Big Brands Suspend, Limit Digital Advertising in U.K. After Report Saying It Helps Fund Extremists

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Jaguar Land Rover, Thomson Reuters and others have reacted to a report that ads have appeared on hate sites and next to YouTube videos from supporters of terrorist and extremist groups.

Big-name advertisers, including car maker Jaguar Land Rover and media and information firm Thomson Reuters, have suspended or limited their U.K. digital advertising spending following a recent newspaper report saying that their ads have appeared on hate sites and next to videos from supporters of Islamic terrorists and other extremist groups.

The Times of London, part of Rupert Murdoch's News Corp, in its report earlier this month wrote: "Some of the world’s biggest brands are unwittingly funding Islamic extremists, white supremacists and pornographers by advertising on their web sites." It added: "Advertisements for hundreds of large companies, universities and charities, including Mercedes-Benz, Waitrose and Marie Curie, appear on hate sites and YouTube videos created by supporters of terrorist groups, such as Islamic State and Combat 18, a violent pro-Nazi faction."

The report said that an ad appearing alongside a YouTube video can earn the video poster $7.60 for every 1,000 views, and some of the most popular extremist videos have more than 1 million hits.

That has put the practice of so-called programmatic advertising buying online, which relies on software rather than people to purchase digital ads, in focus in Britain, with Google's YouTube getting particular attention. 

"Jaguar Land Rover was very concerned by reports in The Times, which claimed that advertising featuring our brands might benefit extremist and other inappropriate online media as an unintended consequence of algorithm technology used on some video-sharing web sites," the car company said in a statement. "We take our brands’ reputation very seriously and placed a temporary hold on U.K. digital advertising activity, while seeking and gaining assurance that we could resume it safely."

It added: "We re-started digital advertising on Saturday, February 11 and continue constructive discussions with YouTube about improved third-party verification on their site."

Thomson Reuters similarly said it was "deeply concerned that product advertising from a recent online campaign has appeared on inappropriate web sites." The company added that it "has a rigid set of policies and procedures to avoid this happening and is grateful for this case being brought to our attention."

Concluded the firm: "Thomson Reuters took immediate action to investigate and resolve this matter and suspended elements of the programmatic digital advertising activities within the business unit responsible while a further review takes place."

Resorts operator Sandals Resorts said, following the report, its U.K. unit has "temporarily halted a significant proportion of digital advertising (including YouTube)" and was "working with our advertising and publishing partners to ensure all possible measures are being explored to avoid any reoccurrence."

And Marie Curie, a U.K. organization that provides care and support for people living with terminal illness and their families, has "paused a significant proportion of our digital advertising activity, including a complete suspension of YouTube whilst we review the robustness of monitoring in place," said a representative.

The World Federation of Advertisers has also taken note, with CEO Stephan Loerke saying in a statement: “Brands have been increasingly drawn to programmatic media's promise of efficiently delivering relevant content to people at the right time and place, at scale. This opportunity has seen investment in programmatic advertising increase dramatically. A recent WFA study shows that this now, on average, represents 16 percent of our (large multinational) members' global budgets, up from 10 percent two years ago."

He added: "Both we and our members are increasingly concerned about the lack of transparency in this ecosystem. This takes many forms; including brand misplacement (as highlighted in recent media reports), but also the endemic levels of ad fraud.... WFA members have already been taking action to deal with the issue of ads appearing against inappropriate content often by limiting the amount of 'run of exchange buys' within their investment. Our recent programmatic study found that WFA members are increasingly (67 percent) turning to private exchanges, which promise better quality inventory. More brands are also taking a more hands-on approach and directly contracting with the various parties involved in the ecosystem to ensure greater control — including the ability to contractually oblige them to protect their brands against misplacement and ad fraud. This could include potential penalties where these guarantees are not met."

Concluded Loerke: "Clearly there is a need for the world's leading digital platforms to address this with a great deal more urgency and intensity."

YouTube has not commented, saying its policy is not to discuss advertisers' and clients' decisions.

Who stands to benefit from the recent debate about digital advertising in the U.K.? "Short-term, ITV could benefit from some money flowing back to TV," Liberum Capital analyst Ian Whittaker said in a report. "Medium-term, the news flow highlights the risks of online ad spending to brands and highlights TV’s 'safe harbor' elements."

He drew a parallel to another recent digital case making headlines, saying it "mirrors concerns in the U.S. where a number of SuperBowl adverts, including Hyundai and P&G, have also reportedly ended up as pre-roll for terrorist groups, such as Hezbollah on YouTube." Other signs that brands are becoming more wary of the risks of online include Walt Disney's decision to sever ties with YouTube star PewDiePie after he posted a series of videos featuring anti-Semitic comments. 

Reiterating U.K. TV giant ITV as his top stock pick, Whittaker said: "In the short-term, more advertising money could come back into TV if online ad spending is reduced."