By Jack Nicas 

A week after Google apologized for running customers' advertisements alongside objectionable videos, triggering a change in policy, its YouTube site is still rife with examples that are angering more big advertisers and causing some to cut spending with the tech giant.

Google's automated system placed ads for some of the world's biggest brands -- including Coca-Cola Co., Procter & Gamble, Amazon.com Inc. and Microsoft Corp. -- on five YouTube videos peddling racist and anti-Semitic content, according to a review by The Wall Street Journal.

Asked about the Journal's finding that their ads were still appearing with such content on YouTube as of Thursday night, Coca-Cola, PepsiCo Inc., Wal-Mart Stores Inc. and Dish Network Corp. said Friday they were suspending spending on all Google advertising except targeted search ads. Starbucks Corp. and General Motors Co. said they were pulling their ads from YouTube. FX Networks, part of 21st Century Fox Inc., said it was suspending all advertising spending on Google, including search ads and YouTube.

Wal-Mart said: "The content with which we are being associated is appalling and completely against our company values."

Other companies whose spots appeared, including Toyota Motor Corp. and Microsoft, said they were monitoring the situation. Procter & Gamble said it was working with Google but declined to say whether it was reducing spending.

The examples show how Google, the world's largest advertising platform, is struggling to keep its clients' ads away from questionable content, at least in the near term as it works on solutions. The cancellations by many of the biggest U.S. advertisers could dent revenue for Google, a unit of Alphabet Inc.

Google "had assured us over the past few days that our brands were safe from this type of content," said an executive at one of the affected companies. "Despite their assurances, it's clear they couldn't give assurance."

A Google spokeswoman on Friday reiterated the company's statement from earlier in the week that it is improving its policies and enforcement to better police content, pull more ads from "hateful, offensive and derogatory" videos, and give advertisers more control over where their ads appear. Google has already begun some of those steps, the spokeswoman said, including strengthening technology to automatically screen videos and adding more reviewers to pull ads from problematic videos and websites. However, she acknowledged imperfections in the software.

Google removed four of the five videos flagged by the Journal and pulled ads from the fifth.

The ease with which journalists have been able to find top brands' ads on controversial videos suggests Google is still failing to catch some of the most obvious examples.

Ads for Coca-Cola, Starbucks, Toyota, Dish Network, Berkshire Hathaway Inc.'s Geico unit and Google's own YouTube Red subscription service appeared on racist videos with the slur "n-----" in the title as of Thursday night. Those ads ran before two videos that dub a racist song over videos of former first lady Michelle Obama or Chicago rapper Chief Keef. The videos, posted by the same account, have been viewed more than 425,000 times and 260,000 times, respectively.

Another video titled "Black people in their natural habitat," with a racial slur in the description, played monkey noises over footage of black men in prison and images of black civil-rights leaders Malcolm X and Martin Luther King Jr. Google showed ads for Amazon, Microsoft and GM's Chevrolet unit before or during that video.

The companies that cut spending -- Wal-Mart, Starbucks, PepsiCo, Coca-Cola, Dish, GM and FX -- said that they were concerned their ads appeared on such videos and that they would suspend advertising until Google proves such an incident wouldn't happen again.

Amazon and Geico didn't immediately respond to requests for comment.

Google has said it uses software to automatically screen videos' titles, descriptions, images and dozens of other signals to prevent ads from appearing on inappropriate content. But the software has been imperfect. It has pulled ads from innocuous content, allowed ads that violate Google's existing policies, and can miss context or nuance.

Google said Friday that imperfection in the software led to ads appearing on videos with racial slurs in the titles and descriptions. The company said the software doesn't automatically remove ads from every video with "n-----" in the title, for instance, because it fears that could unfairly punish acceptable content, such as documentaries or music videos.

