What does this actually mean, though? Advertisers are always free to spend or not spend their dollars as they see fit.
This is the brave new world. The free-market of information is beginning to show its teeth for better or worse and those who shy away from it will lose market share.
In fact this whole brewhaha was started because the current head of the WPP said he wanted Google to do something about his ads showing up next to extremist videos. It's not inconceivable the article on The Times that started it all was made as part of WPP's strategy to make Google kowtow to them on this subject.
Basically don't underestimate the power of advertising agencies. They can produce news cycles at will.
Philosophically, I agree with you, but I'm not sure if it really will work that way.