For all its moonshots, funky offices, and perception that it is a technology company, Google's main business is it sells ads.

It may prefer to talk about self-driving cars, robots that will give you nightmares and its work at the cutting edge of AI, but to fund all these headline grabbing projects, the company sells ads. It may not like to talk about it too much, but in the internet age, it is very good at it.

Unfortunately, Google now has no choice but to talk about its advertising model. An investigation by the Times, revealed that major brand names, including Marks & Spencer, McDonald's and Tesco found that their ads were being placed on videos from rape apologists, anti-Semites and those preaching terrorist propaganda. There were taxpayer-funded ads from government departments.

Brands quickly pulled their advertising money from YouTube in the UK and Google's EMEA chief Matt Brittin even apologised publicly for the failing of his company. It was not a good look for Google and its "don't be evil" motto.

Philipp Schindler, Google's chief business officer tried to sooth advertisers worries saying: "In the coming days and months, we're introducing new tools for advertisers to more easily and consistently manage where their ads appear across YouTube and the web." It didn't work.

The problem spread to Ireland and then the US where giants like AT&T and Verizon said they were withdrawing from the platform. And despite Google's hand-wringing and promises the issue would get better, the problems persist.

On Thursday (23 March) Bloomberg found that major advertisers across Europe and Asia are still appearing alongside extremist YouTube videos. An English Defence League video was accompanied by ads from Total, Netflix, IBM and Tag Heuer. Viewers in Germany, France and South Africa saw an anti-Semitic video proclaiming the existence of a "Jewish World Order" alongside ads from AXA, Total and Range Rover respectively.

Enemy of the state

The result is that Google has now seen as an enemy of the state by some and in recent days some news outlets have sought to conflate one issue with another. Last week, in the wake of the terror attack on Parliament, the Daily Mail called the company "the terrorists' friend" simply because you can search online for a terrorist manual on how to carry out a terror attack using a car.

Of course this sort of idiocy only serves to do the work of the terrorists for them – further instilling fear and hatred among the public – but it also makes Google seem in league with the terrorists and extremists when clearly this is not the case.

It's no surprise that Google has not been able to fix the problem quickly however. To put the challenge in context, in the time you have been reading this article so far, about 400 more hours of new video content have been uploaded to YouTube. Between now and tomorrow more than half a million hours of video will have been uploaded. Over the course of a year, that's 210 billion hours of video.

As technology analyst Ben Thompson points out, Google would need to employ 100,000 people working full time to watch everything that is uploaded onto YouTube. Human curation is not practical and Google is investing a lot in machine learning to try and automatically remove extremist content, but there is more the company should be doing – and this may now force it to change things more quickly.

And yet, despite all this concern and indignation, have you noticed that the advertisers and their agencies are not unilaterally saying goodbye to Google? Instead they are "pausing" ad campaigns and this is seen as "a temporary move".

This is because the ad agencies no longer call the shots.

The changing advertising landscape

Very few brands – and certainly no major ones – buy ads directly. Ever since there was more than just a single place to place ads for your product or services, we have had ad agencies. The first one opened in 1841 and it offered to use its relationship with all the newspapers on the market at the time to get brands better rates as well as handling the job of knowing where to place their ads and when.

As the popularity of radio and in particular TV grew, the need for such agencies became even more important, especially for big brands who needed help crafting television ads. This led to the rise of the powerful Madison Avenue advertising agencies and ad men of the 1960s — epitomized by the the dapper Don Draper character in AMC's Mad Men.

Then, along came the internet and suddenly the old models didn't work so well anymore.

As the internet has evolved, two big players emerged – Google and Facebook – and these two companies now hold all the power because their have all the users. And of course they are responsible for making sure the ads on their network are placed in the right place, but surely the ad agencies – who now have a lot less work to do because the effectively only have to deal with two companies – should be doing more to protect their clients?

"Advertisers and ad agencies should be accountable as well," Thompson says. "If ad agencies want to be relevant in digital advertising, then they need to generate value independent of managing creative and ad placement: policing their clients' ads would be an excellent place to start. If The Times can do it so can WPP and the Havas Group."

This is not a problem which is going to go away anytime soon, but for brands who want to continue to leverage the power of Facebook and Google user bases, they need to make their ad agencies work for their money.