The ads found by the Journal are among a string of examples identified by news organizations in recent days -- each report prompting advertisers to cut advertising spending with Google. On Wednesday, AT&T Inc., Verizon Communications Inc., Johnson & Johnson and other firms suspended some advertising with Google after the Times of London showed them images of their ads appearing alongside YouTube videos supporting terrorists, following an investigation that focused on ads shown in the U.K.

Google has likely been showing major brands' ads alongside questionable content for years. But the media's public airing of the issue prompted advertisers to pull spending and forced Google to make changes.

A Journal reporter, checking YouTube videos peddling conspiracies and racist views over the course of roughly five hours Thursday evening, found ads from major brands running on about 20 videos filled with racial slurs, hateful titles, or other content that appears to violate Google's existing standards.

Google showed ads for PepsiCo's Quaker Foods unit, Microsoft's Minecraft videogame and FX Networks' "Fargo" on a 15-minute video titled "EXPOSING THE JEWISH LIES." The video showed a sermon from Steven Anderson, the founder of the Faithful Word Baptist Church in Arizona, which the Southern Poverty Law Center has deemed a hate group for promoting views that the Holocaust was a hoax and gay people should be killed. Faithful Word didn't immediately respond to a request for comment.

When companies' ads appear on questionable sites or videos, it doesn't only potentially muddy their brands, it also funds the purveyors of such hate speech, misinformation or other unsavory content. Each time a user watches the entirety of an ad Google has placed before a YouTube video, the advertisers pay a small fee that is split between the video's creator and Google. YouTube charges an advertiser roughly $7 to $12 per 1,000 ad views on average, depending on the targeted audience, advertisers say. YouTube's immense scale -- it recently said users watch more than 1 billion hours of videos a day -- helps it earn billions of dollars a year on such ads, analysts estimate.

While Google's main moneymaker, internet search ads, has been largely insulated from the controversy, the financial impact for the company continues to grow as major advertisers freeze their spending on important revenue sources for the company. Placing ads on third-party websites brought in revenue of $15.6 billion last year, or 17.3% of Alphabet's overall revenue. Alphabet doesn't disclose YouTube's revenue, but has signaled it has been a major driver of growth in recent quarters.

FX Networks appears to be the first brand to freeze spending on search ads, though it is a tiny customer of that business for Google. 21st Century Fox and News Corp., parent company of the Journal, share common ownership.

"Currently, the advertising industry has a challenge related to filtering and controlling contextual placement," a Microsoft spokesman said. The company said its ad buying guidelines "preclude placement in or near offensive content."

But Microsoft and several others didn't immediately pull their Google spending, unlike PepsiCo and Wal-Mart.

"Toyota is aware of public comments by Google promising to deal with this matter, and, as such, have not yet suspended our advertising, although we are watching the situation closely," said a Toyota spokesperson. Toyota has suspended some of its advertising on YouTube in the U.K.

Procter & Gamble, the world's largest advertising spender, said it would make "changes if we find our ads appearing within a context that does not comply with our guidelines or business ethics." It said it would not comment on its plans specifically with Google, which showed an ad for P&G's Crest brand before a video titled "A 6000 Year History Of The Jew World Order." That was the only video of five flagged by the Journal that YouTube didn't remove from its site.

Brands' ads show up on such videos in part because of the complex automated ad-buying system that underpins much of online advertising. Advertisers tell Google which audiences they aim to reach, such as teenage males who like videogames, and Google delivers their ads to those users as they browse across its millions of YouTube videos and the more than 2 million websites in its ad network. Complicating Google's job of policing content is the sheer size of YouTube and its ad network, as well as the nuance often required to determine what content is objectionable, according to advertising and tech executives.

--Jennifer Maloney, Sarah Nassauer and Sharon Terlep contributed to this article.

Write to Jack Nicas at jack.nicas@wsj.com

 

(END) Dow Jones Newswires

March 24, 2017 17:32 ET (21:32 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
Alphabet (NASDAQ:GOOG)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Alphabet Charts.
Alphabet (NASDAQ:GOOG)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Alphabet Charts.