Supertanker Google will charge ahead despite the coronavirus setback

Why would Google think about a hiring freeze at all right now? Even if it cuts marketing spend, the titan is poised to bounce back strongly from the recovery.

Tech companies can get very worked up when information is leaked to the media.

Sometimes they find ingenious ways to stop them: a fascinating 2015 biography of tech entrepreneur Elon Musk recalls how he copied the text of a leaked letter and pasted it into a Word document so he could check the file's size. By checking this against the office’s printer activity logs, Musk was able to track down the person who carried out the printing job (they 'fessed up when confronted and resigned).

But few are apparently as keen to prevent company information from leaking out as Google, whose aggressive efforts to hunt down leakers have even led to a lawsuit claiming that the company operates in a culture of secrecy and fear.

So it was somewhat surprising that an unnamed director’s email emerged as the source of news that Google was cutting its marketing budget and putting in a hiring freeze. "There are budget cuts and hiring freezes happening across marketing and across Google," they said. "We, along with the rest of marketing, have been asked to cut our budget by about half for H2."

Given that Google openly states in its terms of service that its products, such as email, use "automated systems and algorithms to analyse your content", it shouldn’t be all that difficult for the company to crack this particular case of searching its internal emails.

The timing of the revelation – a week away from last night's Alphabet (Google’s holding company) quarterly results call – was interesting too. Despite Google and Facebook being respective monopolies in search/display and social media, they are not immune as brands pause marketing to conserve cash at a time when consumer demand has fallen off a cliff.

Indeed, Google's earnings call explained that it is reducing marketing budget because it was forced to put on fewer in-person events. However, in terms of brand and performance marketing, Google insisted that it would still have "a healthy budget for ads and promotions, particularly in digital". 

Even if Google had a bad March and seems likely to have a bad second quarter (many analysts are expecting the company to post flat revenue, for the first time, between April and June), it remains a colossal force that is poised to grow stronger when we come through the other side of this crisis and recession. 

Despite the lockdown bringing about a surge in demand for online content, whether it's social media, video streaming or video chat, online ads have become much cheaper as demand from brands has fallen. Last month, Campaign reported that cost-per-milles, for example, had fallen by about 20% across Europe, while cost-per-clicks have shown a decline of about 30% globally (apart from in Asia, where lockdown measures have eased for the most part). 

The early indications from performance marketers I've spoken to is that CPCs and CPMs on the main digital ad platforms (Google, Facebook and Amazon) have stabilised in April and in some cases may be creeping up again. It's too early to start talking about a recovery, but perhaps the bleeding has stopped.

When the recovery does begin, digital media is well-placed to bounce back harder and faster than offline media. Google and Facebook are therefore poised to come out the other side of this crisis even stronger than they were already, even if they report 20-30% declines in their March ad revenues in the coming days.

It is generally much quicker and cheaper to create advertising on these platforms than it is to instruct a creative agency to make a 30-second TV spot and a media agency to plan and buy its placement. Digital media is also measurable in ways that offline media can’t be, and being able to point to objective data is a powerful tool for marketers when being asked to justify increases in spend in a tough economic environment. Whether this leads to the most effective and value-for-money way to advertise a brand is highly questionable, to say the least, but performance-led digital output is the quickest way to turn on the marketing tap.  

Not everyone agrees, such as Brainlabs founder Daniel Gilbert, who pointed out to me: "Digital is over 50% of media; everyone is doing it and it's therefore saturated. You have to be brilliant to win now – not just ahead of the investment curve. I still predict that digital will become 100% of media within the next decade – but that doesn't mean the bounceback will be stronger in digital than elsewhere. We're entering a recession and that will affect everyone." 

Nevertheless, if you run Google or Facebook and see this field of play, why would you even think about taking your players off the field right now? This is the time when we should see Google and Facebook undertake aggressive hiring sprees. These companies have massive cash reserves and can afford to hire the industry’s best talent at a time when advertising agencies and traditional media owners are furloughing their staff. They may not want to be known for poaching people in a downturn, but it is perfectly rational.

One digital agency executive specialist who regularly talks to Google in the UK tells me that there was talk of a hiring freeze earlier this month, but it was only supposed to last for two weeks. And it appears that whatever freeze was in place has already been lifted: at the time of writing, Google has 2,536 live job listings (while Facebook has 2,857).

This specialist says: "I think what's going on here is more about positioning, really. It's either an internal comms thing to make sure people are aware that these are unprecendented times and they shouldn't take the piss when it comes to hiring. But they'll be back to full steam ahead soon."

And, despite last week's revelations, 766 of those Google job listings are tagged as "marketing". I asked Google how many of these jobs it expected to fill, given that marketing budgets are apparently being cut back, but the company did not respond.  

In fairness to Facebook, its chief operating officer, Sheryl Sandberg, admitted as much in an interview at the beginning of April, when she said the company would hire 10,000 additional employees by the end of the year. 

One former Googler who was at the company during the last recession (after the financial crash) paints a picture of how different life was compared with the rest of the ad industry: "You just didn’t feel it – the growth of that business made it feel like we were insulated in a bubble from the outside world of calamity. It was almost like [the recession] didn’t happen.

"We used to joke that you would only know about the recession at Google because they started serving salmon en croûte and not beef Wellington in the cafeteria. That was when Google UK was growing at 35% and search had just started to take over the world."

Whatever they are serving in the various Google lunchrooms around the world this summer, I would still expect this behemoth to need even more knives, forks and plates as staff numbers increase into next year.

Omar Oakes is global technology editor at Campaign

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