Google Inc. (Nasdaq: GOOG) has just taken another step on the road to ramping its ad revenue model (AdWords) with the opening of a new office in Ann Arbor, Michigan. The office launches with 20 people but is expected to employ 1,000 people within five years.

A purported $38 million in tax breaks over 20 years could be part of the incentive for Google to open the office in Michigan, but it makes sense to have the office located in Ann Arbor because it is in the same time zone as New York City (GMT -5:00), which has a proportionally high number of corporate headquarters. West Coast sales could likely be handled by a department within Google's Mountain View headquarters.

The other takeaway is that Google is planning on having 1,000 people within five years. Seeing as it has roughly 6,000 employees currently and the current staff dedicated to AdWords sales in Michigan is just 20 (of course the current sales team is probably part of the 6,000 and the 20 is in Michigan is focused on hiring), Google is clearly feeling very optimistic about future ad revenue and its own success.

Of course, Yahoo! and Microsoft are both just as optimistic about the ad revenue model pioneered by Google; having launched their own services earlier this year. And AOL has begun the transition from ISP service to content provider and portal focused around, what else, ad revenue.