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YouTube’s ad mess gives advertisers leverage for what they really want: More data

Advertisers are tired of just trusting Google.

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As far as advertisers are concerned, there are really only two ways to place ads online: The “open web” where you can track the ads, and “walled gardens” where you can’t.

Google falls into the second bucket.

That means marketers have had to trust Google to make sure their ads are doing what they’re supposed to do, including appearing in the correct places. But after they discovered last week their ads were funding YouTube videos containing hate speech and extremist messages, they suspended their business.

Here’s where it could get interesting. Advertisers now have some leverage to try to get what they really want: More data.

Google did announce this week it would give advertisers more control over where their content goes and do more to police which YouTube videos would be eligible for ads. Still, the details of what Google is willing to give is still being hammered out, sources say.

Despite Google’s pronouncement on Monday, yet more advertisers halted spending on YouTube, including two of the biggest ad spenders around: Verizon and AT&T. As of Thursday, Johnson & Johnson and J.P, Morgan said they also stopped their YouTube advertising, according to Reuters. Then Friday, PepsiCo, Walmart, Dish, Starbucks, General Motors and FX Networks stopped spending on YouTube, according to the Wall Street Journal.

"Transparency and trust have always been fundamental to Google’s measurement offerings which is why we have a long history of partnership with the [Media Rating Council] for accreditation and audits through Ernst and Young,” a Google spokesperson told Recode. “If the standards are understood and the methodologies verified, there is less friction for marketers and we can compete on the merits of the platforms and offerings themselves.”

But Google is probably not talking about giving marketers the kind of control that the marketers say will be more helpful and which goes beyond just making sure their ads don’t appear in videos promoting terrorism.

What advertisers really want from YouTube is what they already get on the open web: tracking how many times an ad has been shown to a particular anonymized user; where it’s happening; and how people are interacting with the ad.

Right now, when someone leaves a site like Expedia or CNN and goes to YouTube, the advertiser doesn’t know if it’s showing that person the same ad they showed before. Same goes for Snapchat and Amazon, also walled gardens. Advertisers have an easier time predicting how a product will sell if they know how often someone saw an ad for that product.

Google (and Facebook) already offer some data to advertisers, but it’s different enough from what they get from other web publishers that it makes it harder to incorporate into a buying strategy. For a deeper look at how this is currently playing out, this Wall Street Journal article is very helpful.

Google is unlikely to give the level of information advertisers have long requested. The company has been known to cite the need to protect their users’ privacy and ensure pages load quickly.

But the bigger reason is that their audience’s data is what makes them so valuable — they’re not about to give that up.

YouTube’s current ad problem, however, bolsters the advertisers’ longstanding argument for better data. “If we can track the ads on publisher sites (if they let us) we can detect worrisome content and block ads from appearing adjacent to the inappropriate content,” said John Montgomery, the global executive vice president in charge of brand safety for GroupM, the largest media buying firm in the world.

Five of GroupM’s clients announced they had suspended ads on YouTube in the U.K. last week. The company said it would revisit the suspensions at a later date, which means those companies aren’t back on board with YouTube just yet.

Despite the fact that Google’s policy changes likely won’t meet all the desires of advertisers, their agencies say there’s some progress. Joe Barone, managing partner of digital operations for GroupM called Google’s latest moves “very encouraging,” but added, “they haven’t changed the basic premise, which is ‘trust us.’”

He cited YouTube’s recent move to expand auditing of YouTube’s ad metrics as an example of how it was giving advertisers more transparency.

But having that data wouldn’t necessarily ensure protection of brand safety, and now that advertisers have pulled out, they could theoretically ask for more concessions.

And for Verizon, there’s another incentive to play hardball with Google. The telecom giant has grown more competitive in the digital advertising space in recent years, expanding its own ad networks by purchasing Yahoo and AOL. Verizon is now expected to beat out Microsoft to the place of third-largest digital advertiser after Google and Facebook in the run-up to its $4.8 billion purchase of Yahoo last year, according to Bloomberg.

It’s important to remember that issues with proper ad placement on YouTube reflect problems with digital advertising generally. Digital ads are often bought programmatically, meaning they’re placed using automated software.

Car rental company Enterprise, for example, also stopped buying with YouTube, pinning its concerns to programmatic ads. “It appears that technology has gotten ahead of the advertising industry’s checks-and-balances,” the company said in a statement.

But ultimately, there’s only so much of an impact these boycotts can have on Google’s core ads business. Google, Facebook and other digital advertising platforms rely more on small businesses than big brands for their revenue. Small- to mid-size companies are responsible for 70 percent of digital ad spending, according to GroupM data cited by MoffettNathanson Research.

Also of note: Advertisers that have bailed on YouTube and Google display ads are continuing to advertise with Google search. And search is where the money is for Google. The company brought in an estimated $24.6 billion in search ad revenue in 2016, compared with $4.83 billion in display ad revenue that year according to eMarketer.

Still, the recent controversy’s impact on Google isn’t a hit to revenue, but a hit to reputation, as reflected in a recent drop in parent company Alphabet’s stock.

And the other important factor here that still potentially gives the big advertisers some leverage is Google has long wanted the more valuable brand advertising that typically goes to television, which nabbed $54 billion in ad sales last year, compared with $53 billion that was spent online, according to data compiled by MoffettNathanson.

Google and Facebook have argued for a while that advertisers should shift more of their dollars away from TV and to digital since everyone is online. But that thesis is being tested right now.

This article originally appeared on

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