This article is more than 3 years old

This article is more than 3 years old

PepsiCo, Walmart and Starbucks on Friday confirmed that they have suspended their advertising on YouTube, joining a growing boycott in a sign that big companies doubt Google’s ability to prevent marketing campaigns from appearing alongside repugnant videos.



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The companies pulled their ads after the Wall Street Journal found that Google’s automated programs placed their brands on five videos containing racist content. AT&T, Verizon, Volkswagen and several other companies pulled ads earlier this week.



“The content with which we are being associated is appalling and completely against our company values,” Walmart said in a Friday statement.

Besides suspending their spending on YouTube, Walmart, Pepsi and several other companies have said they will stop buying ads that Google places on more than 2m other third-party websites.

The defections are continuing even after Google apologized for tainting brands and outlined steps to ensure ads don’t appear alongside unsavory videos.

If Google can’t lure back advertisers, it could result in a loss of hundreds of millions of dollars in revenue. Most analysts, though, doubt the ad boycott will seriously hurt Google’s corporate parent, Alphabet. Alphabet shares have fallen more than 3% since Monday, closing at $839.65 on Thursday.

Although they have been growing rapidly, YouTube’s ads still only represent a relatively small financial piece of Alphabet, whose revenue totaled $73.5bn last year after subtracting commissions paid to Google’s partners. YouTube accounted for $5.6bn, or nearly 8%, of that total, based on estimates from the research firm eMarketer.



Whether the recent events are a mere blip on the radar for Google or a harbinger of bigger problems to come may depend on whether the company can quickly improve its technical tools to give advertisers more control over where their ads appear.

YouTube has begun reviewing its advertising policies and will take steps to give advertisers more control, Philipp Schindler, Google’s chief business officer, wrote in a blogpost this week. Google also plans to hire more people for its review team and refine its artificial intelligence – a key step, since much of the ad-serving is handled by automation.

Eric Schmidt, executive chairman of Alphabet, acknowledged in a Fox News interview that ads appearing next to videos promoting hate speech or advocating violence had slipped through the digital cracks in Google’s elaborate ad-serving systems.

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“We match ads and the content, but because we source the ads from everywhere, every once in a while somebody gets underneath the algorithm and they put in something that doesn’t match,” Schmidt said. “We’ve had to tighten our policies and actually increase our manual review time and so I think we’re going to be OK.”

But Google’s public statements have done little to assuage advertisers’ fears, said David Cohen, president, North America, for the media buying firm Magna Global.



Even before the most recent revelations about YouTube, control over online ad placement had become a hot-button topic for advertisers. Social networks and news aggregators came under fire during and after the US presidential election for spreading fake news reports, and advertisers have also sought to avoid having their brands appear beside content that they categorize as hate speech.

“Between non-human traffic and fraud, fake news and hate speech, brands are more concerned than ever,” said Marc Goldberg, CEO of Trust Metrics, a New York-based company that addresses ad fraud.

