Advertisers Face Up to Scandal Risk But Can’t Ditch Tech Giants

The advertising industry’s annual gathering on the French Riviera has become a recurring cycle of contrition from technology giants and admonishment from the Mad Men. In 2017, it was YouTube apologizing for ads appearing next to jihadist terror videos. In 2018 came Facebook Inc.’s mea culpa for a data privacy scandal. This year, Facebook regretted live-streaming a mass shooting in New Zealand and YouTube battles the spread of hate speech.

All the while, the marketing money continues to flow. Facebook and Google’s advertising sales grew 38% and 22%, respectively, in 2018, and both dominated the beach front in Cannes again this year with showy largess. Google served up grape smoothies, gingerbread ice cream and live tunes from synth-pop duo Pet Shop Boys and electro outfit Justice. Facebook held panels with Grammy-winning singer-songwriter John Legend and style icon Jenna Lyons, while Chief Operating Officer Sheryl Sandberg hosted some of the biggest advertisers by the shore.

But the recurring scandals hitting the tech giants have created a dilemma for chief marketing officers. Do they take a principled stand and move their ad dollars elsewhere, sticking to more traditional media like TV and newspapers but missing out on the global reach and hyper-specific targeting of consumers that the platforms afford? Or do they accept the risk of being drawn into future hate speech and toxic content controversies, if it means they can keep growing sales? The consensus in Cannes this year from advertisers: let’s ride it out.

“Every once in a while there’s going to be a screw-up and unfortunately the screw-ups are pretty big,” said Michael Roth, chairman and chief executive officer of the Interpublic Group of Cos., the world’s fourth-largest advertising company by revenue. “The thing is, it still works.”

Unlike the past, when adverts were confined to spaces curated by professionals, such as TV commercial breaks, radio programs or billboards, chief marketing officers are opting to get comfortable with the daily risks of placing their products alongside non-vetted, user-generated content.

In Cannes, Facebook and Google both stressed their latest efforts to keep their platforms safe, from investing in machine learning that spots offending material before it’s uploaded to hiring more humans to oversee posts. But each conceded they’ll never keep all the objectionable material at bay. Sandberg said Facebook had a ‘Herculean’ task on its hands and that generally, all technologies can be used for both bad and good.

“Bad actors are smart and find ways to circumvent our policies and brush right against where the new line has been drawn,” said Cecile Frot-Coutaz, YouTube’s head of Europe, Middle East and Africa. “It’s that delicate balance of keeping the openness but protecting our users and advertisers.”

YouTube’s latest controversy is how it keeps its service safe for children, after predators were found to be leaving pedophile comments on videos featuring kids. YouTube has previously come under fire for allowing fake or misleading content to flourish on its platform, and not removing videos with homophobic and racist remarks.

Pressure isn’t just building from marketers, but also from other platforms touting their wares in Cannes to lure spending. Amazon.com Inc. hosted meetings in a top-floor suite at the five-star Carlton hotel with spectacular views over the Mediterranean, showing brands how they can advertise in Amazon search results and grow sales through its Alexa smart speaker. Snap Inc. entertained guests in a contemporary art museum, handing out rainbow-colored flip-flops. Music streamer Spotify Technology SA and Walt Disney Co.’s Hulu brought in Grammy-nominee Ciara for a VIP party at a hillside villa.

Advertisers’ latest initiative to tackle the issue of safety online is a so-called ‘Global Alliance for Responsible Media’ that includes brands, ad agencies and platforms. Yet pushed at the partnership’s launch on specific measures they’d like to see, marketers from consumer-goods giant Unilever, confectionery manufacturer Mars Inc. and drinks-maker Diageo Plc weren’t forthcoming.

Yannick Bollore, CEO of ad giant Havas, called it “unthinkable” not to advertise on social platforms, because that’s where consumers spend most of their time.

“But we need to guarantee to our clients that we can find a positive environment,” he said in an interview in Cannes.

His counterpart at WPP, Mark Read, went furthest in publicly suggesting changes that might be needed, mooting moderation of content in certain categories or limiting what can be posted from new accounts.

“We need to think about the design of the platforms,” Read said, whose London-based advertising group spends billions of dollars of client money with Facebook and Google. “Clearly they haven’t done enough.”

Marketers are making investment decisions at a time when the average tenure of a chief marketing officer, or CMO, is a mere 43 months, or less than half of that of a CEO, according to research by headhunters Spencer Stuart. Their short shelf-life shows the scrutiny they’re under from their boards, said Michael Kassan, founder of MediaLink, which advises the world’s most influential marketers and media companies.

“The easiest way to talk is with your cheque book,” Kassan said. “But the pressure on a CMO to deliver results is intense.”

And even if marketers wanted to force change through financial pressure, it’s not clear it would work. The tech giants have built a base of millions of small- and medium-sized businesses that advertise using their tools, which limits the leverage of any particular brand, said Pedro Earp, chief marketing officer of beer-maker Anheuser-Busch InBev NV.

“Some of these issues are complicated and aren’t solvable like that,” Earp said, who sits on Facebook’s client council which consults on how to improve the platform for advertisers. “It’s been a constructive dialog.”

But so long as Facebook and Google continue to offer marketers an unparalleled ability to reach consumers and ease of use, they’ll keep dominating the industry, said Wenda Harris Millard, vice president at MediaLink and based in London.

“For advertisers it’s kind of like, ‘Do I press the F button or the G button?”‘ she said. “It’s hard to stop all this.”