Google responds to advertiser boycott
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Google responds to advertiser boycott

Here are some of the things you can find through Google’s search engine: local florists. Music videos. Extremism. If the last item on that short list caused you to do a double take, then you will be able to sympathise with 250 businesses that have recently boycotted Google’s advertising services. How much will this hurt the world’s premier internet giant? Analysts are divided.

Specifically, advertisers are complaining when their adverts appear next to extremist content – a fair complaint, given the extent to which traditional media works to target adverts on-screen and in print. According to a note from the analysts at Nomura Instinet, the boycott could cost Google as much as $750 million.

However, there are caveats. First amongst them is the fact that the advertising boycott only applies to Google’s display advertising network and YouTube – which are the offending services. Google’s immensely profitable search advertising is unaffected. And second is that the competition, when it comes to digital ad space, is not much better. Other platforms that allow user-generated content (which, online, is all the big ones) are equally at risk of placing adverts next to material that many would deem unsavoury.

In any case, not everyone agrees with Nomura’s analysis. Analysts at RBC Capital Markets and Morgan Stanley have both issued notes claiming that the boycott will have a small effect on Google’s overall revenues. According to Morgan Stanley, the top 100 advertisers on Google probably represent less than 20% of the company’s revenues.

Google has responded, promising to hire more people to review potentially offensive content prior to selling ad space on or around it. The company has also pledged tougher ad policies, and more control for marketers. In a blog post last Tuesday, Google’s chief business officer Philipp Schindler, said:

"Recently, we had a number of cases where brands' ads appeared on content that was not aligned with their values. For this, we deeply apologize. 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."

Disclosure

Dominion holds Alphabet, the parent company of Google, in its Global Trends Managed Fund.


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