Digital Citizens Alliance and MediaLink have released a new edition of their “Good Money Gone Bad” report, which examines the impact of content piracy on the digital advertising ecosystem. While many of the players have changed since the first edition, the revenue numbers have remained stable: The 589 sites analyzed in 2014 generated an estimated $209 million in aggregate annual revenue from advertising alone, as compared with $227 million in 2013.
Even worse: The advertising profits garnered by content thieves do not equate with the losses incurred by the owners of the content. As the report points out “these losses are unquestionably greater by many orders of magnitude.”
And brands whose ads appear on content theft sites “take a double hit” according to the report: Their reputations suffer by association with content theft itself and with the illicit services whose ads also appear on the sites. In addition, they are being defrauded. The money they spent to advertise on legitimate sites is instead fueling content theft, and the impression counts are being boosted by bots and other fraudulent means.
MediaLink’s analysis of these ad-supported pirate sites provides additional insights into other aspects of the content theft ecosystem, including the continuing presence of premium brand ads, the danger to users who are exposed to malware, and the prevalence of ad fraud.
Here are a few other highlights from the report:
Premium Brand Advertisers Still at Risk:
Despite increased industry awareness of the problem, the reputation and value of legitimate brands continues to be threatened as their ads show up in increasing numbers on offending sites, often alongside offensive ads. There were 132 premium brands observed by MediaLink researchers on the sites, up from 89 the previous year.
Malware Threatens Consumers
One-third of the sites included links with the potential to infect users’ computers with viruses and other malware. In most cases the links are hidden behind Download or Play buttons, but in many cases, it is not even necessary to click on a link to spawn the unwanted download. These downloads earn site owners millions in annual revenue.
Ad fraud has been in the spotlight over the past year as the advertising industry has tried to come to terms with the problem. This is a significant challenge for the industry as a whole, but is particularly virulent in the content theft business—not surprising for an industry that at its core is based on theft and fraud.
Video Streaming a Growing Model
As consumer appetites have shifted from downloading to streaming, content theft sites have followed suit. The number of video streaming sites in 2014 was up 40% from the original report, and revenue grew significantly due to video CPMs that are far higher than those for display ads. The profitability and ease of execution are the primary drivers of ad-supported content theft. The best chance to deter or degrade these activities is through legal, technical, or industry initiatives, which have made headway.