What the Google Ad Controversy Means for Your Business

AT&T, Johnson & Johnson, McDonald’s, Toyota and Verizon have brought to more than 250 the number of companies that have pulled advertising from Google, raising even bigger questions about the safety and effectiveness of one of the world’s biggest marketing channels.

The controversy started last week in Britain, when the government there and local media groups, including the BBC and the Guardian, boycotted Google in response to revelations in the Times newspaper that their brands were paired with extremist content. Google subsequently pledged to improve its placement system, which had coupled ads with messages posted by hate preachers and the Klu Klux Klan.

The situation has put CEOs in a bind. Pulling ads from Google could prevent their brand from being seen by millions of people. But then there’s the kind of brand damage that could be done by seeing, by way of example, a terrorist recruitment video … brought to you by AT&T!

The first thing for leaders to consider is where in the Google universe their ads are appearing. The boycott has primarily focused on Google’s YouTube video-streaming service, but it has expanded to include other areas, such as AdSense, which companies use to place ads on third-party sites.

“SCHMIDT SAID THE COMPANY COULD PROVIDE NO ASSURANCE THE NEW MEASURES WOULD BE FOOL PROOF.”

So far, the company’s biggest service, AdWords, which lets brands advertise on the search query part of Google itself, has been unaffected.

“We are deeply concerned that our ads may have appeared alongside YouTube content promoting terrorism and hate,” AT&T said. “Until Google can ensure this won’t happen again, we are removing our ads from Google’s non-search platforms.”

The tech giant, facing the loss of hundreds of millions of dollars in revenue, has pledged to tighten its procedures, though so far there’s been no guarantees it can totally fix the problem. Shares in Google’s parent company Alphabet have fallen 3.8% this week.

Alphabet chairman and former Google CEO Eric Schmidt said yesterday that some people are able to circumvent the algorithms that couple ads with content.

“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,” he told Fox Business. “We’ve had to tighten our policies and actually increase our manual review time, so I think we’re going to be OK.”

When pressed, however, Schmidt said the company could provide no assurance the new measures would be fool proof. “We can’t guarantee it, but we can get pretty close,” he said.

It’s still unclear precisely what percentage of ads have actually been associated with inappropriate content. And some advertising industry sources recently told Business Insider that there could be an element of “Google bashing” going on, given the company’s dominance of the ad space.

Big companies also could have much to gain by using the fallout as a bargaining chip against Google while negotiating other issues, such as accessing its vast data troves.

A more detailed account of Google’s response can be found here.

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Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

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