Advertisers Flee YouTube Controversy

The technology that has earned Google billions has now cost the company several huge advertisers. AT&T, Walmart, and Johnson & Johnson have all backed out of using YouTube for ads following pairings with several controversial videos. The brands are concerned for their image. They also seek to reduce the amount of revenue directed to extremists. Content creators receive a portion of the campaign funds for ads directed to their videos. Google has apologized for any disconnect between the values of the brands and the content with which they have been connected. However, given that most ad placement is completed electronically, the likelihood is that major companies will continue to risk negative associations when using the YouTube platform. The withdrawal comes at a bad time for Google, which has recently launched a high profile lawsuit against Uber over intellectual property theft.

Walmart and AT & T among the many companies to cease YouTube advertising over inappropriate content.

New Technology Cause New Ad Placement Problems

The main problem is that ad placement systems have switched from the legacy campaigns for radio, television, newspapers, and magazines, in which sales agencies arranged which ads would go with a particular content publisher. This kind of setup protects brands from having their ads end up next to content that might fit algorithmically, but which is unsuitable for the desired demographic for socio-political reasons. For example, if Johnson & Johnson is trying to sell shaving cream in Saudi Arabia, a video featuring an radical Islamist might look ideal from an data driven standpoint on location and age, but would obviously not be a good fit for the company’s image.

Automatic Ad Campaigns behind Poor Matches

Google and Facebook are the two leaders in programmatic advertising, which now makes up almost 80 percent of revenue spent on digital campaigns. Google in particular has maintained control over the process that links advertisers and content publishers. The amount of video uploaded on a daily basis requires automatic review tools. The only manual review occurs when YouTube users flag specific content. Still, this may not affect content aimed at a narrow user base with views that mirror those of the original creator. If YouTube connects this type of video to a major brand, the damage financially could escalate before either the advertisers or Google is aware of the controversy.

Issues Surface with YouTube Data

Another problem with automatic ad placement is that brands can’t see if actual human beings have viewed the campaigns. Last year, YouTube charged several brands for ads viewed by bots, essentially computer programs created to mimic human behavior. When describing the lack of transparency regarding viewer statistics, Keith Weed, who heads up marketing at the huge conglomerate Unilever, said that it was as if they had “billboards underwater”.

How Can Platforms Fight Fake News?

Google and Facebook have both been receiving more criticism for a perceived lack of responsibility in recent months. Industry experts accuse Facebook in particular of promoting “fake” news sites. This problem has grown in scope following last year’s contentious U.S. Presidential elections. A 2016 survey showed that nearly half of American adults get use Facebook as their primary news source. Facebook recently came out with a warning when Snopes or Associated Press has flagged a particular news item. They hope to combat the promotion and sharing of unverified information.

Will Declaring Some News Misleading Increase Media Distrust?

Critics have noted that this is unlikely to change anyone’s opinion.  When presented with counterfactual information, people with a bias retreat even more deeply into their original position. Additionally, many stories have strong facts to support both sides, or deal with the sensitive areas of spirituality or ethics. In these cases, it would be difficult to assign a definitive label of true or false to the content. Alternatives would include allowing Facebook users to block content coming from particular sources, or letting content providers self-identify as satirical.

How Will the Google Ad Backlash Affect Trading?

The major impact will be on Google share prices. Several of their largest advertisers left over the course of a week. This is the first time that the problems regarding YouTube ads have actually resulted in financial damage to the company. Additionally, the company will also have to invest in more staff and better technology to review content in the future.

The stock prices for the companies which have left YouTube could also drop. YouTube is still a major target for advertising. It will be hard to replace the number of views that brands like Walmart can reach on the platform. If the situation isn’t resolved before the end of Q2 2017, the lack of advertising could have lasting effects for several manufacturers, and could also drag down the Dow and S & P 500 indices.