Google Cuts 200 Sales, Marketing Jobs

Staff Reduction Comes as Rivals Renew Ad Efforts

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NEW YORK (AdAge.com) -- Google will eliminate 200 jobs in sales and marketing, half of which are based in North America, in the biggest round of layoffs in the company's history.

Omid Kordestani
Omid Kordestani Credit: Google
The move is the latest in a string of staff cuts since the beginning of the year as the search giant retrenches in the face of an ad recession that is affecting its core search-advertising business. It also comes as Google attempts to make deeper inroads with agencies and persuade marketers to embrace YouTube, a task that is more labor-intensive than Google's largely automated search-ad business.

Google laid off 100 recruiters in January, and cut another 40 staffers last month with the closing of its radio-ad-sales business, which never got off the ground.

It's an unfamiliar place for the search giant, whose hockey-stick growth in search has funded massive expansion into new businesses and philanthropic activities. Google has doubled staff in the past two years, growing from 10,674 at the end of 2006 to 22,222 at the end of last year.

"When companies grow that quickly, it's almost impossible to get everything right -- and we certainly didn't," wrote Google's senior VP-sales and business development, Omid Kordestani, in a blog post. "In some areas we've created overlapping organizations which not only duplicate effort but also complicate the decision-making process."

Google said the affected employees would be offered the opportunity to find other jobs at the company or to receive outplacement support and a severance package.

Mr. Kordestani said while he understands the "recession makes the timing more difficult," the company "ultimately concluded that we had to restructure our organizations in order to improve our effectiveness and efficiency as a business."

At an investor conference earlier this month, Google CEO Eric Schmidt told Morgan Stanley's Mary Meeker that he considered the economic situation "pretty dire" and said, "The next few quarters are going to be very, very tough."

While search is the fastest-growing ad medium and is still expected to grow in 2009, he said the "pain that is being felt by corporations worldwide will translate to our world."

The cutting of 200 positions globally comes on the heels of the departure of former Google North America President Tim Armstrong, who was named CEO of Time Warner's AOL earlier this month. His replacement is Dennis Woodside, Google's VP-operations for the U.K., Ireland and Benelux. Just as Google is cutting sales staff, rivals AOL and Yahoo are restructuring theirs; each has a new CEO and head of sales, resulting in a flurry of departures and new hires.

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