July 4, 2020

Brand, Media & Advertising

Google cutting its marketing budget by 50%. What does it mean for advertisers and agencies?

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Image credit: CNBC

Google has recently announced that it will cut its marketing budget by up to 50% in the 2nd half of 2020. Google has told it’s marketing employees to reduce marketing spends and implement hiring freeze for both fulltime and contract employees.

The covid pandemic has impacted business of all sizes be it mom and pop shops or billion-dollar companies like Facebook, Google , Amazon & Apple. As people all over the world sitting at their homes living on survival mode are not spending at all on luxury products/services like Automobiles, shopping, eating out, and traveling this has badly affected the economies of every country. On the companies side, due to reduced production/manufacturing, the supply has down with very less or no availability of products.

But, why should you care about this announcement? Well, you should if you are marketing/advertising space. It’s a clear message that cutting of marketing budget is one of the ways to mitigate the impact of the Covid crisis on the bottom line of the business. Seems like google does not want to spend on expansion and marketing its products and services.

According to some sources, Google’s revenue may hit by 15% due to this crisis. Reducing marketing budgets for a company like Google with very thick profit margins is very convincing for other brands to reduce their marketing budgets. But the worry for people like us in advertising and media space because of the reduced marketing spends from brands will impact the revenue of media and creative agencies and that in turn will impact the new hirings, appraisals, and the overall employment in the industry.

Digital contributes a big chunk of revenue today for any media agency. Google and Facebook command more than 50-60% of the digital ad spends. In such a scenario it will be very hard for media professionals and Google teams to convince clients to keep investing in Google or digital per se when Google itself has lost faith in marketing.