(Reuters) - U.S. healthcare conglomerate Johnson & Johnson and JPMorgan Chase & Co became the latest big U.S. companies to suspend all digital advertising on Google's YouTube, over concerns that its ads may have appeared on channels that broadcast offensive videos.
Wireless carriers Verizon Communications Inc and AT&T Inc said on Wednesday they would suspend digital ads on YouTube, joining a list of well-known British brands such as retailer Marks and Spencer Group Plc that are deserting Alphabet Inc's Google.
Google has come under intense scrutiny for ads appearing alongside videos on YouTube carrying homophobic or anti-Semitic messages. The company vowed an overhaul of its practices and said on Wednesday it has started an extensive review of its advertising policies.
Shares of Google parent Alphabet ended down 1.2 percent, or $10.15 per share, at $839.65 on the New York Stock Exchange.
Control over online ad placement has become a hot-button issue for advertisers, with social networks and news aggregators coming under fire during and after the U.S. presidential election for spreading fake news reports.
Advertisers have also sought to avoid having their brands appear beside content that they categorize as hate speech.
J&J said on Thursday it wanted to ensure that its product advertising did not appear on channels that promote "offensive content." (http://bit.ly/2nqZNJD)
JPMorgan, the biggest U.S. bank by assets and the biggest issuer of general purpose credit cards, suspended all of its ads from YouTube on Thursday, according to spokeswoman Trish Wexler.
The bank spends about $3 billion on marketing each year.
YouTube has been a key driver of growth for Google as its traditional business of search advertising matures. Google's net ad revenue worldwide from YouTube was $5.58 billion last year, according to New York-based research firm eMarketer.
While major brands suspending advertising on YouTube is a public relations pain for Google, the suspensions do not affect Google’s biggest ad product, search.
According to eMarketer, Google’s 2017 global ad revenue is projected to be $73.75 billion, grabbing 62 percent of the $99.62-billion search market. Search accounts for 83 percent of Google’s overall ad revenue.
The financial hit is also less certain because digital platforms tend to collect the bulk of their revenue from small-to-medium sized companies who cannot afford to buy on TV.
“Digital dependence on the long-tail of advertising clients means that while major advertisers like P&G or agencies like Havas can publicly protest, they do not have the same impact on a Google or a Facebook as they have on a CBS or NBC," analysts at MoffettNathanson wrote on Thursday.
"In other words, if a major brand marketer or agency moves money to TV and out of digital, the TV industry will see the benefit whereas the digital industry might not truly feel it.”
(Reporting by Natalie Grover in Bengaluru and Tim Baysinger, Anjali Athavaley, David Henry and Jessica Toonkel in New York; Editing by Sai Sachin Ravikumar and Saumyadeb Chakrabarty; Editing by Nick Zieminski and Lisa Shumaker)