Several Major Advertisers Remain Wary of YouTube - Barron's

YouTube is still working to regain the trust of advertisers who fled after reports that their ads were seen with inappropriate content. Getty Images

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About two months ago, several major companies pulled their ads from Google-owned YouTube after reports that the ads were being shown alongside extremist content from hate groups and terrorists. Among the companies that stopped advertising were behemoths like General Motors , Wal-Mart , and Pepsico. Some also pulled ads from the Google Display Network, which places ads on millions of other websites.

Investors worried about the issue for a few days and then moved on, assuaged by comments from Google CEO Sundar Pichai that the company had the issue under control. He said Google is using improved technologies, including machine learning, to better enforce its policies for keeping ads away from problematic content: “advertisers have clearly noticed all the improvements we have made.”

Analysts signalled the all-clear -- “we believe large brand advertisers are increasingly coming back to the platform, suggesting minimal disruption to monetization growth at YouTube, in our view,” JMP Securities analyst Ronald Josey wrote in April. The stock has also shrugged it off. Alphabet , the company that owns Google, has risen 14% in just the past month.

But Barron’s Next reached out to a dozen companies that had reportedly pulled their ads from YouTube and/or the Google Display Network and found that several major advertisers have yet to return:

• Wal-Mart still won’t run ads on YouTube, a Wal-Mart spokesperson wrote, but declined to explain further.
• Verizon continues to suspend its ads as it works with its digital ad partners to “understand the weak links.”
• Nestle has also “pause[d] our media buying with Google/YouTube pending reassurances from them on actions to address the problem of brand advertising appearing on inappropriate websites.”
• Toyota will only run ads on channels where they can direct placement, such as Buzzfeed and Discovery, although they remain in “active discussions to reach an acceptable resolution” for further advertising, Toyota said in a statement.

Some big companies have been convinced that Google is on top of it, or are working with ad agencies to make sure they’re protected.

• Johnson & Johnson has resumed advertising “in a number of select countries,” including the U.S. after Google instituted “brand protections.”
• Enterprise Holdings, which owns Enterprise, Alamo, and National car-rental companies, last week said it plans to resume advertising “in the next week or so” following talks with Google. Its media agency Omnicom is also working on a program called Supply Accreditation through Filtering and Evaluation (SAFE) where it will “score” videos to determine if they’re advertiser-friendly. Enterprise will be helping test the program, the spokesperson wrote.

Google hasn’t quantified how many advertisers left, and didn’t answer our question about how many have returned. “Many advertisers never left and many have decided to come back,” a spokesperson wrote. “While they know that no system can be perfect, they appreciate the actions we’ve taken and know we are taking this seriously and are committed to getting better and better.”