Google ad boycott could aim ire at ad-serving software
Google ad boycott could aim ire at ad-serving software
By Sophie ESTIENNE March 23, 2017
San Francisco (AFP) - Google's money-making foundation is
strong enough to endure a current boycott by advertisers, but the movement
could rattle the practice of software "programmed" ad placement,
analysts said on Thursday.
The internet giant's core business of serving up
advertising along with online search results appeared to be safe from the
boycott, motivated by companies seeking assurances that their marketing
messages won't be displayed along with hateful or outright terrorist content,
particularly videos on Google-operated YouTube.
The "backlash" could broaden into a rebellion
against the market practice of software programming ad placements, slowing not
only Google's revenue but also that of other internet firms, according to
Jackdaw chief analyst Jan Dawson.
"I would think Google (and parent company Alphabet)
would be extremely lucky to emerge from all this with minimal financial
impact," he said in a blog post.
"I think it's far more likely it sees both a
short-term dent in its revenues and profits from the spreading boycotts and
possibly a longer-term impact as brands reconsider their commitments to
programmatic advertising in general."
California-based Google, which has seen a slew of
companies withdraw ads fearing placement alongside extremist content, said this
week it is introducing new tools to give firms greater control.
"We know advertisers don't want their ads next to
content that doesn't align with their values," Google's chief business
officer Philipp Schindler said in a blog post.
"We're taking a tougher stance on hateful, offensive
and derogatory content."
- Hateful videos -
The boycott began last week after the Times newspaper of
London found BBC programs were promoted alongside videos posted by American
white supremacist and former Ku Klux Klan member David Duke as well as Wagdi
Ghoneim, an Islamist preacher banned from Britain for inciting hatred.
The analysis found more than 200 anti-Semitic videos, and
that Google had failed to remove six of them within the 24-hour period mandated
by the European Union after it anonymously signaled their presence.
The British government subsequently put its YouTube
advertising on hold, saying in a statement, "it is totally unacceptable
that taxpayer-funded advertising has appeared next to inappropriate internet
content."
Others to pull the plug, temporarily at least, include
the BBC, The Guardian newspaper group, McDonalds UK and the British arm of the
major advertising agency Havas.
The movement spread to the United States this week, with
AT&T and Verizon pulling ads from Google.
Google's parent Alphabet has lost slightly more than $20
billion in value since the start of this week based on a slip in its share
price, in a sign the boycott has made investors nervous.
- Limits of software -
Still, analysts believe the boycott's overall financial
impact should be relatively small given the breadth of Google's advertising
activities.
Even a "draconian" estimate of fiscal damage
was limited to whittling perhaps a percent off Alphabet's revenue, Morgan
Stanley said in a note to investors.
"It is a hit on their revenue, but it is an even
bigger hit on their brand; on their reputation," Altimeter Group principal
analyst Charlene Li said. "Google hasn't taken it seriously enough."
She recommended that Google engage advertisers directly
and openly.
A solution may not be easy. Google needs to strike a
balance between pleasing advertisers and those who upload videos to YouTube and
are free to take their creations elsewhere if unsatisfied with their shares of
ad revenue.
Google's setbacks could benefit traditional television
networks as ad dollars return there from YouTube or stall a shift to online,
Morgan Stanley said.
Google rivals such as Facebook could also benefit if they
prove safer havens for digital advertising.
Above all, the boycott highlights the limits of
"programmatic" advertising, the practice of letting software
algorithms decide pairing between marketing messages and content sought by
online viewers.
The technology is broadly used by internet firms, which
heavily rely on software and artificial intelligence to figure out what ads
will interest people at any given moment.
Advertisers can chose "keywords" for targeting
their ads, or sometimes use demographic options such as age groups or where
people live.
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