In an email to employees last week, Sundar Pichai laid out Google’s internal response to the COVID-19 pandemic. A new report today reveals a significant impact on marketing budgets across the company.
CNBC acquired a memo from one “global director” relaying instructions to cut the marketing budget by “about half” for the second part of 2020. Today’s report does not reveal what division or product group this note originates from, but it does reference broad “budget cuts and hiring freezes happening across marketing and across Google.”
In 2019, Google spent $18.46 billion on sales and marketing, though this includes employee compensation. One area where advertising is particularly important is Cloud as it competes with Amazon and Microsoft by hiring more enterprise sales representatives. It’s unclear how areas that need especially wide consumer reach, like hardware, will be affected.
When asked for comment, Google acknowledges the size of budget reductions, but not that every group will be impacted as it adjusts plans.
“As we outlined last week, we are re-evaluating the pace of our investment plans for the remainder of 2020 and will focus on a select number of important marketing efforts,” a company spokesperson said in an emailed statement to CNBC Thursday. “We continue to have a robust marketing budget, particularly in digital, in many business areas.”
CEO Sundar Pichai said that Google would review “non-business essential marketing,” but that message did not convey the scale of budget cuts. The company says it will continue digital advertising, which is in line with people staying at home for the foreseeable future.
However, he was explicit in plans to “significantly slow down” hiring, though thousands of hired employees are still in the process of joining. That onboarding process has been impacted by the inability to distribute hardware and conduct training. Hardware investment, like data centers, is another area under review.
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