Study on Digital Advertising on Suspected Infringing Websites by the EU Observatory

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Digital advertising is a fast growing market with an increasing complexity of the advertising chain, including programmatic transactions and behavioural advertising. This growth and high automatization results in the lack of visibility regarding the trading process and causes little transparency. Suspected IP infringing websites, such as bittorrent, hosting and linking websites, are benefiting from these circumstances, funding themselves by means of offering their advertising spaces.

The European Observatory on Infringements of Intellectual Property Rights published a study on how digital advertising supports websites that are suspected of being engaged in IP infringements. The data for the study has been collected for six weeks from each of the twenty-eight Member States with respect to 280 suspected IP infringing websites. The study quantifies such advertisings and identifies the involved sectors.

One of the important findings provided by the study is that the suspected infringing sites comprise a brand-rich environment; the Observatory has found 46% of the ads related to the mainstream sector with 1500 unique brands advertising. Among these, a number of top brands were also present with their ads on suspected IP infringing websites. The brands may inadvertently advertise on these sites, due to the usually assigned placement responsibility to the intermediaries and due to the programmatic and automatized advertising system.

Therefore, albeit intermediaries on the advertising market strive to implement certain systems to avoid ad misplacements, the need for appropriate tools and measures is indispensable, so brands will not be associated with suspected IP infringing websites and therefore they will not fund and lend credibility to these websites.

The Observatory’s study has shown that 54% of the ads belong to the high-risk sector, such as malware, fraud and adult content. However, according to the figures, 10 out of 232 intermediaries put 91% of these high-risk advertisements on the suspected infringing websites. Moreover, given the fact that 25 intermediaries have placed 73% of the mainstream ads on these sites, altogether approximately 35 intermediaries are responsible for the advertisements on the suspected infringing websites.

These findings highlighted by the study allows for the application of the “follow the money“ approach, which aims at cutting off the revenue sources of IP infringers, such as advertising in the case of suspected IP infringing websites. The “Follow the Money” approach is top priority within the Commission’s latest proposal for the modernization of copyright rules. Advertising on suspected infringing websites not only may tarnish the brands, but also defrauds the advertising brands due to the fact that 41% of the websites generate extra revenue by means of ad frauds according to the Observatory’s study.

The full report can be found on this link.

For further information, please contact David Leffler.

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