Google LLC is reportedly planning to slash its marketing budget for the second half of this year by 50%, according to a leaked internal memo sent to employees this week.

The report comes a week after Sundar Pichai, chief executive of Google’s parent company Alphabet Inc., said in an email to employees that the company is cutting back on new hires this year as part of its response to the COVID-19 pandemic.

This week’s memo from an unnamed “global director” at Google, first seen by CNBC, relays the company’s plans to cut its marketing budget for the second half of the year by “about half.” The memo didn’t reference any specific business units or product groups, but said the cuts would happen “across marketing and across Google.”

Google’s marketing budget is pretty huge. In 2019, it spent $18.46 billion on its sales and marketing efforts, according to its financial reports, though that figure also includes employee compensation.

One area that’s especially important to Google, from a marketing perspective, is its cloud computing business, which is heavily reliant on hiring more sales representatives to compete with Amazon Web Services Inc. and Microsoft Corp.

If cuts are made there, it could pose problems for Google’s cloud business as the company has often stressed in the past that it needs to invest in its sales force, said Constellation Research Inc. analyst Holger Mueller.

“Google Cloud CEO Thomas Kurian sees a lack of sales personnel as a key weakness compared to its key competitors, Amazon Web Services and Microsoft Azure,” Mueller said.

Google acknowledged that it is planning to make some cutbacks in an emailed statement to CNBC, but said not all of its businesses would be impacted.

“As we outlined last week, we are re-evaluating the pace of our investment plans for the remainder of 2020 and will focus on a select number of important marketing efforts,” a company spokesperson said. “We continue to have a robust marketing budget, particularly in digital, in many business areas.”

In his email last week, Pichai had warned that the company was planning to review non-business essential marketing this year, but did not convey the scale of the budget cuts. Still, he was explicit about the company’s plans to “significantly slow down” hiring, though it will onboard thousands of new employees who have already been hired this year.

That of course poses a question, another Constellation Research analyst, Liz Miller, told SiliconANGLE. Namely, what does Google consider to be “non-essential marketing”?

“In today’s age of smart, intelligence-driven marketing strategies, how is any marketing investment still lingering in the non-business essential category? One would hope that part of this move is to eliminate any vestiges of spend for spends sake, or vanity campaigns being made to appease whims,” Miller said.

Regardless, Google is likely to come out of the COVID-19 crisis in good shape. For one thing, Google is still top of the heap in the all-important search market, and it’s one of the big three giants in digital ad spend, along with Amazon and Facebook, the analyst said.

“Right now times are tough, but the digital engine will kick start quickly as the economy looks to rev quickly out the gate,” Miller said. “Google and Alphabet, at least on the marketing and advertising side of the business, may feel the pinch, but they won’t stay down for long.”

Photo: Omar Cafini/Flickr