Google is battling a storm in the U.K., where hundreds of big advertisers from McDonald's Corp. to Tesco Plc have suspended marketing on its sites because of fears that their messages may be displayed near offensive content.
New measures announced by the Alphabet Inc. unit fall way short of tackling the problem. They give advertisers a bit more control over where their ads appear on YouTube and on the Google network that places ads around the web. But all the tools are made by Google itself, leaving the world's biggest seller of advertising to police itself.
It would be much better to let advertisers, and their agencies, use independent software to verify that campaigns aren't sitting next to unpleasant content. Google and Facebook Inc. have -- grudgingly -- opened up a tad to such third-party auditors, such as to check whether video ads are really seen and for how long. Yet they could do much more.
In reality, they don't really want to clamp down since more controls reduce ad inventory and add to their costs. (As Gadfly colleague Shira Ovide points out, the tech giants' biggest enemy is hubris.)
Better verification methods can add about 2 percent to the cost of an online ad campaign, according to a WPP-owned digital agency. But they protect brands by excluding inventory from sketchy sites featuring porn or extremist articles and videos. They can also weed out fraud, or when criminals use robots to generate fake page views. About one-fifth of the $80 billion spent on digital ads, excluding search, could be lost to such fraud, according to recent studies.
In the U.K., the present ruckus started in February when The Times of London showed video ads from big brands and government agencies were running alongside jihadist and neo-Nazi content. The stories prompted hearings in Parliament and outraged statements from companies unhappy to be accused of bankrolling such outfits with ad dollars.
These issues have been around for years, of course, but there's little doubt that the honeymoon for online advertising is over. More marketing dollars are being spent online than ever, and automated systems are used to auction off space with little human oversight. Marketers specify a target audience, such as 30-something male car-buyers in Scotland, but they have no idea where their campaigns will actually show up.
All this has led big brand owners such as Procter & Gamble Co. to question the effectiveness of web spending. They're threatening to cut off online outlets that don't weed out "crappy" ads and fraud.
U.S. digital advertising prices are rising five times faster than inflation, and much faster than television ads, according to a study from Adobe Systems Inc.
Yet people spend less time on each website than before, perhaps because they're surfing from small screens on phones. Brands in the U.S. have doubled spending on search ads -- long seen as the best form of online marketing -- but it has only brought them an 11 percent increase in traffic, the Adobe data show.
The data don't have quite the same shock factor as stories about Mercedes inadvertently bankrolling Islamic extremist preachers through YouTube ads. But the two problems show an unhealthy online ad market where brands are throwing away an awful lot of money.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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