The real motivations behind the growing YouTube advertiser boycott

• More than 250 brands have reportedly pulled their spend from Google's services after a newspaper investigation found their ads appearing next to extremist content on YouTube.
• Business Insider spoke to more than a dozen ad executives who suggested the boycott smacks of "opportunism" and a chance to gleefully bash the biggest player in the online ad industry.
• Some executives suggested advertisers and agencies are hopeful Google's pain over the issue will continue so they can use it as leverage in their negotiations with the online ad giant. Others said the boycott shows just how little many people understand about the way online advertising works.

LONDON - The timing could not have been worse.

On the week leading up to the annual ad industry event Advertising Week Europe, The Times of London ramped up its investigation into brand ads inadvertently appearing next to extremist content on YouTube and funding the videos' creators.

By the second day of the London-based trade show, The Times reported that more than 250 brands - from L'Oreal, to McDonald's, Audi, and HSBC - had suspended their campaigns from YouTube (and in some cases, Google's display ad platform that serves ads to third-party websites) until Google could give them assurances that their ads would not appear next to videos containing hate speech, promoting terror organizations, or other obviously unsafe content for their brands to be associated with.

Google had to devote much of its first session at the event - an on-stage chat between its European boss Matt Brittin and Unilever marketing chief Keith Weed - to apologizing about the issue and promising updates to its policies, controls, and hiring strategy in order to tackle it.

The YouTube advertiser boycott also dominated the other on-stage discussions that took place during the week, as ad executives took their chance to admonish Google for not doing enough to keep brands safe.

Behind the scenes, in the "Google Lounge" where speakers and VIPs congregate before they head to the day's sessions, Google's European executives were witnessed holding discussions with agencies and trade bodies.

Online ad misplacement is nothing new

Brand safety has been an issue ever since website owners began monetizing their content on the internet. Google "funny ad misplacements" and you'll find a plethora of examples, like the now legendary insurance brand's ad featuring a duck glaring from the screen, situated on an article titled: "Anatidaephobia - The Fear That You Are Being Watched By A Duck"

So why the sudden fuss now? It's not like the association between Google funding terrorist sympathizers with its ad systems is anything new. Last year, for example, The Financial Times reported on the website for the Islamist extremist accused of funding the 2009 Jakarta suicide bombings that was using Google AdSense to make money from ads from brands including Microsoft, IBM, and Citigroup.

Business Insider spoke to around a dozen executives attending Ad Week Europe to attempt to find out what is really behind the boycott.

Why ad misplacement keeps happening and what advertisers want Google to do about it

Online advertising companies pride themselves on offering advertisers access to big audiences at a price that comes at a fraction of the cost of other, "traditional" media.

When advertisers buy online media, they rarely negotiate each individual placement. Instead they buy audiences - usually across a group of websites, or in this case YouTube videos - using a method called programmatic, which uses automated systems to bid on each ad slot on the advertiser's behalf. Often, advertisers are pushed by their procurement departments to aim to reach the largest audience for the smallest cost as a priority, rather than taking account of the context in which their ads will appear.

Advertisers can insist on having whitelists (a list of websites or types of content that their ads *can* appear on) and blacklists (a list of websites or types of content that their ads *can't* appear on) in order to mitigate the risk of their ads appearing next to questionable content. Managing such lists can be time-consuming, ad verification services usually come with extra costs, and with millions of pieces of content being uploaded to the web every day, they still can't 100% guarantee brand safety.

Google's European boss Matt Brittin explained to Business Insider on Monday that 400 hours of user-generated video are uploaded to YouTube every minute and thousands of websites added to Google's AdSense network each day, which makes it extremely difficult to police which content is safe for brands to advertise against and which isn't. And that's not to mention the fact that Google doesn't want to curtail free speech in the process.

Google did say on Tuesday, however, that it is employing more people, deploying more technology, and updating its policies to help review questionable content for advertising.

But that doesn't rub with some advertisers

One marketer at a brand that unwittingly found one of its ads next to a hate speech video on YouTube told Business Insider he took issue with Google's stance to monetize first, moderate later. Other publishers, such as news publications, can insert tags into their articles - to make sure brand ads don't appear next to news stories about bomb attacks, for example.

The marketer, who wished to remain anonymous, believed no amount of staffing up would offer a foolproof guarantee to prevent such an incident from taking place again - but a switch in strategy to review content first before serving ads against it would help. That's a view shared by UK advertiser body ISBA, which suggested Google should place recently uploaded content in a kind of quarantine until it could guarantee brands were safe to advertise against it.

Schadenfreude

Google dominates the digital advertising industry. Its dominance threatens the online news business. It threatens the TV business. And it threatens advertising-buying agencies who fear their clients could simply go to Google direct and cut out the middle-man. Google-bashing is quite common in the ad industry.

One UK advertising executive who also spoke to Business Insider on a condition of anonymity, said: "Nobody wants to take on the bully in the playground, but once one person does, everyone can pile in ... It's like Manchester United. Who likes Manchester United and doesn't support them? They used to smash everyone for years and now people are enjoying their bad streak [of performance]."

The reason so many UK advertisers, specifically, decided to lay into Google this week may also have a little something to do with being British, according to another UK ad agency veteran: "It's a very British thing: We like underdogs, we don't like it when people succeed. When people get on top, we want to kick them down."

Nonetheless, most of the executives we spoke to were surprised at the sheer amount of volume placed in Google's direction over this ad misplacement issue, given the small amount of ad dollars that were likely affected.

Google's Brittin said on Monday that the company is talking about "pennies not pounds" - a view shared by most of the executives we spoke to, who thought the percentage of ads appearing next to extremist videos is likely negligible.

