Ad Agencies and Accountability

It’s never a good thing when a news story begins with the phrase “summoned before the government.” That, though, is exactly what happened to Google last week in a case of what most seem to presume is the latest episode of tech companies behaving badly.

From The Times:

Google is to be summoned before the government to explain why taxpayers are unwittingly funding extremists through advertising, The Times can reveal. The Cabinet Office joined some of the world’s largest brands last night in pulling millions of pounds in marketing from YouTube after an investigation showed that rape apologists, anti-Semites and banned hate preachers were receiving payouts from publicly subsidised adverts on the internet company’s video platform.

David Duke, the American white nationalist, Michael Savage, a homophobic “shock-jock”, and Steven Anderson, a pastor who praised the killing of 49 people in a gay nightclub, all have videos variously carrying advertising from the Home Office, the Royal Navy, the Royal Air Force, Transport For London and the BBC.

Mr Anderson, who was banned from entering Britain last year after repeatedly calling homosexuals “sodomites, queers and faggots”, has YouTube videos with adverts for Channel 4, Visit Scotland, the Financial Conduct Authority (FCA), Argos, Honda, Sandals, The Guardian and Sainsbury’s.

Let me start out with what I hope is an obvious caveat:

  • I believe that free speech is a critical right, and that includes speech with which I strongly disagree (that’s the entire point)
  • That said, a right to free speech does not include a right to be heard, much less a right to monetize; anyone can host their own site and sell their own ads, but there is no right to Google’s or Facebook’s platforms or ad networks
  • To that end, it is perfectly legitimate to be upset at the fact proponents of hate speech or fake news or any other type of objectionable content are monetizing that content on YouTube or through DoubleClick (Google’s ad display network)

What is more interesting, in my opinion, is with whom should you be upset?

Google’s Responsibility

At first glance this seems like a natural place to extend my criticism of Google from two weeks ago after The Outline detailed how some of Google’s “featured snippets” contained blatantly wrong and often harmful information:

The reality of Internet services is such that Google will never become an effective answer machine without going through this messy phase. The company, though, should take more responsibility; Google told The Outline:

“The Featured Snippets feature is an automatic and algorithmic match to the search query, and the content comes for third-party sites. We’re always working to improve our algorithms, and we welcome feedback on incorrect information, which users may share through the ‘Feedback’ button at the bottom right of the Featured Snippet.”

Frankly, that’s not good enough. Algorithms have consequences, particularly when giving answers to those actually searching for the truth. I grant that Google needs the space to iterate, but said space does not entail the abandonment of responsibility; indeed, the exact opposite is the case: Google should be investing far more in catching its own shortcomings, not relying on a barely visible link that fails to even cover their own rear end.

Algorithms are certainly responsible for what is reported in The Times: ads are purchased on one side, and algorithmically placed against content on the other. So, bad Google, right?

To a degree, yes, but not completely; consider this paragraph at the end of The Times’ article:

The brands contacted by The Times all said that they had no idea that their adverts were placed next to extremist content. Those that did not immediately pull their advertising implemented an immediate review after expressing serious concern.

Were I one of these brands I would be concerned too; in fact, my concern would extend far beyond a few extremist videos to the entire way in which their ads are placed in the first place.

Ad Agencies and the Internet

Few advertisers actually buy ads, at least not directly. Way back in 1841, Volney B. Palmer, the first ad agency, was opened in Philadelphia. In place of having to take out ads with multiple newspapers, an advertiser could deal directly with the ad agency, vastly simplifying the process of taking out ads. The ad agency, meanwhile, could leverage its relationships with all of those newspapers by serving multiple clients:


It’s a classic example of how being in the middle can be a really great business opportunity, and the utility of ad agencies only increased as more advertising formats like radio and TV became available. Particularly in the case of TV, advertisers not only needed to place ads, but also needed a lot more help in making ads; ad agencies invested in ad-making expertise because they could scale said expertise across multiple clients.

At the same time, the advertisers were rapidly expanding their geographic footprints, particularly after the Second World War; naturally, ad agencies increased their footprint at the same time, often through M&A. The overarching business opportunity, though, was the same: give advertisers a one-stop shop for all of their advertising needs.

