advertisement
advertisement

Google pledged $340 million in aid for small businesses. It won’t help mine survive

Travel tech company Pitchup.com owes much of its success to Google, writes its founder and CEO. With small businesses struggling, it’s time for the tech giant to step up and support them.

Google pledged $340 million in aid for small businesses. It won’t help mine survive
[Photo: DLC/Unsplash]

The travel industry has been devastated by the coronavirus. But with low-density accommodations and little reliance on flights, camping and other outdoor holidays initially seemed like they might escape the worst.

advertisement
advertisement

As CEO of outdoor accommodations booking site Pitchup.com, I had been clinging to hope that outdoor travel would be relatively unscathed as the coronavirus pandemic spread. But as bookings on our platform began to tumble on the 12th of March, it became clear we weren’t immune to the woes facing travel and tourism.

Three weeks after our bookings nosedived, I was forced to furlough much of our team and spent hours asking suppliers for leniency. After an evening on the phone, I poured a glass of wine. An alert caught my eye. For a while I’d been wondering when our biggest supplier, costing more than the rest combined, would break its silence on the novel coronavirus.

As an online business, we owe much of our success to Google. They send us tens of millions of annual users, and power our maps, email, and much of our analytics and hosting, not to mention our Android phones. This doesn’t come cheap: We pay them a seven-figure sum each year.

As an online business, we owe much of our success to Google.

Google has always made its good citizenship known, aspiring to support a healthy digital advertising ecosystem that “works for everyone.” The travel sector has underpinned Google’s growth—Europe’s 800-pound gorilla, Booking.com, spends around $4 billion annually alone—so I had high hopes for Google’s response. But as I read the March 27 announcement by Google’s CEO, Sundar Pichai, my heart sank.

The company would be committing $800 million “to support small and medium-size businesses (SMBs), health organizations and governments, and health workers.” Like any near-billion-dollar number, $800 million sounds extremely generous, until you apply some simple math. The $340 million in Google Ads credits earmarked specifically for SMBs with active accounts over the past year is only about 0.2% of Google’s annual revenue (based on $162 billion in revenue reported by Alphabet, Google’s holding company, in 2019). When you break that number down for the about 4 million SMB advertisers that use Google Ads, each SMB would only receive a credit of about $85 on average. That $85 credit per advertiser amounts to a measly 0.25% of $33,750, the approximate average annual ad spend for SMBs.

Further, Google’s credits will be available “in the coming months” and must be used in 2020. The constraint will likely leave only the second half of this year to use the credits, meaning that seasonal businesses that usually peak in the spring, or that don’t have a 2020 season at all, may be unable to redeem them.

advertisement

Comparatively, it has been heartening to learn of the support plans our other service providers have already put in place. These organizations, including translation software providers, image management services, and chat systems, are minnows compared to Google, but have been far more responsive and generous. Several have immediately waived fees for a quarter while continuing their service. Our requests to Google about similar initiatives, on the other hand, have been fruitless so far. The responses from Google Cloud, Google’s hosting and maps arm, and G Suite, its email and drive provider, have been similarly underwhelming: brief payment deferrals, but no billing relief.

Ads, however, are businesses’ main contribution to Google’s coffers. The Google Ads credit is intended “to alleviate some of the cost of staying in touch with customers” arising from coronavirus. Given the brutal impact of this crisis on most sectors, the scale of this plan is disappointing to say the least.

It is hard to see how Google’s announcement fosters the healthy ecosystem the tech giant espouses (but doesn’t always live up to). Given that its status at the top of the digital advertising food chain is due to its clients’ ad spend, Google’s support should be commensurate with the value that ecosystem has brought it. Businesses are fighting for their survival, not for $85.

Businesses are fighting for their survival, not for $85.

Google has certainly prospered off the back of the travel sector, with the top two advertisers alone spending around $8 billion each year. Booking Holdings (including Booking.com, Kayak, and OpenTable) spent $4.4 billion on performance marketing in 2019. Expedia Group (including Hotels.com) spent $4.7 billion on “selling and marketing” in 2018. Much of these budgets go to Google. Yet Google’s total pledge to help all small businesses is less than 10% of spend by each of those companies.

The travel industry, my industry, is possibly the hardest hit by the pandemic. “Travel and tourism…is not simply in downturn—it is sliding towards complete oblivion… If the West allows lockdown to stretch into the summer, the entire trade is essentially insolvent,” wrote entrepreneur and author Luke Johnson in The Sunday Times.

Since our decisive downturn mid-March, our bookings are now running 98% down on last year. Hospitality companies around the world are similarly affected, facing a double whammy of zero revenue and a deluge of customer support requests. It has been reported that 43% of tour, activity, and attraction operators are at risk of failure within three months, and an online petition has been launched for the sector.

advertisement

While its own revenue will have fallen in line with that of its clients, I call on Google to match the scale and urgency of this crisis. Coronavirus is an existential threat not just to travel firms, but to entire sectors of the economy. Many advertisers owe their success to Google’s unique platform, from which it has profited to the tune of hundreds of billions, surpassing Apple last year to become the world’s most cash-rich company. Now is the time for Google to step up, dig deep, and support the advertisers that made it what it is.


Dan Yates is the founder and CEO of Pitchup.com.

advertisement
advertisement