IEFBE 1656

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European Observatory on digital advertising

European Observatory, Digital Advertising on Suspected Infringing Websites - on Infringements of Intellectual Property Rights
The Observatory commissioned this ‘snapshot' study of the digital advertising landscape to detail the scale of the ad-based funding of suspected IP infringing websites affecting the EU market. In this study 280 suspected IP infringing websites were monitored from each of the 28 EU Member States over a six week period between May to July 2015. The study collected over 180,000 ads from 1,400 webpages.

Ads were found in 131 different sectors, some websites having up to 57 unique sectors. The Selected Websites included 64% Linking Websites, 23% Hosting Websites and 13% BitTorrent Portals. 62.5% of the Selected Websites offered a mix of different types of IP content (e.g. included music, film, games and software) and 37.5% of the Selected Websites offered only one type of IP content exclusively (e.g. eBooks only). BitTorrent Portals had the highest percentage of Mainstream ads (52%) and 92% of BitTorrent Portals used additional ad revenue generation techniques, such as Pop-up Ads or Pop-under Ads. Linking Websites had the highest percentage of High Risk ads (57%). This study looks at how digital advertising supports suspected IP infringing websites and quantifies the prevalence and profile of such advertising. It analyses in detail the brands and sectors supporting the websites with their advertising and the ad companies placing those ads.

1. Brands are the key: Brands are able to direct ad placement and control how ad companies manage their campaigns. Despite this, suspected IP infringing websites are a brand-rich environment: this study identified over 1,500 unique brands. Mainstream advertising alone made up 46% of all ads collected in this study (for definitions see Glossary in Appendix C). Brands may inadvertently advertise either because they don't know which websites pose an IP risk, or they cede full placement responsibility to Intermediaries. Whilst a very large number of brands was identified, analysis shows there are two small sub-sets that have the potential to significantly impact the issue. First, premium brands belonging to 46% of the top 100 companies by global ad spend were identified. These companies potentially lend credibility to websites. Second, 70% of ads collected for named brands were for just 97 brands, all of which appeared in 20 or more EU Member States. Ad misplacement may impact brands negatively as it can affect return on investment for their ad spend. In addition, their own brand may be tarnished by being placed next to inappropriate content or malware.

2. High Risk ads: a complementary focus. In this study 54% of ads collected were in High Risk sectors: malware, fraud and adult (for definitions see Glossary in Appendix C). These ads pose a risk to consumers and generate income for websites. This type of advertising does not lend itself to outreach to the brand. Therefore the intermediary (the ad company placing the ad) is the focal point for effective action. This study found just 10 out of 232 intermediaries placed 91% of all High Risk ads collected.

3. Intermediaries and data management: Intermediaries will usually take steps to avoid ad misplacement if a brand requests it. However, the security of the ad supply chain is breaking down in this fast evolving era of data-driven advertising and real-time ad decisions. Intermediaries have a responsibility to effectively pass along brands' instructions and to implement systems and tools to ensure compliance with contractual obligations. In this study, a core group of 25 out of 232 intermediaries are involved in placing 73% of the Mainstream ads. This statistic, together with the fact stated above that just 10 Intermediaries placed 91% of all High Risk ads, indicates that these 35 Intermediaries may have a significant role to play in dealing with the problem.

4. Ad fraud boosts revenue for websites. Potential ad fraud was identified on 41% of the websites. These websites could potentially generate multiple ads on each webpage that are never visible to a consumer, thereby defrauding the brands that paid for those ads to appear. This is another reason why brands may find these types of websites pose a risk. There have been a number of studies over the last few years looking at adfunded online IP infringement. The findings of this study, which took a wider view across more territories than any previous studies on this subject, confirm that the problem has not yet been solved. The entire digital ad ecosystem has a role to play and can choose to make IP protection a critical component of the online ad compliance toolkit....