Google has described the ad misplacements as inadvertent and resulting at least partly from the sheer volume of content being uploaded to YouTube on a daily basis from people around the world. Like others, including Facebook and Twitter, Google uses an automated process known as programmatic advertising to place ads on YouTube and the over two million sites that are part of the Google Display Network.
Sometimes the system can make mistakes Google has admitted while promising to introduce new measures that will give advertisers more direct control over ad placement.
The question now for Google is whether it can implement those changes quickly and transparently enough to prevent more advertisers from walking away, even if only temporarily.
Programmatic buying is a relatively new advertising practice that has become mainstream only within the last few years, Enterprise said in a statement explaining its decision to pull ads from Google. "Although it is effective in dealing with the highly fragmented nature of the digital ad world, programmatic buying is still evolving as a business practice—and it appears that technology has gotten ahead of the advertising industry's checks-and-balances," the car rental giant warned. "There is no doubt there are serious flaws that need to be addressed."
So far such concerns don't appear to have spilled over to Wall Street. But analysts from Mizuho and Merrill Lynch this week stressed the importance of Google addressing the problem before it gets worse.
"Google's problems with ad placement or misplacement are reminiscent of the issues Facebook ran into with curating its news feeds," said Charles King, principal analyst at Pund-IT. "Practically speaking, the programmatic tools that Google and other companies use allow them to provide volume ad services cheaply and effectively."
The question now is whether the changes that Google has said it is making to give customers more control over ad placement will affect the larger reach and effectiveness of its ad platform, he said.
It is also worth noting that at least some of what's going on could be posturing by potential rivals, King said. AT&T through its Time Warner pursuit and Verizon via its acquisition of AOL and planned Yahoo purchase are both positioned to be direct competitors to Google in future, he said. "Both companies should provide evidence of how they plan to avoid causing buyers of their own online ad services the same sort of pain that they claim to be suffering due to Google."
Google did not comment directly on the most recent exodus of advertisers but pointed to a recent blog post by Chief Business Officer Philipp Schindler promising ad policy changes.