Piracy and Malware Are Closely Related Problems

On December 3, 2015, I posted a blog about a new Interactive Advertising Bureau (IAB) study, which found that advertising fraud, piracy websites, and “malvertising” costs the U.S. digital marketing, advertising, and media industry $8.2 billion annually in potential revenue. The study also specifically found that illegal content costs advertising companies and digital marketing firms $2.4 billion annually in potential revenue.

This week, on December 8, the Trustworthy Accountability Group (TAG) announced a list of major advertisers who have pledged to require their advertising partners to take aggressive steps to help fight the $2.4 billion annual loss. Some of the big names include Allstate, American Express, Comcast, and Walmart. (See my February 2015 blog on TAG’s Brand Integrity Program Against Piracy.)

Also, on December 9, the Digital Citizens Alliance (DCA) released a new report entitled “Digital Bait.” The report found that one out of every three piracy websites contains malware. Additionally, consumers are 28 times more likely to receive malware from a website with illegal content than from a website with licensed content providers. The report also found that 45 percent of malware is delivered by “drive-by downloads,” which invisibly download malware onto a user’s computer without the user clicking on anything. Lastly, the report found that advertising revenue and sales of user information on piracy websites amounted to $70 million in revenue in 2015.

If it was not already clear, the IAB and DCA reports show that advertising fraud, piracy, and malware-related advertising are serious problems costing companies billions of dollars in potential revenue. However, it is encouraging to see voluntary initiatives from TAG and major advertisers that stand up against websites which facilitate illegal content.

It is necessary to diminish ad-supported piracy and advertising fraud to help ensure that content providers, artists, innovators, and marketers can earn a return on their creative works – thereby incentivizing more innovation, investment, and economic growth. 

IAB Study: Digital Fraud and Piracy Costs $8.2 Billion Annually

On December 1, 2015, the Interactive Advertising Bureau (IAB) released a new study entitled “What Is an Untrustworthy Supply Chain Costing the U.S. Digital Advertising Industry?” The study found that advertising fraud, piracy websites, and “malvertising” are costing the U.S. digital marketing, advertising, and media industry $8.2 billion annually.

Of the $8.2 billion annually, the losses are split into three categories:

• Advertisers lose $4.4 billion from invalid traffic, which induces systems to generate ad-related actions for purposes other than support of the delivery of the right ad at the right time to the right user.

• Infringed content represents a $2.4 billion loss for the digital marketing and media industry. Two billion dollars is lost revenue to content providers and $456 million is lost revenue to potential advertisers.

• The remaining $1.4 billion in losses come from “malvertising” (or malicious advertising) and the cost of fighting all these illegal activities. The $1.4 billion includes lost revenue from malware-related ad blocking ($781 million), lost revenue from search engine blacklisting when a website is impacted by malware ($57 million), and the cost of investigating illegal activities and documenting direct incidents ($423 million).

It is necessary to diminish ad-supported piracy and advertising fraud to help ensure that content providers, artists, innovators, and marketers can earn a return on their creative works – thereby incentivizing more innovation, investment, and economic growth.