New findings reported by The Wall Street Journal reveal that approximately 80% of the ads YouTube serves on the web have violated their own terms of service, making them subject to refunds.
That could cost Google billions of dollars, adding to the company’s existing problems, including growing dissatisfaction with its search results and two ongoing ones. antitrust lawsuits.
Google’s YouTube advertising practices under scrutiny
Advertisers pay YouTube to show their ads on the platform before or after videos. However, according to the research of adlyticsabout half of these ads don’t actually show on YouTube.
YouTube also displays ads on other websites and mobile apps through its “Google Video Partners” program. Google claims these third-party sites offer the same ad experience as YouTube, with fully viewable audio ads that can be skipped.
However, Adalytics found that ads on these partner sites are muted 80% of the time, automatically play on the side of the screen, and cannot be skipped. In other words, the ads that advertisers pay YouTube to show don’t get the exposure or experience that YouTube promises.
The financial impact is significant. Brands typically pay about $100 for every 1,000 views of their ads on third-party sites, expecting high-quality ad placements. However, Adalytics found that lower-quality ads were typically shown, selling for just $5 per 1,000 impressions.
In other words, brands are paying a premium to expect their ads to appear prominently on YouTube. But in reality, more than half of their ad budgets go to serving inferior ads on non-YouTube properties.
This difference in price and quality represents a significant discrepancy that costs advertisers a lot of money.
Ads that run on low-quality sites
The Adalytics study examines the advertising campaigns of more than 1,100 leading brands, representing billions of ad impressions, between 2020 and 2023.
Big brands with ads placed inappropriately on disreputable websites include Johnson & Johnson, American Express, Samsung, Sephora, Macy’s, Disney+, and The Wall Street Journal.
Even government organizations like Medicare, the US military, the Social Security Administration, and municipal agencies in New York City were affected.
Their ads were found on websites that spread misinformation, hosted pirated content, and other low-quality sites. This contradicts Google’s promise that ads will only appear on carefully selected, high-quality websites.
In response, advertisers seem justifiably upset and are taking steps to recover money for these inappropriate ad views. This threatens to damage Google’s relationships with advertisers and credibility in the advertising market.
Joshua Lowcock, global director of media at advertising agency UM Worldwide, tells The Wall Street Journal:
“This is an unacceptable breach of trust on YouTube’s part. Google must fix this and fully refund customers for any fraud and impressions that do not comply with Google’s policies.”
Answer from Google
Google disputes the Adalytics report, saying it contains many errors. Google says it works hard to keep advertisers safe.
Google says it has strict rules for running video ads on other websites. It often removes ads from partner sites that violate these rules.
However, research findings and reports from affected advertisers raise questions about Google’s claims.
Consequences and potential repercussions
The revelations in the Adalytics report could have the following far-reaching consequences for Google, its advertisers, and the digital advertising industry.
Loss of trust and credibility
Google’s reputation could suffer because of these results. Advertisers may lose faith in Google’s promise to deliver high-quality ad sites.
This loss of trust can lead advertisers to spend their money differently. They might advertise on different platforms or require stricter rules to ensure that high-quality ads are placed well.
Impact on Google’s revenue
Google may have to pay back billions of dollars to advertisers over problems with its ad systems.
This could substantially reduce Google’s revenue at a time when the company is facing other problems. Google’s search ad business is weakening, and the company is also facing several antitrust lawsuits.
Regulatory scrutiny and legal action
The Adalytics report could encourage government regulators to investigate Google’s advertising systems and policies more thoroughly.
This increased scrutiny could result in Google being subject to financial or other penalties.
Advertisers can also file legal claims against Google to recover money they’ve lost or to force Google to revise the way it places ads to avoid future problems.
Changes in the digital advertising ecosystem
The issues identified in the report show that more transparency and oversight is needed in how digital ads are bought and sold.
There are a few ways to fix this:
New best practices or industry rules could be established to hold companies to higher standards. New technologies could be developed to better verify that ads appear alongside the right content. Governments could pass laws or regulations that require more transparency and accountability.
The overall goal would be to ensure that advertisers get what they pay for.
Google’s next moves?
To deal with criticism and backlash, Google may need to devote more effort and resources to improving the way it places and monitors ads.
Some options could include the following:
Thoroughly analyzing websites where Google ads appear. Be more transparent about how and where ads are targeted. Pay close attention to where your ads appear to make sure they appear alongside the right content.
If Google can fix these issues, it may be able to regain the trust of advertisers, repair their reputation, and avoid losing more money.
Featured Image: JHVEPhoto/Shutterstock
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