If you’re even slightly aware of current events (and I should know, I’m quite familiar with being out of the loop!), you’ve undoubtedly heard about the big news story lately:

Massive tech layoffs. We’re talking Microsoft, Google, Amazon—it’s even sparked its own hashtag, #layoffs2023. Any widespread job losses are worrisome, regardless of your personal situation. But as a small business owner or marketer, you might have specific anxieties. Sure, this involves major tech players, but could it trickle down to smaller companies? Many of these firms are advertising platforms—will pay-per-click (PPC) advertising be affected? I’ve investigated this situation to provide some insights from your perspective. Keep reading to discover:

• What’s happening in the world of Big Tech?
• What’s causing all these layoffs?
• What are the implications for online advertising and small businesses?

What’s happening in Big Tech?

January 2023 witnessed more Big Tech layoffs than any month since the pandemic began. To illustrate, 159,684 tech jobs were cut in all of 2022, yet January 2023 alone saw a staggering 68,502. That’s over 43% of last year’s total in just one month!

Companies like Google, Microsoft, Informatica, Salesforce, Amazon, SAP, IBM, Spotify, Wayfair, Coinbase, and Vox Media have all made significant cuts in January and recent months. As previously mentioned, mass layoffs are inherently troubling. This situation is particularly noteworthy because it’s both unexpected and considered one of the worst contractions in the industry’s history. It also presents a curious contrast with the current labor market. As The Atlantic writer Derek Thompson highlights:

• Throughout the 2010s, the labor market was weak, yet the tech sector thrived.
• During the pandemic, the economy experienced a “flash freeze depression” while tech boomed.
• Currently, the labor market is robust, but tech is “hemorrhaging” jobs. So, what’s the explanation?

Why are all these layoffs happening?

Several factors contribute to this trend, which Derek’s article aptly addresses. Here’s a summary: The anticipated tech “acceleration” from the pandemic was more of a “bubble.” Tech companies, consumers, and investors bought into the idea that the pandemic’s surge in remote work, e-commerce, and online platforms fast-tracked us to a 2030s reality. This hasn’t materialized. We haven’t arrived; we’re still en route, traveling at roughly the same pace as in 2019. Consequently, much of the expansion and investment now appears excessive, hence the contraction. Inflation triggered an advertising decline. Remember, many of these tech giants—Google, Meta, Amazon, etc.—are also advertising platforms. With inflation hitting 40-year highs in 2022, numerous businesses slashed advertising budgets. It’s often an early casualty during economic uncertainty, exacerbated by the rising cost of advertising itself.

Companies are adjusting and bracing for impact. Some companies are proactively implementing layoffs. Although inflation seems to be easing (it has dropped from 9% to 6.5%)), economists, businesses, and consumers remain wary of a recession. To maintain profitability and appease shareholders, these companies must prepare for continued spending cuts by businesses and consumers—which translates to reducing their own expenditures. Naturally, alternative theories and interpretations exist, but these are the core reasons underlying most coverage of this issue.

What does it mean for small businesses and PPC?

Now that you understand the situation and its causes, let’s explore the potential implications for small businesses and PPC, based on news reports, last week’s PPC chat discussion, and insights from PPC specialists who contribute to our blog! Here are some particularly relevant takeaways:

1. Big tech is not in jeopardy.

“Revenue decline” doesn’t necessarily signify these companies are failing or nearing collapse. Remember, these aren’t just businesses—they’re giants. As Tech Reporter Bobby Allyn’s NPR article mentioned earlier stated, these shifts, while historic, represent a small percentage overall. These companies remain immensely wealthy, and Big Tech has experienced robust growth over the past decade. Microsoft alone generated $198 billion in revenue in 2022.

Image source These actions don’t signal their imminent demise but rather a course correction in response to the evolving post-pandemic landscape, aimed at resuming their growth trajectory.

2. This is a temporary blip; digital advertising will continue to expand.

Considering the above, it’s unsurprising that many PPC experts believe this is a temporary phase and aren’t overly concerned about a broader economic downturn or ripple effects on small businesses or advertising. Take, for instance, this Tweet from digital marketing strategist, author, and speaker Anders Hjorth during #PPCChat:

A1: We have been on a shaky ride since Covid. I think the big platforms got overoptimistic and wanted to come out top on the talent battle. We are now going through a readjustment but it doesn’t change the baseline for growth in digital advertising. This is temporary#ppcchat

— Anders Hjorth (@soanders) January 24, 2023

Brett McHale, founder of Empiric Marketing, LLC, and a regular contributor here, echoed this sentiment: “We’ve witnessed economic downturns and mass layoffs eventually leading to booms/bubbles—the 2008 economic crisis giving way to the 2010s tech boom comes to mind. I’m not predicting that will happen now, just that these economic situations tend to be cyclical.” It’s noteworthy that, aside from Twitter (for obvious reasons), no one expressed particular concern about any specific platform.

