YouTube advertising mess could cost company $750m

27 Mar 20175 Shares

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YouTube. Image: MIND AND I/Shutterstock

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The ongoing problems that YouTube is experiencing following a raft of companies pulling their advertising could end up costing the Google-owned company big time.

Earlier this month, British government agency adverts began cropping up on extremist videos on YouTube. Content from the likes of the Home Office, the Royal Navy and BBC appeared on the controversial videos, with the decision to cancel advertising catching on quite fast.

By last week, advertisers such as McDonald’s, Toyota and Audi had pulled their ads after similar concerns.

AT&T and Verizon soon followed, joined by pharma groups GlaxoSmithKline and Johnson & Johnson.

In total, five of the top 20 US advertisers have boycotted YouTube, as well as other global brands, numbered in the dozens.

YouTube

Analysts at Nomura Instinet have now claimed that the final cost for YouTube owner Google could be as high as $750m.

The total drop in revenues could represent 7.5pc of YouTube’s total income, though, given the speed with which the companies have cut ties with the video-sharing giant, and the size of the figures involved, conformity among analysts’ fears is difficult to spot.

For example, last week, Morgan Stanley claimed that the companies boycotting YouTube make up 10pc of net revenues, with millions of clients making up the bulk of the company’s income in this area.

At the same time, RBC Capital Markets reported that if a 10pc decline hit YouTube and Google Display Network revenues, it would reduce Google’s overall income by just 1.7pc.

Earlier this week, Google responded with a lengthy post from its chief business officer, Philipp Schindler, who said that YouTube was deeply apologetic for this issue.

“We know that this is unacceptable to the advertisers and agencies who put their trust in us. That’s why we’ve been conducting an extensive review of our advertising policies and tools, and why we made a public commitment last week to put in place changes that would give brands more control over where their ads appear.”

YouTube. Image: MIND AND I/Shutterstock

Gordon Hunt is a journalist at Siliconrepublic.com

editorial@siliconrepublic.com