HSBC HSBC Holdings PLC

By Jack Nicas 

Google sought to tamp down a growing controversy over its placement of ads on inappropriate content with a promise to better police the millions of websites and videos across its platforms.

The company has faced a powerful backlash from advertisers over the past several days. HSBC Holdings PLC and L'Oréal SA reduced spending with the technology giant after news reports that Google regularly placed 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 faction.

Google and other internet giants such as Facebook Inc. have long aimed to position themselves as neutral platforms connecting users and advertisers with content created by others. That approach helped Google build the world's largest advertising business, in part by selling ads on far ends of the internet with sometimes edgy content.

But with estimates showing spending on digital ads surpassing that on television ads last year in the U.S., increasing scrutiny from advertisers is forcing internet companies to take more responsibility for the content on which they run ads.

Under policies unveiled Tuesday, Google, a unit of Alphabet Inc., said it would pull more advertising from controversial websites and videos and give marketers more control and visibility over where their ads appear. Google also said it would employ more people and technology to enforce the 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."

Google had long said existing controls guard against marketers' spots appearing alongside controversial content. The speed with which Google announced the additional measures -- following an apology on Friday -- 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.

"The reason Google has been reluctant on how to address this is because they can't fully address it," said David Rodnitzky, head of ad agency 3Q Digital. "They can build algorithms to find a hate group or article a brand doesn't want to be associated with, but at end of the day, the internet is a vast, sprawling, ever-changing ecosystem that is impossible to ever solve with an algorithm."

Google already employs thousands of people to stop violations of its existing ad policies. So Mr. Rodnitzky said he believes Tuesday's changes are "window dressing to placate big advertisers."

The British unit of Volkswagen AG's Audi, which had pulled its YouTube ads, said it welcomed Google's "swift action" to address concerns, but was awaiting clarity. "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.," the auto maker said.

WPP said that a handful of its clients suspended advertising on YouTube in the U.K. and that the ad firm 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.

Spending affected so far is relatively small, and touches a subset of Google's business. Serving ads on third-party websites brought in revenue of $15.6 billion last year, or 17.3% of Alphabet's overall revenue. Alphabet doesn't disclose YouTube's revenue.

But the issue prompted Pivotal Research Group analyst Brian Wieser on Monday to downgrade Alphabet's stock to hold from buy. He said Tuesday that the announced measures were too late. "Brand safety has become one of the most important issues in the minds of a typical large marketer," he said, so he predicted ad sending on Google to fall slightly as a result of the controversy.

The planned changes at Google include expanding a policy that prohibits ads from running alongside content that attacks or harasses people based on race, religion, gender or similar categories.

While current policy focuses on content that advocates violence toward such groups, the new one applies to anything that is incendiary or demeaning to them. That change likely will be controversial with some website owners and video creators who rely on Google for ad revenues, as its broad scope could include a wide variety of content.

Google 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.

Google said it 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 videos peddling extremist views or misinformation. Google said it would simplify how advertisers control where ads appear, including enabling them to blacklist specific sites or YouTube videos.

Google plans to give advertisers more transparency on where 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 run. Google also 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."

Nick Kostov and Jack Marshall contributed to this article.

Write to Jack Nicas at jack.nicas@wsj.com

(END) Dow Jones Newswires

March 21, 2017 20:18 ET (00:18 GMT)

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