Google to cut DoubleClick jobs, sell Performics piece

Less than a month after closing its DoubleClick acquisition, Google on Wednesday announced significant but expected changes in the ad services company that include reducing its staff and selling part of its Performics division.

Google will lay off or offer "transitional roles" to about 25 percent of DoubleClick's U.S. workforce, a source familiar with the plan said. The person, who asked not to be named, said that staffers offered a transitional role would be employed in a contract position for a certain period of time

Google acknowledged that DoubleClick's staff will be cut, without offering details about the number of positions eliminated. "Since our acquisition of DoubleClick closed on March 11, we have been working to match and align DoubleClick employees in the U.S. with our organizational plan for the business. As with many mergers, this review has resulted in a reduction in headcount at the acquired company. Today, we are laying off some DoubleClick employees in the U.S. and placing others in transitional roles," Google said in a statement.

Prior to the layoffs announced Wednesday, DoubleClick had 1,500 employees worldwide, including 1,200 in the U.S.

Meanwhile, Google has decided to divest itself of the search engine marketing (SEM) and search engine optimization (SEO) group within Performics, a move that had also been anticipated. Providing SEO and SEM services puts Google in some potential conflict of interest situations that could damage its relationship with independent SEO and SEM firms and with Performics clients.

"It's clear to us that we do not want to be in the search engine marketing business. Maintaining objectivity in both search and advertising is paramount to Google’s mission and core to the trust we ask from our users," wrote Tom Phillips, director of the DoubleClick integration process, in an official blog posting.

Google doesn't yet have a buyer for the Performics business, but it has "received preliminary interest" from some current partners, according to Phillips. "Search Marketing will continue to run as a separate entity until the division is sold," he wrote.

Google will retain Performics' affiliate marketing business and integrate it into existing Google operations, Phillips wrote.

SEO and SEM firms, which provide services for improving Web sites' search-engine rankings and running effective search-engine ad campaigns, had been vocal about their displeasure at having Google, until now a partner, turned into a competitor via Performics.

A key concern in the SEO area was that Performics would get special access to inside information about Google's search-engine algorithms, putting independent SEO firms at a disadvantage. Meanwhile, there was concern that Google would push its in-house Performics SEM services at highly discounted prices, or maybe even for free, in competition with SEM service providers.

A potential conflict of interest situation involved the conceptually divergent missions of Performics and Google's ad sales business. Performics is supposed to get its clients the highest return on investment (ROI) from their paid search campaigns -- spending as little as necessary to achieve their goals. But Google's business is to sell as much advertising as possible. This, critics pointed out, could lead Performics to put Google's interests above those of its clients.

The Performics SEO services also put Google in the business of taking money from clients in exchange for helping them rank better in search-engine results, something Google has always vowed not to do. Moreover, Performics provides paid inclusion services into search engines that engage in this practice, in which a company pays a search engine to include its Web site in its index. Google has always been highly critical of paid inclusion services, and doesn't offer them.

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Copyright © 2008 IDG Communications, Inc.

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