San Francisco — Facing thorny questions about possible conflicts of interest, Google Inc. plans to break off its search marketing arm from its affiliate marketing business, said it will sell a recently acquired service called Performics that helps Web sites improve their ranking on online search engines, including Google’s when it bought DoubleClick.
In its nine-year history, the company is cutting about 300 jobs, or one-quarter of the 1,200 DoubleClick staffers from the American operations, the advertising technology company that it acquired recently, according to a source familiar with direct knowledge of Google’s plans.
A Google spokesman said the company could not confirm the exact number of workers laid off, but the decision, announced Wednesday, comes merely three weeks after Google picked up Performics as part of the online search leader’s $3.2 billion purchase of online ad service DoubleClick.
The company approximately has 1,500 personnel globally, and the chief executive of Google, Eric E. Schmidt, has indicated that job cuts would also affect DoubleClick’s overseas operations at a later date.
In a statement, the company said: “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, Google spokesman Brandon McCormick said. As with many mergers, this review has resulted in a reduction in headcount at the acquired company.”
Continuing, the company said: “Today, we are laying off some DoubleClick employees in the U.S. and placing others in transitional roles. We are confident that our combined organizational structure, along with the skills and experience of our new colleagues, will allow us to continue to offer great products and services to our customers.”
Meanwhile, Google said it is planning to split its DoubleClick unit, Performics Search Marketing, which helps marketers place ads on search engines, including those owned by Google and its main rivals, Yahoo and Microsoft.
The determination to sell Performics Search Marketing is not unexpected, said Ellen Siminoff, chairman of search marketing company Efficient Frontier. Google’s job is to get paid as much as possible for the ads that appear on its pages.
“If you are a search marketing organization, your aim is to get the most for your customers’ money,” Siminoff added, noting that those two goals could be in conflict.
Disposing the piece of Performics that manipulates search engine results will enable Google to preserve the trust of its users, according to Tom Phillips, who is overseeing the company’s DoubleClick acquisition.
“It is very obvious to us that we do not want to be in the search engine marketing business,” Phillips wrote in a blog on Google’s Web site. “Maintaining objectivity in both search and advertising is paramount to Google’s mission and core to the trust we ask from our users.”
Google said that it will combine the affiliate marketing business activity into existing Google operations to backup its affiliate advertisers and provide more tools and monetization opportunities for its publishers.
Search expert Danny Sullivan of Search Engine Land, who wrote an open letter asking Google to divest itself of the search engine marketing arm, saying that even if Google keeps its search engine operations completely separate from the search optimization arm; there could be the appearance of impropriety and bias.
Sullivan is asking for Microsoft to do the same with the Avenue A/Razorfish search marketing assets the software company gained when it bought aQuantive in 2007 for $6 billion.
The acquisition reinforces the company’s technology for selling and measuring the effectiveness of display ads, which include pictures and video. DoubleClick was the largest of Google’s more than 37 acquisitions. Google, owner of the world’s most popular Internet search engine, completed the purchase on March 11.
The reformation also indicates Google may be more closely watching its expenses amid concerns that the slowing U.S. economy will curb the ad spending that has driven the company’s rapid earnings growth.
Growing fears about a possible slowdown has contributed to a 33 percent decline in Google’s market value so far this year, wiping out about $70 billion in shareholder wealth.
“Google increased more than 6,100 workers in 2007 and ended the year with 16,805 employees worldwide.”