An attendee has a photograph taken at the YouTube Inc. story exhibit during the South By Southwest (SXSW) conference in Austin, Texas, U.S. (Photographer: David Paul Morris/Bloomberg)

YouTube Reaches Out to Advertisers as AT&T, Hasbro Halt Spending

(Bloomberg) -- Alphabet Inc.’s Google went into damage-control mode after a raft of major advertisers stopped spending money on YouTube over concerns that the video-sharing site can be used to forge networks of people engaged in exploitation of children.

Google executives held a call with representatives of major advertisers and ad agencies and sent them a memo to assure them that the company had deleted predatory accounts and was working to build new tools to weed out commenters who try to sexualize videos featuring children, according to people familiar with the situation.

The outreach came after companies such as AT&T Inc., Kellogg Co., Nestle SA and Walt Disney Co., as well as several smaller brands, paused their YouTube advertising over the controversy. Toymaker Hasbro Inc. and the U.S. division of Fiat Chrysler Automobiles NV said late Thursday that they had joined the stampede away from YouTube. The uproar originated with video blogger Matt Watson, who posted a 20-minute clip on Sunday detailing how comments on YouTube were being used to identify certain videos of young girls participating in activities such as posing in front of a mirror and doing gymnastics.

Comments under the videos suggested potential predators were bookmarking certain points and sharing them with others. Watson’s video demonstrated how, if users clicked on one of the clips, YouTube’s algorithms recommended similar ones. By Thursday, Watson’s video had been viewed more than 2 million times.

“Advertisers count on Google to monitor offensive material on YouTube and rely on them to get offensive content off as soon as it is discovered,” said Michael Pachter, an analyst at Wedbush Securities. If the company’s response is sufficient to convince the advertisers to come back, the episode won’t have an impact on revenue, Pachter said.

YouTube is a growing and important part of Google’s vast internet advertising empire. Video ads are generally more lucrative than Google’s bread-and-butter text search ads. YouTube has seen major boycotts by advertisers in the past, such as when ads appeared next to violent terrorist content, but companies have generally come back to the platform after public concern abated. Google doesn’t break out the video site’s advertising revenue, though BMO Capital Markets analysts estimated YouTube’s sales at $16.2 billion in 2018.

“Any content -- including comments -- that endangers minors is abhorrent and we have clear policies prohibiting this on YouTube. We took immediate action by deleting accounts and channels, reporting illegal activity to authorities and disabling violative comments,” a spokeswoman for YouTube said in an email.

Google said it had disabled comments on "tens of millions" of videos that included minors and deleted around 400 accounts that had left concerning comments. Total ad spending on the videos mentioned was less than $8,000 within the last 60 days, and YouTube plans refunds, the spokeswoman said.

That number could be dwarfed, though, by even a week-long boycott by major advertisers, some of whom spend large portions of their advertising budgets on the platform.

AdWeek earlier reported the existence of the memo to advertisers.

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