Google to launch new ad service, cuts sales and marketing jobs

27 March 2009

MOUNTAIN VIEW, California: Google, the online search giant, is developing a system that will allow advertisers to buy ads simultaneously across TV and the web, but is also cutting 200 marketing and sales jobs, a move it has attributed to "over-investment" and the impact of the economic downturn.

Michael Steib, the company's director of TV advertising, has announced the new service, called Google TV Ads Online, will enable advertisers to buy traditional TV spots alongside ads on YouTube and other websites through a single portal.

It is said to be testing the new technology with a small group of advertisers, and the system is expected to go live in a few months time.

Earlier this year, Google scrapped both its radio and print advertising services after slow levels of take-up in the respective industries, and it is now reducing its sales and market workforce.

Alongside the impact of the economic downturn, Google's head of field operations, Omid Kordestani, wrote in a blog that the company had "over-invested in some areas in preparation for the growth trends we were experiencing at the time."

While the reduction amounts to only a small percentage of the company's workforce of 40,000, they are also the first attributed by the company to the broader business climate in its history.

WPP Group, the marketing services conglomerate, will cut a percentage point of its global staff for every corresponding decline in its revenues, says the company's chief executive, Sir Martin Sorrell.

While Sheila Spence, svp corporate development at WPP, has previously argued that the holding group aims to make further acquisitions this year, both Standard & Poor's and Citigroup have recently issued warnings about its prospects in 2009.

Sorrell has now said the company will "make cuts in line with revenues. If revenues are down 2% we will make a cut in 2% of the workforce. If it is down 3% or 4%, we will reduce headcount by 3% or 4%."

He previously predicted that WPP would cut around 2,000 jobs this year from a total workforce of 112,000, having previously slashed its total number of employees during the downturn in 2002.

Alex Griffiths, a credit risk analyst at Fitch, the ratings agency, warned the number of job losses could be considerably more substantial, arguing: "In 2002 WPP reduced its headcount by almost 10%. This time round they could do that again."

Data sourced from dealReporter; additional content by WARC staff