Illicit Websites Use Automated Ad-Buying Systems to Their Advantage
It’s easy for websites to make a profit selling online advertising. All they have to do is avoid paying for content.
Sites brimming with pirated movies and television shows are being supported, inadvertently, by major marketers that buy ad space on them. Thanks to the rise of automated ad-buying technologies, more ad dollars are flowing to sites with stolen copyrighted content than ever before, ad executives say. Who should do the policing is a matter of debate in the industry.
In February, nonprofit Internet safety group Digital Citizens Alliance commissioned MediaLink to research how much money these sites are earning. MediaLink examined 596 sites where viewers can find pirated movies and TV shows, and estimated those sites generate a total of $227 million in advertising revenue annually.
Even small piracy sites could generate more than $100,000 a year from ad space sold to major brands, the report said, because they don’t pay for their content. The profit margins of the sites examined could range from 80% to 94%, based on the costs typically associated with maintaining such sites, which include hosting fees and human resources.
Take zzstream.li, for example, which helps users unearth and stream unlicensed video owned by companies including Home Box Office Inc., Warner Bros. Entertainment Inc. and Lions Gate Entertainment Corp. LGF -11.51% In March, it featured advertising for brands including Kraft, Toyota, 7203.TO +1.73% Target, Honda, Lego and Claritin. The site reached 1.34 million people in March, according to online measurement firm comScore.
Commercials for both Toyota and Kraft’s Velveeta brand appeared on zzstream.li before a full episode of HBO’s “Game of Thrones.” According to HBO, this content was displayed illegally. Elsewhere on the same site an ad for Honda appeared alongside an episode of Lions Gate’s “Mad Men,” while commercials for Target and Merck MRK +0.28% & Co.’s Claritin preceded a full episode of the Warner Bros.-made show “The Big Bang Theory.”
That content was being streamed without permission too, the program makers say.
It is a similar story with mytvline.com. Unlicensed HBO content was streamed on the site after commercials for brands including Lego and Honda.
“We work diligently to protect our content so it’s unfortunate that ad dollars are finding their way to illegal video sites, most likely unbeknownst to the brands involved,” said Jeff Cusson, a spokesman for HBO, a unit of Time Warner Inc.
Attempts to contact the owners of zzstream.li and mytvline.com proved unsuccessful. The zzstream.li domain is registered to a nonexistent street in Sweden, while mytvline.com was registered using a domain privacy service provided by Domains By Proxy LLC. Neither site offers any contact information.
The marketers said they hadn’t intended for the ads to appear on the sites, and were unsure how they did.
Echoing the sentiment of others, Target Corp. said its ad placement on zzstream.li was “in violation of the contract terms with the vendor who manages ad placements online,” and said it was working with that vendor to have its ads removed.
This is a problem that continues to plague the world of online advertising. Marketers are increasingly buying online ad space through complicated automated marketplaces and chains of brokers, instead of directly from website owners themselves. When marketers place ads through these channels, they can’t be sure where they might appear across the Web.
Merck said ads for its Claritin allergy medicine were placed on zzstream.li by Tremor Video, TRMR -1.68% an ad firm working on its behalf, adding that Merck doesn’t have any relationship with the site or “any like it.”
Adam Lichstein, chief operating officer at Tremor Video, said the company has controls in place to ensure ads don’t appear where the company and its marketer clients don’t want them to.
He conceded, however, that things slip through the net. “The Internet is vast and wide and we can’t control everything that happens,” he said.
Piracy sites are well aware of this, and use it to their advantage. Ad executives say it is relatively easy for these sites to force their way into these automated marketplaces and to gain access to big-brand ad budgets. Even if those sites are found by ad companies and blocked from their systems, they often succeed in disguising themselves and finding a way back in.
The site operators are then paid by ad networks and marketplace operators the same way any of their publisher partners would be, these executives say, using methods such as Automated Clearing House, wire transfer or online payment services including PayPal.
“This is a huge problem. It’s a giant game of Whac-A-Mole, and the piracy sites know it,” explained Andrew Casale, a vice president of strategy at online advertising technology company Casale Media. “When they stop seeing big brands and material spending on their sites, they only need to change their domain names to get back to the spend.”
Ad-technology firm TubeMogul also placed ads on zzstream.li on behalf of ad agency Universal McCann, though it said it too did so unintentionally. TubeMogul’s chief strategy officer, Jason Lopatecki, said the company is doing its utmost to keep up with the tactics used by bad actors. There are “many tricks nefarious publishers use to play cat-and-mouse,” he said.
Universal McCann’s chief investment officer, David Cohen, described the problem as “an ongoing battle,” and one that presents a “significant challenge to the industry.”
But some say ad networks and technology firms don’t do enough to stop advertisers from appearing alongside potentially illicit content. According to the Motion Picture Association of America, some companies knowingly sell ads on piracy sites because it is lucrative to do so.
“While the industry as a whole has some cleaning up of its act to do, there are some significant players that appear clearly to be turning a blind eye to blatant infringement—and profiting from it,” said Farnaz Alemi, a content protection counsel at the MPAA.
Last year, the Annenberg Innovation Lab at University of Southern California attempted to track which ad networks display the most ads on illicit file-sharing sites. Its research found that a handful of companies routinely ranked among the worst offenders, including Propellerads, ExoClick and Adcash.
According to the lab’s director, Jonathan Taplin, those companies simply ignore the nature of the content on the sites they work with. “It can be stopped, I know it can happen,” Mr. Taplin said. “But some ad companies don’t care at all.”
A representative for Estonia-based Adcash said the company doesn’t support piracy sites, and that it enforces policies that prohibit its ads from appearing on sites that might infringe copyright laws. ExoClick and Propeller Ads Media didn’t respond to requests for comment on the Annenberg Innovation Lab’s research.