New Pressure For Networks And Exchanges To Shun Piracy Sites

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Piracy ImageOver the past two months, the USC Annenberg Innovation Lab has released two reports highlighting the ad exchanges and networks that were placing the most advertisements on piracy sites or illegal download sites, and the brands whose ads appear on such sites.

This has brought this issue to light once again, after last year’s discussion around the proposed legislation Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA). While the government tried to regulate this type of scenario, the overall consensus in the technology world was negative.

However, Jonathan Taplin, the director of the USC Annenberg Innovation Lab, told AdExchanger that the group does see this as a continuing issue and is interested in focusing on it because of the connection the school has to artistic content, whether that be music or movies, that are often pirated on these sites.

"The problem with pirate websites is they drain huge amounts of dollars out of the media economy and they don't put anything back into it," he said. "When Spotify sells advertising, it takes some of that money and pays it to musicians and publishers. But when the big pirate sites sell advertising, they don't pay any of that back for music or movies."

In its first report, out on January 5, 2013, the Annenberg Innovation Lab called out the top advertising networks placing the most advertisements on file sharing sites: OpenX, Google, Exoclick, Sumotorrent, Propellerads, Yahoo, Media Shakers, Yesads, and Infolinks.

In the report released February 14, Google and OpenX had fallen off the list, while other new networks joined the top ten, which now looked like this: Propellerads, Sumotorrent, Yahoo, Admxr, Exoclick, Adcash, Mgid, Adtransfer, Infolinks, and CPXInteractive.* The group also highlighted companies whose ads appeared on such sites, noting that brands including American Express, General Motors, Saks Fifth Avenue, Visa, and others appeared multiple times on infringing sites.

"A cursory view of this list would lead one to conclude that the young adult demographic found on infringing sites seems to be very attractive to the auto, auto insurance, mobile phone and credit ratings firms," the Annenberg Innovation Lab wrote in the report, while also questioning why higher-end brands would be interested in such placements.

A big factor in play is that these categories toward lead gen and other performance driven metrics. In other words, they're inherently less focused on adjacency issues.

"I would guess that the CMOs of many companies do not actually understand that they are appearing on some of these sites to the extent that they are and do not understand the amount of dollars they are putting in the pockets of these guys," Will Luttrell, CTO and co-founder of advertising data provider Integral, told AdExchanger. Integral, formerly known as AdSafe, releases semi-annual reports analyzing the online advertising environment, including high-risk inventory.

In its most recent report, on Q3 and Q4 2012, Integral found that when it comes to high-risk advertising inventory overall, illegal download sites made up less than a fifth of high-risk inventory on ad networks (16.9%), exchanges (19.4%) and publishers (18.6%) in Q4.

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"It's difficult to advertise online at scale and not wind up on pirated content, at some point, as you're buying through various exchange and remnant inventory sources," Luttrell said. "It's bad for the entire industry to shame companies who are not knowingly trying to advertise on these sites, but may just be caught up in this."

In fact, many advertisers on such piracy sites aren't necessarily legitimate, according to a June 2012 report on copyright infringement in the UK commissioned by Google and a UK copyright group, PRS for Music. The report, conducted by BAE Systems Detica, looked at six types of copyright infringement models and found, "For all the sites we segmented, 86% of advertisements did not display the Ad Choices logo suggesting that the advertisers do not associate themselves with the online advertising self-regulation scheme."

While the Lab used the Google Transparency Report to find the websites with the most DMCA takedown requests, it did the research and analysis of the landscape itself. However, Taplin said, the Lab is willing to work with the ad networks to help them get off the top ten list.

"Quite frankly, we've seen Google make huge strides in the last few months in making sure that ads do not end up on these piracy sites," Taplin said. "They have no problem keeping ads off porn sites, so there is no reason any one of these exchanges can't keep them off pirate sites. Google publishes a list of the worst offenders and all you have to do is look at that list."

"Over the past several years, we've taken a leadership role in this fight, investing significant time and money," a Google spokesperson told AdExchanger. "We actively partner with the industry to cut off the flow of money to piracy sites and to create ways for rights holders to get compensated for their work, with systems like YouTube's Content ID and premium distribution channels like Google Play."

Taplin said the goal of these reports, which the Annenberg Innovation Lab plans to release monthly throughout 2013, is to build awareness of the problem of advertisers supporting piracy websites. The Lab has reached out to the ANA and 4As to put its hat in the ring for helping to solve this issue.

"Maybe out of this some kind of code of best practices might happen in the industry," Taplin said, highlighting the importance of self-regulation with this situation.

Luttrell also agreed with self-regulation, saying, "Washington is not very good at regulating Silicon Valley. Self-regulation can work. It's a much slower process and the key is to cut off funding and that means figuring out ways to stop the advertising from appearing on these sites." He highlighted how, in the past, ad networks and advertisers worked to keep their ads off of pornography sites, and noted that the same thing can be done on the piracy side.

For the ad networks and exchanges, he added, it can be a painful process because ads on the piracy sites do drive revenue for these companies as well "But ultimately, if an advertiser is telling the networks, 'you will lose our business if we find out you are placing our ads on these sites,' then they will comply," Luttrell said. "It's really about awareness and getting the CMOs involved in making this an issue."

* This article previously included Quantcast in the January and February reports from USC Annenberg. While the company was originally on the lists, the Annenberg Innovation Lab has since stated, "We now believe that Quantcast was incorrectly identified as being among the top ten Ad Networks placing ads on infringing piracy sites." The article now reflects that change.

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