The following questions came up often in our conversations with advertising executives: Had The Times not conducted its investigation, would any of the brands have noticed any negative impact? Would anyone watching a hate speech video, for example, really think those views were shared by the advertiser that appeared next to it?

'Opportunism'

Another UK-based industry veteran said the escalation of public negative sentiment from the ad industry versus Google smacks of "opportunism".

They added: "It's bad that ISIS content is out there. [British intelligence agency] MI6 should be asking for the postal address where the check [generated by YouTube ad revenue] is being sent, but fake news was 10,000 times bigger. That was seen by millions of people. Ads on the spam sites of the web, yes. '25 Cheerleader Costume Disasters - You Won't Believe Number 24' - that stuff is real and it is [of] scale, but most of those as are bought by agency trading desks."

The advertising agency sector has been plagued with transparency issues in recent months. A high-profile report in the US published last summer alleged agencies unethically pad their profits through non-transparent practices such as rebate schemes and arbitrage. All the big agency groups denounced the findings. But nevertheless, the report, commissioned by the Association of National Advertisers, sparked a wave of media agency reviews, audits, and has fueled a conversation in the industry about mistrust between agencies and their clients.

Google's current scandal may serve to take the heat off, for a little bit.

Ryan Kangisser, founder of ad tech consultancy I/O, said: "As far as agencies are concerned, I think this recent storm has helped to shift attention away from the ongoing transparency and brand safety concerns - related to their own programmatic offerings - and allowed them to reinstate their position as gatekeepers by holding Google much closer to account.  It is also a good opportunity to show leadership as well as create differentiation in the measures they are putting in place to mitigate the prevailing issues around brand safety and fraud."

Some agency groups and advertisers may use Google's current situation as leverage

This particular round of negative PR for Google could serve to give agencies leverage when it comes to negotiating what they really want from the online ad giant. Only one agency group - Havas UK - has suspended all its clients' advertising from YouTube (a move not mirrored by Havas globally). While not pulling spend, the other big agency groups have still taken turns to demand Google take more responsibility for the content that appears on its platforms.

Many agency groups (and others in the ad industry) accuse Google of being a "walled garden" because it doesn't offer open access to all its data. It means agency trading desks can't add tracking pixels to its inventory to apply learnings from campaigns they run on YouTube to ads they run on other video sites. Agencies are also restricted from buying YouTube inventory through third-party demand-side platforms and are forced to purchase ads on the video site via Google's DoubleClick Bid Manager. Now those groups have more fuel to argue that Google should bring that wall down, some of the people we spoke to suggested.

One UK advertising executive speculated that a media agency network could now theoretically say: "If we put [YouTube] inventory through our filter, we will clean it up, make it safe, and make a fortune on the side."

Meanwhile, other media owners - like broadcasters and online publishers - can use the current wave of negativity about Google as a marketing tool to reinforce the value of their premium, apparently safer, environments to advertisers.

A lack of understanding about what's really going on

The executives we spoke to said one of the reasons the brand safety row has flared up is because the issue of ads appearing next to ISIS videos is easier for senior management teams to understand than some of the other challenges affecting the online ad market, like ad fraud, bots, and media agencies' business models.

Almost everyone in the business uses YouTube. Their kids use it. Something like Google's ad exchange, AdX, is a more difficult concept to fathom. A CEO can see a screenshot of their brand ad next to a terrorist YouTube video on the front page of The Times and immediately understand that isn't a good look from a PR perspective. There's an obvious culprit to blame: Google. There's a clear reaction to take: Threaten to pull spend.

But even that kind of action has revealed a lack of education in clients. Business Insider learned that one client joining the advertiser boycott told Google it wanted to cut all of its spend - including search (most of the advertisers as part of the protest restricted their suspensions to just YouTube and Google's display ad network). Just a couple of hours later, the marketer got back in touch to switch search back on, having realized their mistake (and presumably having seen a negative impact on their e-commerce activity).

Digital advertising is complex and not easy for people without experience in the industry or without a technical background to get their heads around.

A letter from Yvette Cooper, the chair of the UK government's home affairs committee, sent to Google on Friday said: "It is inexplicable to us that Google can move very fast to remove material from YouTube when it is found to be copyrighted, but that the same prompt action is not taken when the material involves proscribed organizations and hateful and illegal content."

But as VC firm Andreessen Horowitz partner Benedict Evans pointed out in a tweet, YouTube's copyright detection service Content ID can't be directly applied to filtering out hate speech:

It's also incumbent on advertisers to have at least some idea of where their ad spend is going, the executives we spoke to said. For every pop music video, or Zoella makeup tutorial on YouTube, it should be no surprise their ads will likely be served against some truly unprofessional content shot on a shaky mobile phone - and that a small percentage of that could potentially be offensive. Any platform that is built on user-generated content carries that risk. Advertisers can also choose not to go there and pay only for premium placements, but most don't.

Google shouldn't be let completely off the hook, either, the people we spoke to said. The fact that the level of disquiet from advertisers against the company grew so quickly shows it has some fundamental relationship problems with the industry. And, as media-buying firm GroupM's chief digital officer Rob Norman pointed out in an article for Campaign, YouTube funding accounts associated with terror and violence poses a clear "societal risk".

But the storm is also likely not yet over. The UK government could decide to get tougher and haul Google in front of another squirm-inducing parliamentary select committee, as it did over its tax affairs. The issue, which has been isolated mostly to the UK so far, could spread to other regions - a possibility Pivotal research analyst Brian Wieser floated as he downgraded Google's stock earlier this week. And there's also the chance that ads could still be found appearing next to inappropriate content even after the changes to its policies and advertiser tools are introduced.

The advertiser boycott is unlikely to be permanent. Google's audience is far too big for them to stay away forever. But it remains to be seen whether Google can overcome a clear level of distrust from the advertising industry - the stakeholders it relies on the most.

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