When the Internet came along, the ad agencies presumed this would simply be another justification for the commission they kept on their clients’ ad spend: more channels is more complexity that the ad agencies could abstract away for their clients, and the Internet has an effectively infinite number of channels!

That abundance of channels, though, meant that discovery was far more important than distribution. Increasingly users congregated on two discovery platforms: Google for things for which they were actively looking, and Facebook for something to fill the time. I described the impact this had on publishers in Popping the Publishing Bubble:

  • Editorial and ads were unbundled; the latter was replaced by ad networks that targeted users across multiple sites
  • However, this model makes for a terrible user experience and, more pertinently, it doesn’t work nearly as well on mobile, in part because the ads are worse, but also because it’s hard to track users via cookies
  • Google and Facebook, on the other hand, track users via identity, have superior ad units (especially Facebook on mobile), and have highly invested in advertiser tools that are far superior to anyone else’s

This is why I wrote in The Reality of Missing Out that Google and Facebook would take all of the digital advertising dollars:

Both companies, particularly Facebook, have dominant strategic positions; they are superior to other digital platforms on every single vector: effectiveness, reach, and ROI. Small wonder that the smaller players I listed above — LinkedIn, Yelp, Yahoo, Twitter — are all struggling…

Digital is subject to the effects of Aggregation Theory, a key component of which is winner-take-all dynamics, and Facebook and Google are indeed taking it all. I expect this trend to accelerate: first, in digital advertising, it is exceptionally difficult to see anyone outside of Facebook and Google achieving meaningful growth…Everyone else will have an uphill battle to show why they are worth advertisers’ time.

This is exactly what has happened. Just last week the Wall Street Journal reported on eMarketer’s forecast on digital advertising:

Total digital ad spending in the U.S. will increase 16% this year to $83 billion, led by Google’s continued dominance of the search ad market and Facebook’s growing share of display and mobile ads, according to eMarketer’s latest forecast. Google’s U.S. revenue from digital ads is expected to increase about 15% this year, while Facebook’s will jump 32%, more than previously expected, according to the market research company’s latest forecast report.

Snapchat is expected to grow from its small base, but everyone else will shrink: in other words, there are really only two options for the sort of digital advertising that reaches every person an advertiser might want to reach:


That’s a problem for the ad agencies: when there are only two places an advertiser might want to buy ads, the fees paid to agencies to abstract complexity becomes a lot harder to justify.

Accountability and Logistics

Again, as I noted above, there are reasonable debates that can be had about hate speech being on Google’s and Facebook’s platforms at all; what is indisputable, though, is that the logistics of policing this content are mind-boggling.

Take YouTube as the most obvious example: there are 400 hours of video uploaded to YouTube every minute; that’s 24,000 hours an hour, 576,000 hours a day, over 4 million hours a week, and over 210 billion hours a year — and the rate is accelerating. To watch every minute of every video uploaded in a week would require over 100,000 people working full-time (40 hours). The exact same logistical problem applies to ads served by DoubleClick as well as the massive amount of content uploaded to Facebook’s various properties; when both companies state they are working on using machine learning to police content it’s not an excuse: it’s the only viable approach.

Don’t tell that to the ad agencies though. WPP Group CEO Martin Sorrell told CNBC:

“They can’t just say look we’re a technology company, we have nothing to do with the content that is appearing on our digital pages,” Sorrell said. He added that, as far as placing advertisements was concerned, they have to be held to the same standards as traditional media organizations…

“The big issue for Google and Facebook is whether they are going to have human editing at this point … of course they have the profitability. They have the margins to enable them to do it. And this is going to be the big issue — how far are they prepared to go?” Sorrell said, adding they needed to go “significantly far” to arrest these concerns.

It really is a quite convenient framing for Sorrell (then again, he is the advertising expert): if only Google and Facebook wouldn’t be greedy and just spend a tiny bit of their cash windfall to make sure ads are in the right spot, why, everything would be just the way it used to be! What is convenient is that this excuses WPP from any responsibility: it’s all Google’s and Facebook’s fault.

