company said in a statement.

Google's main revenue source, AdWords is the company's flagship product in an online advertising market the company easily leads.

Thousands of advertisers use AdWords to promote their products and services on the Web through pay-per-click (PPC) advertising and site-targeted advertising for text and banner ads.

Google said Michigan Gov. Jennifer M. Granholm directed the Michigan Economic Development Corporation (MEDC) to convince Google to choose Michigan over other locations more than a year ago.

The MEDC even approved a high-tech single business tax credit valued at more than $38 million over 20 years to win the company's investment.

It didn't hurt that Google co-founder Larry Page grew up in the state and graduated from the University of Michigan.

Google shares were up $1.52 to $419.72 on the news in midday trading.

Google has been steadily adding new features and functionality to its AdWords platform to better compete with rivals Yahoo  and Microsoft  in the search space, a multi-billion-dollar market whose stakes are unparalleled in high-tech.

The Mountain View, Calif., company recently introduced ad scheduling, or "dayparting," for AdWords, which enables advertisers to automatically adjust their bids or pause and resume their campaigns.

In March, Google introduced local business ads, a new feature in AdWords that allows advertisers to promote location-based products and services.

Google is also looking to benefit from the online payment processing business, recently launching Google Checkout, which enables shoppers to purchase items securely from participating stores with a single Google login.

While Google is the search leader at present, neither Microsoft nor Yahoo feel they can ignore the revenue opportunity the advertising business promises in relation to search.

The subject has prompted some analysts, such as Merrill Lynch's Justin Post, to theorize that Google's ongoing traffic share gains and greater focus on building a software platform "increase acquisition probability."

Post said Yahoo or eBay are possible targets that could provide an immediate and large boost to Microsoft's search presence.



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