Because of automated ad-buying technology, illicit sites streaming video content can make hundreds of thousands or even millions from advertising. MediaLink researched 596 piracy sites, and found that the advertising, often from major brands, generated $227 million annually. These sites get to keep most of this revenue because profit margins typically range from 80 percent to 94 percent after site maintenance and human resources fees are paid.
Pirated video sites are able to make so much profit because they do not pay for their content. “Even small piracy sites could generate more than $100,000 a year from ad space sold to major brands,” reports The Wall Street Journal.
Major brands often unknowingly place ads on illicit sites because they purchase from advertising channels and brokers, not the sites themselves. The automation of the online advertising system means red flags are not always raised when these ads appear on pirated video sites.
For example, major brands such as Target, Claritin, Velveeta, Toyota, Honda, and Lego had ads on zzstream.li, a site that illegally streams content from studios such as Warner Bros. Entertainment and Lionsgate Entertainment. Even when an illicit site is blocked by an advertising channel, they often can find ways to re-establish ties.
“This is a huge problem. It’s a giant game of Whac-A-Mole, and the piracy sites know it,” said Andrew Casale, a vice president of strategy at online advertising tech firm 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.”
According to research by the Annenberg Innovation Lab at the University of Southern California, some ad networks routinely display the most ads on illegal file-sharing sites. Propellerads, ExoClick, and Adcash are among the worst offenders. The Motion Picture Association of America argues that some ad networks sell to illicit sites because it is more lucrative.