By Lara O'Reilly and Jack Nicas 

Google's YouTube has made strides in bringing advertisers back to the site after a backlash over ads appearing alongside offensive videos. But many prominent holdouts remain, signaling that the crisis isn't over yet.

Wal-Mart Stores Inc., AT&T Inc., J.P. Morgan Chase & Co., Starbucks Corp., Procter & Gamble Co. and at least a dozen other major brands or government agencies haven't returned to the site, those institutions and people familiar with the situation say. They pulled their spending after news organizations in March revealed that their ads ran alongside extremist or racist videos.

But some companies have resumed spending on YouTube ads -- including General Motors Co., Coca-Cola Co., and McDonald's Corp.'s U.K. unit -- after the site improved its technology to screen videos, committed to employing more human reviewers, and gave marketers more control over where their ads appeared. YouTube also issued refunds to some companies.

The mixed response from advertisers shows their "brand safety" concerns are serious and could linger, but also aren't insurmountable, so long as Google continues its efforts to ease marketers' fears.

YouTube said in a statement: "Many advertisers never left and many have decided to come back. While they know that no system can be perfect, they appreciate the actions we've taken and know we are taking this seriously and are committed to getting better and better."

Google on Sunday also announced a series of changes to curb extremist videos on its site, including adding more technology and human reviewers to flag them and making less extreme ones harder to find.

Many of the marketers still on the sidelines say they are waiting for complete reassurance that poor ad placements won't happen again.

A series of news stories about ads running alongside controversial YouTube videos sparked advertisers to pull spending in late March. In the 90 days from March 15 to June 13, digital-ad research firm Pathmatics estimated spending on ads that ran before YouTube videos or displayed on the YouTube site dropped by 50% to $739 million, compared with a year earlier. Pathmatics didn't capture data from YouTube's mobile app.

Other signs look more positive for YouTube. A poll of 316 marketers -- including 200 decision makers from the top 200 advertisers in the U.S. -- conducted in May by research consultancy Advertiser Perceptions found that 38.5% of respondents were likely to spend "a good deal more" with YouTube this year than last. Just 11.9% said they planned to spend less this year and 41.2% said there would be no change. Among the remainder, some weren't YouTube advertisers.

The data suggest that despite advertisers' concerns, YouTube's scale and data make it irresistible for many marketers.

Google parent Alphabet Inc. posted a 22% increase in revenue to $24.8 billion in the first quarter, mostly driven by its ad business, but those figures largely preceded the backlash. Investors are watching second-quarter results closely for any impact.

Many marketers have ramped up oversight of where their ads appear. Audits run by ad agencies have sometimes showed that even YouTube channels the company brands as "Google Preferred" -- and charges more for -- can include videos advertisers don't consider premium, such as footage of people playing the popular children's game Minecraft. Such videos aren't in bad taste, but their viewers likely include many children, who aren't a priority for most marketers.

YouTube said its Google Preferred channels include many different categories of content, including material aimed at teens, and that it works with marketers to put their ads on the right videos.

Many advertisers are now moving from "blacklisting" videos they wouldn't want to be associated with, to "whitelisting" the channels they deem appropriate. Whitelisting can have the effect of narrowing a company's ad buy.

Enterprise Holdings Inc., owner of Enterprise Rent-a-Car, for example, is working with its media buying agency, Omnicom Media Group, to test a program that scores hundreds of thousands of popular videos each day, based on their suitability for ads.

Marketers have seized on the uproar to press for long-sought changes. After the backlash, Google agreed to let independent measurement firms monitor where marketers' ads appear.

"I think brands like giving Google a bloody nose as they have been so reliant and plowed so much money" into the company, said Ryan Kangisser, founder of ad consulting firm Stack I/O.

YouTube has refunded some advertisers for ads it served next to objectionable content. The amounts returned have been small. In March, Google's top executive in Europe, Matt Brittin, said the matter affected "pennies not pounds" of individual marketers' spending, because advertisers pay per view and few people actually were shown ads next to objectionable videos.

London's transportation agency, Transport for London, said it was satisfied with the refund it received for ads that ran next to extremist videos, but it hasn't resumed spending on YouTube.

However, one media-agency executive said the refunds didn't compensate advertisers for the damage to their brands, including from the news stories showing their ads unwittingly funding hate speech. "The level of money [Google wants] to give back as a sorry is humiliating," the executive said.

Google has met with scores of advertisers and agencies since March to help them ensure their ads only appear next to quality content.

"They've worked harder than we've ever known Google to work to communicate that to advertisers and agencies," said Jenny Biggam, co-founder of U.K. independent media agency The7Stars.

Write to Lara O'Reilly at lara.o'reilly@wsj.com and Jack Nicas at jack.nicas@wsj.com

 

(END) Dow Jones Newswires

June 20, 2017 05:44 ET (09:44 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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