Houston, we have a problem. When Google cuts its marketing budget by as much as 50% you know Advertising and marketing has an existential crisis.
Never mind that Facebook Ads flop for most small businesses, when the Advertising giants are cutting their marketing budgets, it’s not good.
While millions of small businesses struggle with their survival and reduce their costs, we all know marketing and advertising is one of the first things they will reduce. When Alphabet reduces marketing, it’s a marketing apocalypse.
Google plans to slash its marketing budgets by as much as half, in addition to hiring freezes for both full-time and contract workers due to the Great Shutdown. The cuts represent a more drastic move than Google CEO Sundar Pichai originally described a week ago.
Google needs a lot of marketing since its product focus is pretty bad on many of its attempts at innovative products, but these are tough times even for ridiculously profitable advertising monopolies with leery ethics.
Meanwhile Google is losing advertising marketshare to the likes of Amazon, Snapchat, Twitter, Pinterest and even indirectly Roku and The Trade Desk. Baidu has also recently beaten Waymo One to national trials of self-driving cars.
One email about the cuts went out to marketing employees this week, noting the budget cuts and a new hiring freeze for full-time and contract employees. Google is that awesome place to work where even its Quantum computing top scientist was pushed out in the pressure cooker environment. You just got to feel sorry for the neighborhood digital monopoly!
What a hard life it must be where digital Ads are one of the most profitable revenue margins possible for any company on Earth — a company where just by being hired you are among the global elite in terms of skills. But how did the Great Shutdown of 2020 impact the advertising world and demand for marketing spend broadly speaking? I think we just got our answer this week.
The drastic moves come a week after Alphabet CEO Sundar Pichai said Google would be pulling back on some of its investments for the rest of the year amid the Covid-19 crisis, starting with hiring. It appears Pichai wasn’t being totally honest. This will burn a lot of marketing folk internally, in an environment where nobody is safe, even in companies with huge revenues and cash on hand. What’s wrong with that picture?
Google is cold, but its new normal in the Advertising freeze shows just how much digital life can change in a few weeks. Google will be re-calibrating its focus and pace of our investments in areas like data centers and machines and, as it turns out, not so much marketing.
Google spent $18.46 billion on sales and marketing in 2019, according to its most recent annual 10-k. But Ads aren’t king, they are just the spam that help the algorithms go around. With Amazon increasing its market share as E-commerce penetration accelerates, Amazon stealing Ads-share off Google is going to be a big feature of the impact of the Great Shutdown on BigTech.