Google is increasingly turning to resellers as it conducts the largest round of layoffs in its history

By Ronan Shields

Alphabet today has confirmed that it plans to cut 12,000 jobs, reportedly the largest round of layoffs in its history, a development that comes as advertisers note a gradual shift in how Google deals with its largest paying customers.

The Google parent company ended weeks of speculation with confirmation of the job losses, amounting to 6% of its workforce, implemented to deal with the “economic reality… we face today,” according to Alphabet CEO Sundar Pichai.

In a blog post, he claimed such measures, which echo similar cutbacks from its Big Tech cohorts, were made “to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities.”

A Google spokesperson was unable to respond to Digiday’s request on how the cutbacks, which “cut across Alphabet, product areas, functions, levels and regions” will specifically impact its advertising operations by press time.

Although, it is worth noting that Pichai’s memo makes several references to how Alphabet’s investment priorities have been geared toward “pivoting the company to be AI-first” and that this has “led to groundbreaking advances across our businesses.”

A shift in focus amid industry changes

In the weeks leading up to the announcement made today (January 20), separate sources told Digiday that insiders within the Google Ads team were bracing themselves for layoffs as far back as November.

One source, who cited direct conversations with leadership of Google advertising operations, claimed such discussions openly took place on the sidelines of this year’s Consumer Electronics Show, and that cutbacks would focus on inefficiencies, especially surpluses emanating from its 2021 hiring spree.

I think Google has always wanted to be known as a technology company

Dan Larden, TPA Digital

“The world changes every year or two in our industry, so maybe you have people that were brought in during the huge bubble,” added the source referencing the growth of tech companies in the wake of the Covid-19 pandemic. “There are a lot of people receiving very good paychecks that maybe aren’t contributing to the top or bottom line like they were in 2021 or 2022.”

In recent briefings with investors and press, separate equities analysts tipped job cuts at Google, forecasting that it would look to shore up overheads amid declining rates of ad spend, particularly among SMEs and rising costs.

In an advisory note published by Livy Investment Research earlier this week, analysts noted that staff cutbacks would be “low-hanging fruit” for Google to restore investor confidence after recent earnings and sales misses — its stock price rose 3% following today’s announcement.

Google is helping to build a network of resellers

Meanwhile, separate sources within the media industry told Digiday that Google has been increasingly encouraging advertisers to engage with its network of approved resellers over the past number of years.

Some note how this has intensified over the course of 2022.

According to several sources, this strategy helps Google reduce …read more

Source:: Digiday