Since last week, several major United Kingdom brands - including BBC, Channel 4, Lloyd's, and McDonald's - have suspended their advertising campaigns on YouTube after an investigation by the British newspaper The Times showed that their ads could appear Alongside videos about hateful, extremist, anti-Semitic, and sometimes even terrorist-related.
If Google can't lure back advertisers, it could result in a loss of hundreds of millions of dollars in revenue.
Shares of Google parent Alphabet ended down 1.2 percent, or $10.15 per share, at $839.65 on the New York Stock Exchange.
"We match ads and the content, but because we source the ads from everywhere, every once in a while somebody gets underneath the algorithm and they put in something that doesn't match", Schmidt said.
Google has come under intense scrutiny for ads appearing alongside videos on YouTube carrying homophobic or anti-Semitic messages.
Schindler said the company has been conducting an "extensive review" and has enabled new controls to allow brands to more easily curate where advertising may appear.
ISBA, a United Kingdom advertising association with over 400 corporate members, urged Google shortly thereafter to review its policies and withdraw any ad inventory it could not guarantee wouldn't appear next to offending material. Brands often don't know where their online ads are running. While Mondelez has not seen evidence that its ads have appeared alongside inappropriate content, it is in "constant discussion with both Google and YouTube and will be monitoring the issue closely", a spokeswoman said. The decision by major USA brands to withdraw spending suggests that boycott is quickly spreading.
"We'll also tighten safeguards to ensure that ads show up only against legitimate creators in our YouTube Partner Program - as opposed to those who impersonate other channels or violate our community guidelines". In 2016, the firm generated $80bn in ad revenue - accounting for nearly 90% of the firm's total income for the year.
Google announced Tuesday that it will hire more employees to deal with advertisers' complaints about extremist content.
Last week saw the start of a backlash against Google after advertisers voiced concern that their ads were appearing next to extremist content.