Google Planning to Cut Its Marketing Budget in Half

April 24, 2020
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Technology company Google (NASDAQ: GOOGL) is responding to Coronavirus-related economic pressures by slashing its marketing budget and rethinking its hiring activities.

Marketing cuts will be implemented in the second half of the year and will continue for as long as necessary. Here’s what investors need to know about the latest developments from one of the world’s most valuable companies.

Marketing Cuts Announced in Company Email

Google sent an email to staff on Wednesday announcing the cuts. In its message, an unnamed director said that “There are budget cuts and hiring freezes happening across marketing and across Google. We, along with the rest of marketing, have been asked to cut our budget by about half for H2.”

Google confirmed that the email was authentic when asked by various media sources this week. When pressed by CNBC, a spokesman confirmed that the business is “re-evaluating” the pace of its investment for 2020. The spokesman did note that continues to “have a robust marketing budget, particularly in digital, in many business areas.”

Google is not just a technology leader. It is one of the largest marketing companies in the world. A significant portion of its revenue is generated by paid advertisements on platforms like the search engine and YouTube.

The budget cuts reflect a changing global landscape. With more than a third of the world’s population on lockdown orders, businesses are less willing or able to spend on advertising. Google’s own marketing outreach needs are diminished during this difficult time.

Cutting its marketing budget will help the company to protect its balance sheet. Keeping the business lean during the Coronavirus Pandemic should also help to protect existing jobs.

Will Google Stop Hiring?

Although hiring will slow down or completely stop in some business areas, Google will still take new employees in the second half of the year. The hiring freeze for marketing is not widespread across the company. There’s a robust cloud business that Google needs to support, along with its other services like email and video sharing.

Google will likely ramp up its hiring and marketing spend in 2021. It spent a total of $18.46 billion on sales and marketing last year, one of the biggest budgets in the tech industry.

Shares fell after the news was released. Alphabet Inc. (Google’s parent company) saw a -2.37% decline in shares on Thursday, compared to a 3.96% gain in the technology sector. The stock is now down -5.09% in the year to date, creating a discounted buying opportunity for investors who are willing to wait out today’s difficult market conditions.

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