Analyst predicts the YouTube advertiser boycott will cost Google $750 million
Analyst predicts the YouTube advertiser boycott will cost
Google $750 million
By Julien Rath March 27, 2017
Google could lose up to $750 million from the advertiser
boycott related to ads appearing next to extremist content, according to a note
from analysts at Nomura Instinet.
According to the note, YouTube, which relies extensively
on big brands, would take a 7.5% hit to its revenues, which are estimated to be
$10.2 billion for 2017. Five of the top 20 US advertisers, which make up 7.5%
of the US ad spend, have frozen their advertising with Google — alongside
dozens more around the world.
Traditional TV companies will likely look to capitalize
on the boycott during the upfronts – where networks try to sell the bulk of
their advertising – which run from March to May and emphasize the view that
advertising on TV guarantees brand safety with large scale audiences, according
to the note.
Other platforms which rely on user generated content —
like Facebook, Twitter, and Snapchat — could also be scrutinized more closely
as a result of the boycott, the note suggested.
Notes from Wall Street analysts RBC Capital Markets and
Morgan Stanley last week, however, downplayed the impact of the advertiser
boycott and maintained their positive ratings of the company. Morgan Stanley
said, for example, the top 100 advertisers on Google likely represent less than
20% of the company's total revenues.
Analysts at Nomura believe YouTube was capable of
introducing solutions to increase brand safety but said the development of
these could also impact the company financially.
"Ad buyers are likely to demand greater direct
control over ad placement, which could take time and resources to
implement," the note said.
Google said it would be employing more people to review content,
updating its policies to help review questionable content for advertising, and
introduce more controls for marketers.
More than 250 brands have reportedly pulled their
advertising from Google's display ads network and YouTube. Search advertising, which
makes up the bulk of Google's revenue, is not impacted for the ad boycott.
Comments
Post a Comment