Google faces ad boycott over extremist content
‘Brand safety’ becomes a major issue for industry
Pressure on Google is rising after British brands and media outlets started to pull their business from the company and its YouTube unit over placement of their ads next to extremist content, moves that prompted an analyst to downgrade the stock.
Late last week The Guardian and the BBC, among others, said they would halt spending to protest their advertisements being placed next to YouTube videos of white nationalists, Islamic State videos and other extremist content.
Pivotal Research Group analyst Brian Wieser said the protest from advertisers has “global repercussions.”
The spending is “relatively small so far,” Wieser wrote in a research report Monday. But, “we think that awareness of the incident will marginally curtail global growth this year versus prior expectations.”
He downgraded Google parent company Alphabet to hold from buy and reduced his price target to $950 from $970, in part due to a recent run-up in the stock.
Alphabet shares fell 0.7% to $866.20. They’ve recently traded at an all-time high.
Google’s European Union operations boss publicly apologized to advertisers over the growing crisis that forced major brands such as Marks & Spencer to drop their Google and YouTube ads. Matt Brittin, Google’s President of EMEA Business & Operations, told the Advertising Week Europe conference in London, “we take our responsibilities to these industry issues very seriously.”
“We’ve made a public commit- ment to doing better and are making improvements in three areas: raising the bar for our ads policies; simplifying advertiser controls and adding safer defaults; and increasing investment in enforcement to act faster,” he said.
But Wieser says he’s not confident Google is going far enough to remedy advertiser concerns.
“The approach comes across to us as attempting to minimize the problem rather than eliminating it, which is the standard we think that many large brand advertisers expect,” he wrote.
The exodus of British media outlets and advertisers follows an investigation from The Times in Britain in February that found that ads from major companies and the British government were appearing next to Islamic State videos and other extremist content. That led to the decision by Havas, the sixth-largest global media network, to suspend its advertising with Google and YouTube in the U.K. The UK government has halted its YouTube spending until the problem is resolved, according to the Financial Times.
“According to press reports, over the past few days, many of the UK’s largest brands working with agencies beyond Havas (including the UK Government, L’Oreal, RBS, HSBC, Sainsbury’s, Sky, Marks & Spencer, McDonald’s and Audi) also indicated that they would suspend their advertising on YouTube and/or other Google ad products because of identical concerns,” Wieser wrote.
Guardian CEO David Pemsel said in a letter to Google that many brands feel they must place their ads on Google and YouTube given their dominant position in online advertising.
Google is only tightening its grip on advertising dollars, according to research firm eMarketer. Total digital ad spending in the U.S. will increase 16% this year to $83 billion, dominated by Google in search ads and Facebook in display and mobile ads, according to the firm’s latest forecast.
“It is therefore vital that Google, DoubleClick and YouTube uphold the highest standards in terms of openness, transparency and measures to avoid advertising fraud and misplacement in the future,” Pemsel said. “It is very clear that this is not the case at the moment.”
Google reviews content flagged by users. Four hundred hours of video is uploaded every minute to YouTube, Google says, making it tough to police.
Some 98% of content flagged on YouTube is reviewed within 24 hours, Google says.
“We recognize that we don’t always get it right,” Google U.K.’s managing director Ronan Harris wrote in a blog post Friday.
He acknowledged that Google needs to “do a better job of addressing the small number of inappropriately monetized videos and content,” and pledged Google would introduce new ways in coming weeks for marketers to control where their ads appear.
Why is this such a significant issue?
“Brand safety” has emerged as possibly the biggest issue facing the advertising industry, Wieser says.
For large marketers, even one ad placed next to extremist content can cause harm to a brand, he said.
“We expect they will be all too happy to highlight future brand safety failings, negatively impacting brands. We think that Google will probably need to articulate goals that sound more like a zero tolerance policy, to alleviate concerns before it can fully recover,” Wieser wrote.
“The approach comes across to us as attempting to minimize the problem rather than eliminating it, which is the standard we think that many large brand advertisers expect.” Analyst Brian Wieser