Google Ad Controversy May Hurt Its Reputation, One of Many Issues for Ad Industry

Online Trust Alliance President Craig Spiezle emailed that this may be a "tipping point," with "Google failing to be responsive to the mounting issues from both publishers and brand advertisers, (and consumers)." He said Google is dominant across Gmail, search and YouTube and hasn't been responsive. There are other issues, he said, including the problem with deterring malvertising, an broad consumer resentment of many ad industry practices, which is "driving the ‘justification’ of ad blocking" and a lack of confidence in performance metrics.

Association of National Advertisers CEO Bob Liodice said in a Friday statement that "anything that disrupts, disturbs or threatens consumer and customer relationships ... should be avoided at all costs." He said the brand concerns of ANA members that suspended advertising on Google and YouTube are "rational, appropriate and warranted." Like others, ANA wants digital ad platforms to take steps that guarantee the safety and reputation of brands, he said. "We view brand safety issues as an unfortunate example of the many challenges that exist throughout the digital media supply chain," said Liodice. "The current crisis is representative of the issues that ANA -- and others -- have raised with respect to fraud and risk, reduced transparency, suboptimum measurement and nebulous productivity. A dearth of trust and a need for verification lie at the heart of these problems.”

Branding expert Dorie Clark, who has consulted for Google, emailed that the problem isn't new or specific to Google and YouTube. "Some advertisers are suddenly freaking out because of a recent news story highlighting the problem. But Google is such an advertising behemoth, they won't stay away for long," she said. The company, she added, will be working "assiduously" to fix the problem and once customers are assured that safeguards are improved, "the dollars will flood in again." The adjunct professor with Duke University's Fuqua School of Business said the ad industry faces many problems, including "imperfect" efforts to block objectionable content. "Sometimes they miss extremist content and put ads for Mercedes-Benz next to neo-Nazi and jihadist videos. And sometimes they over-filter and block inoffensive [lesbian, gay, bisexual and transgender] content, leading to charges of bias," she wrote.

Google's efforts to provide more transparency, safeguards and controls so advertisers can better place their ads "will increase costs in terms of personnel, investment in artificial intelligence and machine learning to enhance capacity to review uploaded material," said Moody's Investors Service in a note Friday. The increased costs and loss of ads will have negative consequences, both reputational and financial, but Moody's said the number of companies boycotting Google is still a "very small fraction" of all advertisers that will use YouTube for marketing. The firm said the revenue implications are temporary since Google is "laser-focused" on fixing the problems: It's credit negative but doesn't impact the company's Aa2 rating.

Last week, Google apologized for the miscues and said in a blog post it's doing an "extensive review" of its ad policies and tools. "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," a Google representative emailed Friday. "We're also raising the bar for our ads policies to further safeguard our advertisers’ brands." Chief Business Officer Philipp Schindler wrote in the post that the company is "taking a tougher stance on hateful, offensive and derogatory content," including "removing ads more effectively from content that is attacking or harassing people based on their race, religion, gender or similar categories." Google, he said, will tighten measures to ensure ads show up beside "legitimate creators" in its YouTube Partner Program vs. those who imitate channels or violate guidelines. Schindler said Google will introduce new tools for advertisers so they can better manage where their ads appear.

The flap began after an investigation by The Times of London revealed that advertising from companies like L’Oréal and Nissan and government entities like Transport for London appeared in racist and objectionable YouTube videos. The March 17 report said in most cases, advertisers were "inadvertently providing the extremists with a stream of revenue" since YouTube posters are paid up to $7.60 for every 1,000 views that an advertisement attracts. Google also takes a cut, it said.

Around then, global marketing group Havas Media Group UK paused its ad spending with Google and YouTube, confirmed a Havas spokeswoman in an email. Havas said it's a "temporary move made on behalf of our UK clients and their specific needs," it won't take such measures globally and is working with Google to fix the issues. Last week, AT&T and Verizon, among others, said they're cutting ad spending with Google.

“We are deeply concerned that our ads may have appeared alongside YouTube content promoting terrorism and hate," said AT&T in its recent statement. "Until Google can ensure this won’t happen again, we are removing our ads from Google’s non-search platforms.” Verizon, which also pulled its ads from Google, said in a statement it takes "careful measures to ensure our brand is not impacted negatively. Once we were notified that our ads were appearing on non-sanctioned websites, we took immediate action to suspend this type of ad placement and launched an investigation." Verizon said it's working with its digital ad partners to "understand the weak links so we can prevent this from happening in the future."