Google to slash marketing budgets by 50% and freeze hiring

Google (NASDAQ: GOOGL) said on Thursday that it will be cutting its Q2 marketing budgets by 50%. The company announced it to the marketing employees in an email that also highlighted that new recruitment of contract or full-time employees is paused until further notice.

According to Google’s spokesperson, the move is aimed at slashing the budget amidst the Coronavirus pandemic that is weighing on global businesses. Google will target its budget on select marketing strategies as it re-evaluates its investment plans for the rest of 2020.

CEO Sundar Pichai had already hinted last week that Alphabet Inc. (Google’s parent organization) plans on cutting its investment plans for 2020; the move that he suggested will start with a hiring freeze.

Google Originally Planned To Increase Marketing Budgets In 2020

The U.S tech giant has been hit hard by the ongoing health crisis that removed it from the privileged trillion-dollar club that it joined in January 2020. Google was also reported recently of cutting back on skills training resources to further preserve cash. The company is scheduled to report its second-quarter financial results next week on Tuesday.

As per Google’s recent report, the company spent roughly £15 billion combined on sales and marketing last year. Before the COVID-19 outbreak, Google had originally planned on widening its marketing budgets in 2020.

On the hiring front, Google expanded its workforce by 15% in 2019. Its expenses on advertising and promotion were reported to have increased by £326 million.

Alphabet Inc. also announced on Thursday that it plans on making it compulsory for all advertisers to go through a verification process to purchase ad space. The process is aimed at improving transparency of the company’s ad practices and is likely to go live in summer 2020.

Ripple Sues YouTube For Inadequate Security Against Crypto Scams

In separate news, Ripple filed a lawsuit against Alphabet’s YouTube earlier this week. The blockchain firm alleged YouTube of inadequate measures to protect its viewers from cryptocurrency giveaway scams.

Alphabet Inc. was reported more than 2% down in after-hours trading on Thursday. At £1,009 per share, the company is currently around 8% down year to date in the stock market. In the past four weeks, the stock has recovered roughly 20%.

The COVID-19 driven downward rally has wiped a significant chunk of Alphabet’s value that currently has a market cap of £761 billion and a price to earnings ratio of 25.86.