Here’s the question, though: if Google and Facebook have all of the responsibility, then shouldn’t they also be getting all of the money? What exactly are WPP’s fees being used for? There are only two places to buy ads, so it’s not as if agencies are helping advertiser purchase across multiple outlets as they did in the past. And while there is certainly an art to digital ads, the cost and complexity is also less than TV, with the added benefit that it is far easier to use a scalable scientific approach to figuring out what works (as opposed to relying on Don Draper-like creative geniuses). Policing the placement of a specific advertising buy is also a much more human-scale problem than analyzing the entire corpus of content monetized by Google and Facebook.

Google Versus the Ad Agencies

It’s clear that Google knows that it is the agencies who are actually implicated by The Times’ report. In a blog post entitled Improving Our Brand Safety Controls the managing director of Google U.K. writes (emphasis mine):

We’ve heard from our advertisers and agencies loud and clear that we can provide simpler, more robust ways to stop their ads from showing against controversial content. While we have a wide variety of tools to give advertisers and agencies control over where their ads appear, such as topic exclusions and site category exclusions, we can do a better job of addressing the small number of inappropriately monetized videos and content. We’ve begun a thorough review of our ads policies and brand controls, and we will be making changes in the coming weeks to give brands more control over where their ads appear across YouTube and the Google Display Network.

The message is loud-and-clear: brands, if you don’t want your ads to appear against objectionable content, then get your agencies to actually do their job.

Make no mistake, the agencies know it too: there has been a lot talk about a boycott of Google, but read between the lines about what is actually going on. For example, from Bloomberg:

France’s Havas SA, the world’s sixth-largest advertising and marketing company, pulled its U.K. clients’ ads from Google and YouTube on Friday after failing to get assurances from Google that the ads wouldn’t appear next to offensive material. Those clients include wireless carrier O2, Royal Mail Plc, government-owned British Broadcasting Corp., Domino’s Pizza and Hyundai Kia, Havas said in a statement.

“Our position will remain until we are confident in the YouTube platform and Google Display Network’s ability to deliver the standards we and our clients expect,” said Paul Frampton, chief executive officer and country manager for Havas Media Group UK.

Later, the parent company Havas said it would not take any action outside the U.K., and called its U.K. unit’s decision “a temporary move.”

“The Havas Group will not be undertaking such measures on a global basis,” a Havas spokeswoman wrote in an email. “We are working with Google to resolve the issues so that we can return to using this valuable platform in the U.K.”

This boycott is not about hurting Google, because the reality is that the ad agencies can do no such thing: Google and Facebook control the users, and that means the advertisers have no choice but to be on their platforms. If Havas actually had power they would pull their ads globally, and make it clear that the boycott was permanent absent significant changes; the reality is that the ad agencies are running a PR campaign for the benefit of their clients who are rightly upset — and, as noted above, were until now completely oblivious.

Taking Responsibility

To be clear, I’m not seeking to absolve Google and Facebook of responsibility, even as I recognize the complexities of the challenges they face. Moreover, one could very easily use this article to make an argument about monopoly power, which is another reason for Google and Facebook to address this problem before governments do more than summon them.

Advertisers and ad agencies, though, should be accountable as well. If ad agencies want to be relevant in digital advertising, then they need to generate value independent of managing creative and ad placement: policing their clients’ ads would be an excellent place to start. If The Times can do it so can WPP and the Havas Group.

Big brands, meanwhile, should expect more from their agencies: paying fees so an agency can take out an ad on Google or Facebook without taking the time to do it right is a waste of money — and, when agencies are asleep at the wheel as The Times demonstrated, said spend is actually harmful.

Above all, what Sorrell and so many others get so wrong is this: the Internet is nothing like traditional media. The scale is different, the opportunities are different, and the threats are different. Demanding that Google (and Facebook) act like traditional media companies is at root nostalgia for a world drifting away like the smoke from a Don Draper cigarette, and it is just as deadly.

Editor’s Note: In the original version of this article I conflated media buying and creative agencies and their associated fees; the article has been amended. AdAge has a useful overview of commissions and fees here