Cisco Pulls Ads From YouTube Over Inappropriate Content; Will Others Follow?
YouTube has gotten in hot water over content moderation issues.

If Cisco does it, will others follow?

Cisco Systems, Inc. (CSCO) is the latest company to pull advertising from Alphabet Inc.'s (GOOGL) YouTube over concerns about ads showing up next to inappropriate content. But it's unclear if other large advertisers can afford to not be on the fast-growing platform.

On Wednesday, May 9, Cisco's Chief Marketing Officer Karen Walker wrote in a blog post about brand safety that "while Google and Facebook have made some strides to combat the issue, at this time we have pulled all online advertising from YouTube until the platform has met our standards. But we continue to use it as a platform to share our video content."

The post has since been edited and the mention of YouTube has been replaced with a statement that the company is "working closely with all of our media partners to ensure that Cisco's online advertising meets our stringent standards."

Greg Portell, lead partner in retail practice at AT Kearney, said that every large advertiser like Cisco is having similar conversations with YouTube, and it's not surprising to see the advertiser taking action to make sure the problem gets solved.

"YouTube is an expensive platform for marketers," Portell said. "This is high value digital space, so it's fair to have advertisers expect a bit more [from YouTube]."

However, the value that YouTube provides brands could be too great for some companies to follow Cisco's lead, or to stay away for too long.

"It's an easy way to reach a lot of people," Portell said.

YouTube's ad-related headaches began in March 2017 when a group of brands including Coca-Cola, (KO) Walmart (WMT)  and AT&T (T) left the platform due to ads showing up next to offensive content. Giant advertiser Procter and Gamble (PG)  only returned to advertising on YouTube last month on a more limited basis.

Then in April, CNN found that ads from over 300 companies and organizations, including Cisco, ran on YouTube channels promoting Nazis, white supremacists, conspiracy theorists and other controversial content. 

YouTube has been a key driver of Alphabet's growth, with paid ad clicks on Google's own sites and apps rising 59% in the first quarter, ahead of the previous quarter's 48% growth. Alphabet does not break out YouTube's revenues and operating income separately.

Alphabet's stock was down 0.3% to $1,102.14 on Friday afternoon. Since the beginning of this year, shares have increased 4.6%

Alphabet is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells GOOGL? Learn more now.

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