March 27, 2017
Google’s recent gaffe with advertisers will cost the company big bucks, according to a note from analyst firm Nomura Instinet.
Major brands have been pulling their advertising from Google’s YouTube platform in the past few weeks over concerns of being linked to extremist video content. Google’s promises to fix the problem won’t stop the tech titan from losing as much as $750 million, however, Nomura Instinet predicts.
“We estimate that a suspension of spend from major brands on YouTube results in a $750 million impact to YouTube revenue,” the note reads, adding that YouTube would see a 7.5 percent decrease in revenue.
Although the boycott began in the U.K., a number of major U.S. advertisers have also halted all advertising spending with Google. Some of those brands are AT&T, Dish Network, FX Networks, General Motors, Johnson & Johnson, PepsiCo, Starbucks, Verizon and Wal-Mart. Europe’s growing list of unhappy European advertisers includes Audi, HSBC, Lloyds, L’Oreal, Marks and Spencer, McDonald’s, RBS, Toyota and Volkswagon.
The brands have all said they are concerned about their reputations being tarnished when their ads appear alongside offensive videos, such as clips advocating for terrorism and anti-Semitism.
Google has promised to hire more people as part of its push to better review ad placements. The tech titan also vowed to offer an “escalation path,” making it easier for advertisers to complain, enabling the resolution of such cases within a few hours.
“We know advertisers don’t want their ads next to content that doesn’t align with their values. So starting today, we’re taking a tougher stance on hateful, offensive and derogatory content,” Google chief business officer Philipp Schindler said in a blog post.
“This includes removing ads more effectively from content that is attacking or harassing people based on their race, religion, gender or similar categories. This change will enable us to take action, where appropriate, on a larger set of ads and sites.”
Google is implementing changes in three main areas: ad policies, enforcement of these policies and new controls for advertisers. The changes are part of Google’s “extensive review” of its advertising policies and tools, Schindler said.
Google has also said it will also offer advertisers “more transparency and visibility on where their ads are running,” and in the coming months will expand availability of video-level reporting to all advertisers.