Google ad crisis spreads

A picture illustration shows a YouTube logo reflected in a person's eye

A picture illustration shows a YouTube logo reflected in a person's eye

Published Mar 23, 2017

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San Francisco - Google’s advertising crisis went 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 UK government and the Guardian

newspaper took down ads from the video site and Havas SA, 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 US

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 US

wireless carriers, said they had stopped non-search 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 totalled $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 fourth-largest advertiser in

the US, spending $941.96 million in 2016, according to Kantar Media, and

Verizon is number three.

Read also:  Google to clamp down on hate videos

Google’s network business, which serves display ads on

other websites, generated $4.4 billion in fourth-quarter revenue, about 20

percent of the company’s total ad sales. While YouTube revenue isn’t reported

separately, analysts estimate the video site brings in billions of dollars each

year, and say it’s among Google’s fastest-growing 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 Inc.’s stock on Monday over the

issue.

Google tried to head off the backlash this week,

implementing new tools and policies. But many advertisers were waiting to see

further details or results, before placing ads again.

Sainsbury’s, the British Broadcasting, Toyota Motor,

Volkswagen and Havas each said Wednesday that their decision to pull ads from

YouTube hasn’t changed following Google’s announcements.

Brentford, UK-based GlaxoSmithKline, one of the biggest

drug makers, joined the boycott on Wednesday. 

"The placement of our brands next to extremist

content is completely unacceptable to us and we have raised our concerns

directly with Google," the company said. "We are encouraged by

Google’s steps over the past few days."

A representative for Google declined to comment on

individual customers.

“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,” the representative

said. “We’re also raising the bar for our ads policies to further safeguard our

advertisers’ brands.”

BLOOMBERG

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