Bilingual Reading, YouTube's advertising business is facing a cliff-breaking crisis

EVEN advertisers can be seduced by slick marketing. Google and Facebook have built huge businesses by promising that online ads are more effective and easily measured than traditional media, such as television, radio and print. This year the amount spent on internet advertising, globally and in America, is forecast to surpass television advertising for the first time . But a controversy at YouTube, an online-video site owned by Google, shows how digital advertising still has problems to sort out before it lives up to the dazzling sales pitch.

Even advertisers are sometimes confused by advertising. Google and Facebook have always promised that online advertising has an advantage over traditional media such as television, radio and paper media in terms of effective distribution and monitoring of advertising, and has thus made a huge online advertising business. This year, for the first time, Internet advertising is expected to outpace television advertising in the U.S. and around the world, but the recent ad boycott on Google's YouTube site illustrates the problem of online advertising cleaning up before advertisers pay for it.

A slew of advertisers, including stalwarts such as Coca-Cola, Walmart and General Motors, have announced plans to suspend usage of, or move ad spending away from, YouTube because ads (in some cases their own) were appearing alongside offensive content, including videos by jihadist and neo-Nazi groups. Google’s own brand has suffered: the damage to the firm’s sales could be as much as $1bn in 2017, or around 1% of its gross advertising revenue. Shares of its parent company, Alphabet, have fallen by around 3% owing to the controversy.

Last month, on YouTube, some brand ads or brand names appeared in highly controversial videos promoting ultra-nationalism and terrorism, leading a number of advertisers to announce that they would stop or withdraw from advertising on the site, including brands such as Coca-Cola, Wal-Mart and General Motors. Google itself has been hit by the incident, losing $2 billion in advertising this year, or about 1 percent of its total advertising revenue, and its parent company Alphabet's shareprice fell about 3 percent.

It is not the first time that brands have fretted about where their ads appear. In 2013 Nissan drew headlines when it placed an ad alongside a video of a beheading on the website Forbez DVD. There have been other incidents. But never before have so many advertisers raised concerns about what they call brand “safety” all at once and staged such a dramatic boycott.

Major brands have experienced similar incidents before, fearing that their own advertising will appear in inappropriate situations. In 2013, Nissan made headlines for appearing in a video of the execution of a Forbez DVD website. Such examples are not in the minority, but never before, a number of brands because of concerns about "brand safety" and Qi Qi launched a boycott.

The timing may not be coincidental. Television networks are gearing up for negotiations with advertisers as part of America’s “upfronts”, in which brands commit around 70% of their TV-ad budgets for the year. It is in their interest to encourage big brands to look critically at digital advertising, which has been trouncing nearly all the other categories. The furore over extreme content escalated after the Times, a London-based newspaper owned by Rupert Murdoch, whose empire also contains many television properties, ran a story in mid-March with the headline, “YouTube hate preachers share screens with household names”. Advertisers may also be hoping to negotiate better pricing on their future internet-ad buys by taking a strong stand on this issue, says Mike Henry of OpenSlate, which helps brands place ads on YouTube.

The incident may have also been man-made. In the near future, major television network companies are preparing to negotiate advertising with brands to preheat up the U.S. ad pre-sale season in May, in which brands will finalize 70 percent of their annual TV advertising budgets. At this time to lobby the major brands to treat online advertising carefully, there is a profit and no harm, after all, before the online advertising is too popular, covered all other channels of advertising. In mid-March, the Times newspaper ran a front-page article entitled "Several major international brands 'stand' for hate videos on YouTube", bringing the boycott to a new high, and it's worth noting that The Times is part of Rupert Murdoch's media empire. It operates a number of television stations. Mr McHenry, from OpenSlate, a website that serves the brand's YouTube ad, said advertisers had reacted so strongly to the incident, perhaps in the hope of driving down prices the next time they negotiate with YouTube's online advertising business.

