Companies including Tesco (TSCDY) and Sainsbury's (JSAIY) have pulled advertising after it was revealed that their ads were being shown alongside videos from Britain's far right English Defence League and the Ku Klux Klan.
"It is unacceptable that Google is allowing our ads to be placed alongside these videos on Youtube," Sainsbury's said in a recent statement. "We have suspended all Sainsbury's and Argos advertising on the site with immediate effect and are seeking urgent assurances from Google that this issue is being taken seriously and addressed."
Britain is the second largest market for Google after the U.S., generating $7.8 billion primarily from advertising in 2016. The tech giant gets ad revenues from its Google Search Properties, Google owned apps such as Gmail, Maps and GooglePlay and YouTube, YouTube True View and Google Preference.
Marks & Spencer (MAKSY) , McDonald's(MCD) - Get Report , L'Oreal (LRLCY) , HSBC(HSBC) - Get Report , Lloyds(LYG) - Get Report and Volkswagen's (VLKAY) Audi are also among the companies that have pulled advertising in the U.K.
"We are disappointed to learn that the safeguards we have in place to protect against our adverts appearing alongside unacceptable content, have fallen through," McDonald's U.K. said. "We are now seeking reassurances from Google as to how they can improve its filters to ensure this does not happen in the future. Whilst we have those discussions, all advertising through this channel has been removed with immediate effect."
French advertising firm Havas SA (HAVSF) has also paused its ad spend with Google until the issue can be resolved.
Google's European boss Matt Brittin on Monday apologized for the ongoing issue, saying "we don't want it to happen and you don't want it to happen, and we take responsibility for it," he said at an industry event.
This could just be the start, analysts from Liberum warned.
"It is clear advertisers are becoming increasingly wary of issues surrounding online advertising and we expect more brands and agencies to take action if new stories appear," Liberum said in a Tuesday note, adding that anecdotally the analysts are hearing that clients are asking for guarantees from agencies that their ads will not appear alongside inappropriate material.
This could be a boon for traditional media such as ITV, analysts at Liberum said, as companies move their ad spend to a more secure median.
Last week, U.K. lawmakers grilled executives from Facebook(FB) - Get Report , Twitter(TWTR) - Get Report and Google about how they protect users from hate speech, with members of parliament's Home Affairs select Committee urging the social media companies to "do a better job."
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