Google has been under siege in Europe in the last week after reports that brands’ advertising appeared next to extremist material and other offensive content on YouTube and some of the roughly two million sites in Google’s display network.
The company has defended itself by noting that it prevents ads, which are placed on websites automatically, from running near inappropriate material “in the vast majority of cases.” It also said it added thousands of sites to its ad network every day, as well as 400 hours of video to YouTube every minute.
Still, several advertisers, seeking more accountability, have pulled some of their ad spending. They include the British government, The Guardian, the pharmaceutical company GSK and the French advertising multinational Havas.
Now, the issue is taking hold with American advertisers, with the car rental company Enterprise announcing a temporary halt of spending on YouTube on Wednesday. Verizon, while it did not mention Google or YouTube by name, said Wednesday that it would suspend “all digital nonsearch advertising inventory” after learning its ads “were appearing on nonsanctioned websites,” which presumably included ads on YouTube and websites in Google’s ad network.
AT&T said in its statement: “We are deeply concerned that our ads may have appeared alongside YouTube content promoting terrorism and hate. Until Google can ensure this won’t happen again, we are removing our ads from Google’s nonsearch platforms.”
Johnson & Johnson said it “has decided to pause all YouTube digital advertising globally to ensure our product advertising does not appear on channels that promote offensive content.” The company added, “We take this matter very seriously and will continue to take every measure to ensure our brand advertising is consistent with our brand values.”
Google, in response to the actions, said, “We don’t comment on individual customers, but as announced, we’ve begun an extensive review of our advertising policies and have made a public commitment to put in place changes that give brands more control over where their ads appear.”
Google has become the largest seller of advertising on the internet by pairing its vast network of content — its own and other publishers’ — with businesses large and small looking to grab eyeballs moving from traditional media to the web. The company’s ad business generated $22.4 billion in the fourth quarter of 2016, about 85 percent of the total revenue in the period by Google’s parent company, Alphabet. The biggest part of that still comes from search advertising.
While the pullback from major brands is a public relations blow, it is unclear if it will have much of an effect on that vast ad business. The underlying dynamic of advertising’s shift from TV toward the internet remains unchanged, and YouTube is still the largest player in the web video game.
Still, AT&T was one of the top five advertisers in the United States last year, spending nearly $1 billion through November, according to data from Kantar Media. Mr. Wieser said its size would certainly cause other marketers, and investors, to take note.
“Eventually, they’ll respond appropriately,” Mr. Wieser, who cut his recommendation on Google shares to hold, from buy, early this week, said of the company, citing “global repercussions” from the moves in Britain. “They’re not going to just see a significant business go away.”
The issue highlights the continuing risks companies face with programmatic advertising, which sends advertisers’ money through a complex web of agencies and third-party networks that resemble a stock exchange before ads appear. As advertisers target people based on their browser history — the reason a pair of jeans in an online shopping cart may follow a person around the web for weeks — and extend their reach to all manner of websites and videos based on how many people are tuning in, they are growing more reliant on technology companies to prevent them from showing up in the wrong places.
Whereas advertisers usually get strict assurances about how and where their ads will be placed on television and in print publications, Google and other internet players like Facebook do not provide the same oversight. That is because of the volume of websites they deal with, because of the fact that they have less direct control over the content uploaded to those sites and because algorithms, rather than humans, place the majority of ads.
Google’s policies prohibit ads on video content deemed to be pornographic, inciting violence or promoting illegal behavior. The company uses software to comb YouTube titles and images to flag potentially inappropriate content, but by its own admission, these methods are not perfect. Marketers also have the option of prohibiting their ads from appearing next to certain types of content, such as videos featuring profanity.
“Although it is effective in dealing with the highly fragmented nature of the digital ad world, programmatic buying is still evolving as a business practice — and it appears that technology has gotten ahead of the advertising industry’s checks and balances,” Laura Bryant, a spokeswoman for Enterprise, said in a statement. “There is no doubt there are serious flaws that need to be addressed.”
Programmatic advertising and YouTube represent two major initiatives for Alphabet. The shift to searches on smartphones has pushed down the prices for Google’s main search ads, heightening the importance of new areas of growth.
Google does not break out revenue from either business but has trumpeted both during earnings calls. Ruth Porat, Alphabet’s chief financial officer, said on a call with analysts in January that Google had only “scratched the surface” for what it could do with YouTube and programmatic advertising.
“We remain excited about the sizable opportunities that have not yet been tapped,” she said.
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