Google apologises to ad clients for YouTube content fiasco

Esha Vaish and Kate Holton

(Refiled to remove extraneous apostrophe in first paragraph)

March 20 (Reuters) - Google apologised on Monday for

allowing ads to appear alongside offensive videos on YouTube as

more high-profile firms such as Marks & Spencer and HSBC

pulled advertising for British markets from Google

sites.

The British government has suspended its advertising on

YouTube after some public sector ads appeared next to videos

carrying homophobic and anti-semitic messages, prompting a flood

of major companies to follow suit.

Britain is the largest market for Alphabet Inc's

Google outside the United States, generating $7.8 billion mainly

from advertising in 2016, or nearly 9 percent of the U.S.

giant's global revenue.

"I would like to apologise to our partners and advertisers

who might have been affected by their ads appearing on

controversial content," Google EMEA President Matt Brittin said

at the annual Advertising Week Europe event in London.

Besides well-known British brands pulling the plug, some of

the world's biggest advertising companies responsible for

placing vast amounts of marketing material for clients, said

they were reviewing how they worked with Google.

The boycott is the latest clash between advertising

companies and the internet giants that have built up dominant

positions in digital advertising by offering not only huge

audiences but also the ability to apply their user data to make

ads more targeted and relevant.

For big advertising groups such as WPP, internet

firms are both a client and a competitor, while traditional

media groups such as newspapers and general online news

publishers are having to compete with them for online dollars.

HOSTILE INDUSTRY

"Google faces a hostile industry of media owners in Europe

... and we expect they will be all too happy to highlight future

brand safety failings," said Brian Wieser, a senior analyst at

Pivotal Research Group.

"Overall, we think that the problems which have come to

light will have global repercussions as UK marketers potentially

adapt their UK policies to other markets and as marketers around

the world become more aware of the problem," he said.

WPP, the world's largest advertising firm, said on Monday it

was talking to clients and media partners such as Google,

Facebook and Snapchat to find ways to prevent brands from being

tarnished.

"We have always said Google, Facebook and others are media

companies and have the same responsibilities as any other media

company. They cannot masquerade as technology companies,

particularly when they place advertisements," said Martin

Sorrell, the founder and head of the British firm.

Publicis, the world's third largest advertising

firm, said in a statement on Monday that it was clear Google had

fallen short of meeting advertising standards and that the

French company was reviewing its relationship with Google.

Google said on Friday it worked hard to remove ads appearing

on pages or videos with hate speech, gory or offensive content

but with 400 hours of video uploaded to YouTube every minute it

did not always get it right.

Brittin said Google had made a commitment to doing better

and would simplify advertiser controls, add safer defaults and

increase investment to enforce its ad policies faster.

A spokeswoman for Google UK said it would look again at the

way it defines incendiary commentary and hate speech to raise

the bar on videos and sites allowed for advertising.

On Friday, Google executives were called in to face

questions from the advertising industry and Britain over the

issue.

Representatives for retailers Marks & Spencer, Sainsbury's

and Argos, British banks HSBC and RBS,

McDonald's, the UK branch of advertising group Havas

and the BBC told Reuters their firms had stopped ads.

A source at Lloyds Banking said the lender had

pulled the plug as well. Others such as Vodafone,

Barclays and Tesco were reviewing policies,

their representatives said.

(Additional reporting by Eric Auchard, Rahul B, Gwenaelle

Barzic, James Davey and Lawrence White; editing by David Clarke)