Wal-Mart, PepsiCo join other major advertisers in suspending ads on YouTube after discovering their campaigns were placed alongside offensive videos.
Four years ago, Robert Kyncl, YouTube’s business lead, confessed a mistake. “I thought that YouTube was like TV. But it isn’t,” he said at Google’s annual advertising show. “YouTube talks back. It’s interactive. And YouTube is everywhere.”
Kyncl’s message resonated with advertisers. Gross ad revenue at YouTube soared from roughly $4 billion in 2013 to $11 billion last year, brokerage firm Monness Crespi Hardt estimates. At the same event in 2016, Chief Executive Officer Susan Wojcicki boasted about taking ad dollars from traditional TV networks.
Yet now the same traits Kyncl said made YouTube better than TV have plunged the video service into crisis. Some of the world’s largest advertisers, from Verizon Communications to Johnson & Johnson, stopped spending on YouTube because of concern their ads could appear next to offensive videos.
More big companies pulled back on Friday, including PepsiCo, Starbucks and Wal-Mart Stores, after The Wall Street Journal reported their ads had been automatically placed by Google next to racist content on YouTube.
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“We were shocked to learn about our brand being depicted in an inappropriate way,” a Starbucks spokesperson said Friday, noting its advertising had been removed. “We are currently in discussions with Google/YouTube to determine the best way to prevent this moving forward and have pulled our ads until we are confident that measures will be in place to adhere to our brand guidelines.”
This week, $26 billion was knocked off parent company Alphabet’s market value.
Rob Griffin, chief innovation officer at marketing agency Almighty, said the controversy “will dent their long-term prospect of making YouTube an alternative to TV.”