The boycott of video-hosting platform YouTube by advertisers could cost its parent company Google $750 million in revenue, a media report said.
Over the past few weeks, major consumer brands, including Johnson & Johnson, PepsiCo and McDonald’s have pulled out their ads from the platform as they are protesting the placement of their ads which were appearing next to offensive content, including videos posted by terrorism-affiliated groups.
Although Google promised that it was taking steps to deal with the problem, the controversy still continues, and has led at least one firm to downgrade the search giant’s share price, Fortune reported on Monday.
According to analysts at brokerage firm Nomura Instinet, even if Google addresses the issue quickly, the boycott could cost its video service dearly.
The firm said that YouTube could see its annual revenues — which are estimated to be $10.2 billion for this year — a cut by as much as 7.5 per cent due to the controversy. This is combined with the costs of fixing the problem.
“Ad buyers are likely to demand greater direct control over ad placement, which could take time and resources to implement,” Nomura was quoted as saying.
The controversy first arose in Britain, where a number of brands and the government itself withdrew their advertising after it was discovered that many ads appeared along with the videos from terrorist organisations and other offensive content.
Google was even summoned to address the parliament about what it planned to do about the problem.