Few can now do without ads that are bought “programmatically”, meaning in an automated fashion using algorithms . The technique allows brands to follow internet-goers wherever they spend time and direct ads specifically at them. “What’s strange is that everyone was so fascinated with targeting ads that they forgot to ask themselves the mundane question of what content they are appearing next to,” says Rich Raddon of Zefr, an ad-tech firm.

Now everyone in life will be exposed to "computing advertising", that is, the use of some algorithms, automatic advertising. This technology allows brands to track the movements of Internet users and then target the right ads. However, Rich Raddon, of advertising technology company Zefr, said: "It's strange that all advertisers are obsessed with targeted advertising, ignoring one of the most common problems: the right place to deliver." "

In other ways, too, digital advertising is falling short. In September Facebook admitted that it had inflated the reported time consumers spent watching video advertisements, and since then has acknowledged further measurement snafus. All these issues have invited censure, including from Marc Pritchard, whose role as marketing chief of the consumer-goods giant Procter & Gamble makes him one of the overlords of advertising. “Surely if we can invent technology for driverless cars and virtual reality we can find a way to track and verify media accurately,” he said.

Online advertising also has some drawbacks in other ways. Last September, Facebook admitted that it reported that the length of the online video ads was not true, adding a lot of moisture, and later admitted that in-depth monitoring was problematic. These things have attracted a variety of complaints, including Marc Pritchard, the global chief brand officer of consumer-goods giant Cleaning, who plays a major role in the advertising industry. "Now that we have the ability to invent driverless technology and virtual reality technology, we must be able to develop technologies that can track and monitor the media more accurately and transparently," Marc said.

Although advertisers may be frustrated with YouTube’s poor oversight of where ads appear, there is a limited supply of high-quality online video. YouTube is like a restaurant in a small town: the service may be slow and the quality of food unpredictable, but there are few alternatives, so the clientele sticks around. Today Google and Facebook control around three-fifths of spending on digital ads in America, and their share is only expected to rise.

While advertisers may be unhappy with the poor monitoring of YouTube's advertising, there are few platforms for high-quality online video to choose from. YouTube is like a restaurant in a small town, although the service is not in place, the dishes can not be guaranteed, but the town is only these two or three restaurants, then diners can only be on. Google and Facebook now hold nearly 60% of the nation's online advertising resources, and that number will only grow in the future.

Google and Facebook might consider making concessions to advertisers. At the moment Google does not allow third parties, such as the firm Integral Ad Science, to filter or block inappropriate content on behalf of advertisers, even though these independent firms have the technological tools to do so. That could change if advertisers continue to exert pressure.

Google and Facebook may need to consider making some concessions to advertisers. Google currently prohibits advertisers from authorizing any third party to filter or block online video, but third-party companies like Integral Ad Science do have the technology. And if advertisers take the opportunity to keep up the pressure, perhaps the two companies will compromise.

Advertisers can monitor ad placement, too. There are tools for this: on YouTube and elsewhere on the internet, firms can select keywords so that they stay away from certain contexts. Banks can avoid videos and articles that mention foreclosure, for example, and carmakers can choose not to bid on ad space near articles about crashes. But only about 15% of advertisers are using this sort of tool, reckons Scott Knoll, the chief executive of Integral Ad Science. In the future more will probably turn to such solutions, and also pay for outside measurement to check if their ads are being seen. Technology has brought headaches for advertisers, but that won’t prevent them investing in more of it.

In addition, advertisers can monitor the delivery of ads. There are tools that offer this service: On YouTube and other online platforms, advertisers can filter keywords to avoid content that goes against advertising. For example, banks can avoid videos or articles that include asset foreclosures; car ads can be as far away from articles about car crashes as possible. However, only 15 per cent of advertisers currently use such tools, according to Scott Knoll, CEO of Integral Ad Sciences. But in the future, more and more advertisers are likely to choose to use it, and to hire external monitoring tools to monitor the airing of ads. While technology is a headache for advertisers, there is no doubt that their investment in technology will not stop.

Compilation: Wang Hazi


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Source: The Economist

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