30th, Apr 2020

What Google cutting 50% of marketing spend means for marketers

Google is cutting up to 50% of its marketing budget for the second half of 2020.

The cut down to the marketing budget must certainly be a method chosen to contain the effects of decreased advertising earning dues, caused by the ongoing pandemic. This new strategy comes as an announcement, less than a week from when Google is scheduled to hold discussion for the first quarter of 2020’s financial results. This strategy creates impact on digital marketing companies in India as well. Google is initiating the cuts on the marketing budget across a range of Google divisions.

For better understanding, let’s quote a spokesperson from Google, on this hot issue.

“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 is actually “re-evaluating” its marketing efforts, as was announced by Google CEO Sundar Pichai few days back.

According to Google, marketers should learn a clear lesson from 2008 crisis and that is, preparing early should be the priority. It is the only key to sail through the storm and emerge in a strong position to continue with long-term growth. Google says this might not impact marketers and even if it does, the effects won’t be that visible. The giant reevaluating the pace of investment plans for the rest of 2020, means that all marketers should now buck up as well, and start thinking about long term consequences and that, how to be prepared.

Google will definitely continue to invest, but will be recalibrating the pace of the investments in areas such as data centers, machines, and the essential marketing and travel which are non-business.

Marketers and website development companies in India need not worry after Sundar Pichai’s announcement last week. He repeatedly emphasizes that Google will not cut back in those areas where users and businesses need its support for their growth and success. So this means that cutting back on the marketing budget of Google is not going to affect support for marketers and businesses.

Now, however, Travel Advertising Slump May Have Impacted Earnings.

According to a note tweeted by a search marketer linked with travel advertising, the crash of travel related advertising may be one of the several reasons to a negative drag on earnings.

Let us face this thing now. We know that the financial impact of the coronavirus is extremely serious when even Google is concerned about losses. Actually, for the first time in history, the tech giant is expected to witness a dip in ads revenue. Hence, marketers have enough reason to be this scared!

If any, say any company would be immune from the effects of the pandemic, we would all think it would be Google! Of course! And with more people and kids at home, on their phones and computers, you’d definitely expect Google to be having even more business than usual. Still, there seems to be at least one glitch in Google’s armour as being the world’s most preferred search tool: definitely the marketing revenue. And now with much lesser companies advertising their products, Google is also about to be hit quite hard.

Marketers worry because they think: If Google, then obviously they too! Google, after all, isn’t only just a tech giant. Google is the entire industry trend setter. Many marketers and other companies are most likely looking up to Google for everything. More so, because this giant helps them predict the types of losses they might also be seeing in ads revenue this year. But no one is able to really determine when all the nonessential businesses and services might open. And even when they do open, marketers are worried because they are now clear on what those industries will look like from the point of marketing and business.

Let us look into few pertinent questions. Now, after the situation is back to normal, will we see restaurants that can only seat half of its customers due to social distancing? Will the same situation hold true for airlines, hotels, music and art concerts, and other social gatherings? These things are what most of Google’s ad customers are worried about. Well, marketers are in an uncertainty. There is simply no way to conclude a lot of things right now because in spite of the data Google has collected about its users all over the world, it does not have the data to determine the outcome of the greatest health crisis of modern history.

The Crux of the Matter

What we need to remember is that Google has already weathered a recession before. There is no doubt that this trend setter will survive the COVID-19 crisis. The only question is how huge the pandemic’s impact will be and how will Google’s decision impact customer ad-spending.