3. New opportunities may emerge.

Another shared perspective among PPC influencers and practitioners is that with such a vast pool of skilled individuals unemployed and available, there’s potential for new opportunities or movements. Paid search manager Sarah Steman Tweeted in #PPCChat:

A1: Yes, tech is full of opportunity and when you have this volume of highly qualified people out of work there is a shift, however I also see job loss as opportunity for creation and new ideas sometimes people feel free to explore passions or start a business. #ppcchat

— Sarah Stemen (@runnerkik) January 24, 2023

Mark Irvine, Director of Paid Media at Search Lab Digital, a regular contributor here, and a former streamer, shared this view: “The key takeaway is that tens of thousands of exceptionally talented individuals with extensive experience serving numerous clients and managing diverse budgets are reentering the workforce. They also possess valuable insights into their former companies’ tools and features and a unique industry perspective that many of us lack.”

4. We might witness the emergence of more small consultancies.

Brett also anticipates the rise of new opportunities, particularly small consultancies: “I envision many talented professionals in the field transitioning from large corporations to independent contract work. Hiring a W2 employee poses a significant risk for companies, whereas a 1099 employee represents a much lower financial and legal risk. Skilled professionals who’ve been laid off might offer their services to multiple companies, diversifying their income streams and managing their health benefits through their own LLCs.” Navah Hopkins, Brand Evangelist at Optmyzr and a regular contributor (and another former streamer!) expressed a similar sentiment: “Personally, I often wondered if I’d made a mistake by not pursuing opportunities at larger companies. The recent layoffs reinforced for me and many other digital marketers that we can thrive without “big brand safety.” I’m excited to witness the rise of consultants and the dissemination of valuable knowledge to sectors that previously lacked access to this now-available talent.”

5. Agencies and major resellers stand to gain the most.

Mark highlighted another potential outcome: an influx of talent into agencies and resellers. Here’s his take: “Agencies and larger resellers are best positioned to benefit from this reshuffling. They’re better equipped than small businesses to attract this new talent pool experienced in managing diverse client portfolios. Moreover, Google’s most recent announcement is to re-engage its partners, particularly resellers, to empower more advertisers to thrive on their platforms.”

Resellers cited in the article include Accenture, Interactive, Incubeta, Jellyfish, and Media.Monks.

6. Advertisers should remain vigilant.

A common concern among PPC experts is that with heightened revenue focus, ad platforms might prioritize pushing features and upsells over genuinely helping advertisers succeed. This wouldn’t be entirely new (think Google Ads automation), but extra vigilance is crucial, particularly for novice advertisers. PPC influencer Robert Brady voiced this concern in his Tweet:

A1: The layoffs are terrible for those affected. Period.

I’m also wary of how it signals a shift towards prioritizing profits over advertiser success. They have numerous levers they can pull within their algorithms to generate revenue at advertisers’ expense. #ppcchat

— Robert Brady (@robert_brady) January 24, 2023

He added:

And I anticipate even more aggressive pushing of features that benefit the platform rather than advertisers. @robert_brady Mark shared this sentiment: “I’m approaching new product releases over the next four months with increased skepticism. Layoffs right before an earnings call aren’t a coincidence, and neither are product announcements. While there are still many exceptional teams creating great products at these companies, following layoffs, a product manager won’t readily recommend delaying their anticipated tool for another quarter or two due to unreadiness. Implicitly or explicitly, many teams will feel pressured to prioritize speed over perfection. I’d be particularly cautious about anything announced or anticipated before major investor events in April or July—looking at you, GA4.”

7. Prepare for potential outages and support gaps.

Another concern is a potential decline in customer support or increased outages. Notably, Google Ads was out for three hours on January 23.

This issue has been resolved. Thank you for your patience, and we apologize for the inconvenience. https://t.co/0AqTKCl6Ts

— AdsLiaison (@adsliaison) January 23, 2023

Many believe that support is already lacking, potentially exacerbating this pain point. Navah points out that these companies will face heightened scrutiny: “The companies conducting layoffs will be under intense observation. I anticipate a greater emphasis on true return on investment with platforms like Google, Microsoft, and Amazon, along with diminished patience for subpar service, potentially leading to higher customer churn. Many found it peculiar that Google Ads experienced downtime hours after the layoffs, and such instances might become more frequent, met with dwindling tolerance from the industry.”

8. Moderation and policy enforcement could also suffer.

Mark commented on this final concern (as if ad disapprovals weren’t already a headache): “Sadly, I agree that “cost centers” like customer support are often the first to experience cuts. Given the recent advancements in AI, like ChatGPT, there’s a growing temptation to utilize AI in these areas. However, I’m also concerned that moderation and policy enforcement might be neglected. Google has increasingly automated its policy enforcement in recent years, with mixed results, and I suspect this trend will continue. Twitter’s eliminating its moderation teams sets a worrying precedent, potentially incentivizing other tech giants to de-prioritize resource allocation to vital non-revenue-generating teams.”

While I hope these companies remain committed to their values, even actions that affect advertisers paying for legitimate traffic and filter out invalid traffic are concerning. Without scrutiny, will these tech companies uphold or enhance their standards? Or will they be tempted to compromise quality to inflate traffic and boost their bottom line?”

So, what’s the verdict?

If you’ve been uncertain about the implications of these Big Tech layoffs, hopefully, this article has provided some clarity. In terms of your outlook, some concern is warranted, but panic is unnecessary. Industry experts and veterans aren’t making any drastic moves. The key, as Ashton Clarke Tweeted, is to “help clients remain composed and maintain stability.” As long as you stay informed, monitor your metrics, and base PPC decisions on data rather than automated suggestions, your account and performance should remain in excellent shape!