Google ad crisis spreads around world as big-spending marketers turn away
Google’s advertising crisis has gone global after some of the biggest marketers including AT&T and Johnson & Johnson halted spending on YouTube and the internet company’s display network, citing concern their ads would run alongside offensive videos.
The controversy erupted last week after the London-based Times newspaper reported that some ads were running with YouTube videos that promoted terrorism or anti-Semitism. The U.K. government and the Guardian took down ads from the video site and Havas, the world’s sixth-largest advertising and marketing company, pulled its U.K. clients’ ads from Google’s display ad network and YouTube.
On Wednesday, the boycott spread across the Atlantic as U.S. companies that are among the heaviest ad spenders pulled back, potentially costing Google and YouTube hundreds of millions of dollars in lost business.
AT&T and Verizon Communications, the largest U.S. wireless carriers, said they had stopped nonsearch advertising spending with Google. Johnson & Johnson, the world’s biggest health care company, paused all YouTube advertising globally.
“We are deeply concerned that our ads may have appeared alongside YouTube content promoting terrorism and hate,” a spokeswoman for AT&T said in a statement Wednesday. “Until Google can ensure this won’t happen again, we are removing our ads from Google’s non-search platforms.”
To shield its brand, Verizon took the same action. It’s also started an investigation, Sanette Chao, a Verizon spokeswoman, said in a statement.
Search represents the lion’s share of Google’s advertising revenue, which totaled $79.4 billion last year. However, large advertisers such as AT&T tend to spend more heavily across Google’s video and display advertising network. AT&T is the fourthlargest advertiser in the U.S., spending nearly $942 million in 2016, according to Kantar Media, and Verizon is No. 3.
Google’s network business, which serves display ads on other sites, generated $4.4 billion in fourthquarter revenue, about 20 percent of the company’s total ad sales. While YouTube revenue isn’t reported separately, analysts estimate the site brings in billions each year, and say it’s among Google’s fastestgrowing businesses.
“American advertisers making statements will cause American investors to pay infinitely more attention to an issue that is already gripping much of the industry,” said Brian Wieser, analyst at Pivotal Research Group, which downgraded Google parent Alphabet’s stock on Monday.