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- The issue of brand safety has come to a head this year, and advertisers have been left far from satisfied with YouTube's response.
- Advertisers have been further burned by the fact that YouTube plans to jack up the prices for some of its top US channels by nearly 20% next year.
- YouTube's loss may become TV's gain, with industry experts saying that brands have started reinvesting ad dollars back into TV.
YouTube wants to move past its avalanche of brand safety disasters this year as quickly as possible. If only advertisers were as willing.
The video platform and its parent company Google have come under fire in 2017 for a spate of incidents featuring marketers' ads ending up next to questionable videos. The issue first came to the fore in March, when more than 250 brands including Johnson & Johnson, AT&T and McDonald's pulled their spend from YouTube after their ads appeared next to extremist content on YouTube.
The hits have kept coming. The most recent YouTube ad scandal landed just last month, when investigations by the BBC and The Times found obscene and inappropriate comments on videos of children uploaded to YouTube, leading to major brands including Amazon, eBay, Mars and Diageo suspending advertising on the platform.
Indeed, from extremist content like ISIS propaganda and anti-Semitic hate speech to content featuring children being targeted and exploited by pedophiles, advertisers have found their ads running against all sorts of offensive and "unsafe" videos on YouTube this year. And based on multiple interviews, advertisers have been left far from satisfied with the company's response.
Not the only video game in town
"They were too defensive," said a financial services marketing executive, who wished to remain anonymous. "Google behaved like they had the same monopoly on video with YouTube, like they do on search. And they don't."
Anheuser-Busch InBev's chief marketing officer Miguel Patricio agreed. While the beer giant did not stop advertising completely on the platform like several other brands, he said that it was "a serious issue" for the brand that needed "a fast answer."
"I don’t think they’re doing everything we want them to do," he said at Business Insider's IGNITION conference last month. "We want them to do more, and we’re very concerned about it."
To be fair, Google has announced multiple measures to fix its problems, such as restricting ads only to creators and channels with 10,000 views and hiring larger numbers of people to monitor unsuitable videos, among others. But in the eyes of some advertisers, that has not been enough.
AT&T, for instance, was one of the first brands to pull its ads from YouTube back in March, when a spokesperson from the brand issued the following statement:
"We are deeply concerned that our ads may have appeared alongside YouTube content promoting terrorism and hate. Until Google can ensure this won’t happen again, we are removing our ads from Google’s non-search platforms."
That hasn't happened, at least not yet. Speaking at Business Insider's IGNITION Conference last month, AT&T chief brand officer Fiona Carter confirmed that the telecom giant had still not returned to the platform.
"We remain off YouTube," she said. "We have a particularly rigorous set of standards regarding where our content appears and we're aggressively responsible about our brand."
'The perception is that YouTube is struggling'
While AT&T said it was working with YouTube's top leadership and hoped to return by 2018's first quarter, it is far from being the only brand that is still holding out. Several big name brands, including Priceline, Kimberly-Clark, Squarespace and Casper have steered clear of the platform since March, according to data from ad analytics platform MediaRadar.
Squarespace, for instance, ran 26 ads across a network of 11 YouTube preferred channels between January and March 2017, while Casper ran two ads for its "Don't Fight Gravity" campaign in March 2017 on Bethany Mota's channel, also part of Google Preferred. Both brands have not run any ads on YouTube since.
"For those keeping score, the perception is that YouTube is struggling to solve this problem," said Todd Krizelman, CEO and co-founder of MediaRadar. "In March/April 2017, most brands exposed returned to YouTube within a matter of day or weeks. It’s unclear if brands will return so quickly this time."
At the same time, YouTube is being opportunistic
Making Google's brand safety perception matters worse is the fact that YouTube plans to jack up the prices for some of its top US channels by nearly 20% next year. The price increase is for reserved inventory — ad space purchased ahead of time which guarantee an advertiser prominent placement and specific programming, just like TV.
For Google, the pricing increases are not related to the recent brand safety mishaps or questions over the channels featured in Google Preferred. Rather, this is just the normal course of business.
"We regularly update reserve prices as part of YouTube's normal course of business," a Google spokesperson told Business Insider. "YouTube's standard reserve offerings allow advertisers to purchase the same inventory that is available through auction, but with guaranteed impressions, non-skip format and a fixed price."
But on the other end of the spectrum, this has only left more of a bad taste in advertisers' mouths.
"Brand safety should be a given," a marketing VP at a packaged foods company told Business Insider. "It is not a privilege and it is not negotiable," the executive said, while another chief marketing officer called it "absurd, but not surprising," adding that it wasn't the first time that YouTube had tried to flex its muscles.
"They asked for a minimum commitment for 'Preferred' that was supposed to be brand safe," said this marketing executive. "And most people told them to piss off."
YouTube has been trying to position itself as an alternative to TV for a long time. For the past few years, for example, the companies' executives have touted that YouTube reaches more young viewers than all of cable TV combined.
And to be sure, YouTube has managed to sway some big advertisers to spend some of their TV budgets on the video outlet.
But the string of this year's brand safety issues will surely hamper its ambitions, said a media agency executive who chalks out deals on behalf of multiple brands with YouTube. And with the price increase, brands will not hesitate to walk out, this executive said.
"This price increase has been planned for a long time, they think of it as their version of premium TV," the executive said. "But the fact is that YouTube is not being able to guarantee brand safety even at the current price, so a lot of clients have issues and will not hesitate to walk away."
As an alternative, advertisers will pump more money into 'web-connected' TV ads, such as ads on Hulu and TV apps people consume via devices like Rokus – this executive said.
Meanwhile, the financial services executive said that the brand would likely be a part of the camp that abandons YouTube.
"It will be interesting to see what happens now," the executive said. "Personally, I think there are other options and we don’t have to be captive to bad pre-roll on YouTube."
In fact, on a macro level, YouTube's brand safety problem may have prompted brands to reconsider digital spending altogether, according to Kevin O’Reilly, CTO of the data and technology firm TVSquared. Some of the world’s biggest marketers have expressed a lack of confidence with the digital advertising supply chain, he said and have started reinvesting ad dollars back into TV.
"We can expect to see some slowdown among advertisers migrating from TV to digital and, in the short-term, we may even see a reversal," he said. "Until digital assumes the responsibility and cost of brand safety – providing advertisers with more control, visibility and the assurance that they are being positioned appropriately – expect to see more and more brands come back to or increase investments in TV, where advertisers can choose the content and the context in which their ads are placed.”
Still, YouTube will be hard to ignore in the long term. The video platform has been an intrinsic part of brands' media budgets for years, and its reach being unrivaled across the video ecosystem – particularly among young people. Plus, YouTube's consumption keeps climbing; Pivotal analyst Brian Wieser saying that YouTube is sustaining viewership growth of around 30% year-over-year.
Advertisers may have lost some confidence in the platform, but they haven't yet dismissed it completely. Most marketing executives interviewed for this story said that they hoped that YouTube would fix its problems.
"I would like us back on YouTube," said AT&T's Carter. "It’s a wonderful way to reach a certain target that is looking at very different content than what you get elsewhere."