By Jack Nicas and Nick Kostov 

Google unveiled changes to its ad policies and enforcement Tuesday, saying it would pull more advertising from controversial content and give advertisers more control and visibility over where their ads appear.

The steps come in response to an advertiser backlash over recent reports that the Alphabet Inc. unit frequently displays ads next to inappropriate content such as fabricated news stories or terrorist videos.

The company also said it would employ more people and technology to enforce the new policies.

"We know advertisers don't want their ads next to content that doesn't align with their values," Google Chief Business Officer Philipp Schindler said in a blog post Tuesday. "So starting today, we're taking a tougher stance on hateful, offensive and derogatory content."

Major advertisers such as HSBC Holdings PLC and L'Oréal SA reduced spending with Google in recent days after news reports that Google regularly served their ads on controversial websites or YouTube videos, including some made by supporters of terrorist groups such as Islamic State and a violent pro-Nazi group.

Google had long said existing controls guard against marketers' spots appearing alongside controversial content. But after the advertiser pushback in the U.K., Google on Friday and again Monday acknowledged that those measure fell short, and vowed to improve.

The speed with which Google announced the measures suggests the tools were already at its disposal. Yet enforcing the new policies could be tricky. Google must screen a sea of content that every day adds thousands of websites and nearly 600,000 hours of new YouTube footage. And while some controversial content, such as pornography or neo-Nazi sites, clearly violates its standards for advertising, other cases are nuanced and require human review.

Google's announcement "is a first step. But, importantly, it doesn't just end here," said Max Kalehoff, chief marketing officer of SocialCode, which helps market brands on social networks including YouTube.

Advertising on the internet involves a complex system that automatically places ads in front of targeted audiences wherever they are on the web, he said. "The notion of context is a moving target. We're not talking about linear TV where you had a spoon-fed, tightly controlled stream of content to a mass audience," he added.

Google has long aimed to position itself as a neutral platform connecting advertisers with vast amounts of content on the internet created by others, including millions of videos on its YouTube site and more than 2 million websites served by its ad-distribution business. That approach has been lucrative for Google as it has monetized far ends of the internet -- with sometimes edgy content -- while also giving marketers a broader reach for their ads.

But with spending on digital ads surpassing that on television ads last year in the U.S., according to eMarketer, increasing scrutiny from advertisers is forcing internet companies like Google and Facebook Inc. to take more responsibility for the content on which they serve ads.

Google, in effect, is becoming a reluctant policeman for the internet.

The British unit of Volkswagen AG's Audi, which had pulled its YouTube ads, said Tuesday that it welcomes "the swift action Google is taking to address these concerns," and "once we have a committed time frame from Google clarifying when these safeguards will be implemented across the board, we will have a closer discussion with the brand and fully assess our position in the U.K."

Rob Norman, chief digital officer of the ad-buying unit of ad company WPP, said that a handful of his clients suspended advertising on YouTube in the U.K. and that his group has pressured Google to improve controls for advertisers. "As with traditional media owners, Google and other digital platforms should take responsibility for their content," said WPP Chief Executive Martin Sorrell.

Ad spending affected so far is relatively small, but the attention to the issue prompted Pivotal Research Group analyst Brian Wieser to downgrade Alphabet's stock to hold from buy.

"We think that awareness of the incident will marginally curtail global growth this year vs. prior expectations," Mr. Wieser wrote in a research note Monday.

Serving ads on third-party websites earned Google for $15.6 billion last year, or 17.3% of Alphabet's overall revenue. YouTube revenue is unclear.

As part of the changes, Google plans to expand a policy that prohibits ads from running alongside content that attacks or harasses people based on their race, religion, gender or similar categories. Current policy focuses on content that advocates violence toward such groups; the new policy applies to any content that is incendiary or demeaning to such people. That change is likely to be among the most controversial with website owners and YouTube video creators who rely on Google for ad revenues, as its broad scope could include a wide variety of content.

The company also said it would place ads only on the YouTube videos of "legitimate creators" and pull ads from the videos of those that "impersonate other channels or violate our community guidelines." Google also is reviewing its policies to determine whether more YouTube videos should be removed from the site.

Google is changing the default settings for ads to limit them to more mainstream sites and videos, requiring brands to opt in to advertising on broader -- and sometimes edgier -- types of content such as such as videos peddling extremist views, conspiracy theories or misinformation. Google said it would simplify how advertisers control where their ads appear, including giving advertisers the ability to blacklist specific sites or YouTube videos.

Google said it would give advertisers more transparency on where their ads appear, though Mr. Schindler's post specifically mentioned only the expansion to all advertisers of an existing tool that tells brands every YouTube video on which their ads ran. Google said it also plans to hire significant numbers of people and develop technology "to increase our capacity to review questionable content." And the company plans to make it easier for advertisers to flag issues, with the goal of resolving problem cases within two hours, a person familiar with the matter said.

A Google spokeswoman said the policies would take effect "in the coming weeks."

Jack Marshall contributed to this article

Write to Jack Nicas at jack.nicas@wsj.com and Nick Kostov at Nick.Kostov@wsj.com

 

(END) Dow Jones Newswires

March 21, 2017 16:44 ET (20:44 GMT)

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