Google-owned YouTube will lose approximately $755 million due to a widespread advertiser boycott prompted by ad placement concerns, Nomura Instinet’s analysts wrote in a recent note to clients, as reported by Business Insider. The company’s analysts believe that the online video service won’t weather the recent ordeal unscathed as it’s relatively reliant on revenue generated from ads purchased by global brands and other major advertisers, many of which have now decided to suspend their promotional campaigns on YouTube following the revelation that YouTube’s targeting algorithms occasionally displayed their ads next to extremist videos and other offensive content. Nomura Instinet’s latest note suggests that large brands who already pulled their ads from YouTube account for approximately 7.5 percent of YouTube’s annual revenue that’s expected to surpass $10 billion in 2017, meaning the company stands to lose around $755 million in revenue over the course of this year directly due to the advertiser boycott it’s been hit with. A chart visualizing Nomura Instinet’s forecast can be seen below.
Five of the 20 largest advertisers in the United States including Verizon and AT&T have already pulled their ads from the Google-owned online video service, and many major companies in other parts of the world have followed suit. The traditional TV industry is expected to emerge as the largest winner in the ordeal seeing how many companies that are now participating in the YouTube ad boycott will likely be looking to spend their marketing budgets elsewhere. While it’s possible that the majority of their budgets now get allocated to YouTube’s online competitors, industry watchers believe that Internet firms like Facebook and Twitter may also be facing increased scrutiny following the scandal, meaning advertisers could play it safe for the time being by simply committing more resources to traditional TV companies that can guarantee their brands won’t be displayed in connection to potentially offensive and possibly even illegal content.
While Nomura Instinet’s prediction paints a grim picture for YouTube, some other well-known industry analysts have previously downplayed the impact of the advertiser boycott that the Google-owned service has been hit with, saying that the company is unlikely to be affected by the ordeal in the long term. More details on the matter will likely follow in the coming weeks once YouTube implements new measures intended to appease its currently unhappy clients.