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Advertisers are banding together to prevent their marketing dollars from funding nefarious sites.

The entertainment industry has been up in arms over the issue of digital piracy for years. Now, there's a new ally in the fight: advertisers.

Last week, three associations representing the advertising industry banded together in the United States to launch an initiative to combat advertising that – often inadvertently – ends up on piracy websites. Ads from major brands have appeared on sites that provide unauthorized downloads or streaming of music, movies and television shows, funnelling revenue to the sites' operators.

The American Association of Advertising Agencies (known more succinctly as the 4A's) has teamed up with the Interactive Advertising Bureau and the Association of National Advertisers to try to combat the problem. And a similar initiative could be coming soon to Canada.

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"If we as an industry can prevent revenues from going to support these bad actors, if we can make it less profitable to do this, we should," said Peter Kosmala, senior vice-president of government relations with the 4A's.

The initiative is part of an industry effort to fight a larger problem: As the buying and selling of digital ads has become more automated, many advertisers have seen less transparency around where their ads are ending up. This automated environment is good for them, too; it allows advertisers to bid in real time on ads around the Web, as they see where the consumers they are targeting are surfing. Better targeting means the possibility to reach people who might actually be interested in those messages.

But it also means the model has shifted. Advertisers used to buy ads based on the media environment – choosing to place ads, for example, on a TV show or in a newspaper based upon the assumption that their target audience was likely to see it. Now that they are bidding directly on audiences, the environment in which those ads appear has become less important.

"You're talking about an online media space where it's very hard to track, and that transparency is not necessarily there for brands," said Al Torres, vice-president of sales and business development for Telemetry in New York, which sells fraud protection services to advertisers, with a focus on online video.

In the digital world, it is no longer as simple as an airline's agency buying ads from a newspaper and specifying that it does not want to appear near any stories about plane crashes, for example.

Advertisers still want to appear in what are known as "brand safe" contexts, though. Given the choice, most would not choose to appear on low-quality websites, especially those containing pornographic, violent, hateful or otherwise shady material.

But the speed of ad trading, and the sheer number of middlemen who handle the transaction – from the advertiser all the way to the publisher who places the ad – has made it harder to verify where ads will show up.

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In a presentation in Toronto this week, Mr. Kosmala of the 4A's showed a screenshot of an ad for shipping logistics company DHL on the downloading website Seven Torrents. On the website this week, ads for Lise Watier cosmetics, Holiday Inn, and Cineplex could be seen. And on Project Free TV, on which people can stream television shows, ads appeared for Rogers Communication Inc.'s digital magazine subscription service, Next Issue Canada.

"You've got upwards of 12 intermediaries between the seller of the inventory and the advertiser – it could be that many," said Bob Reaume, vice-president of policy and research for the Association of Canadian Advertisers. In a recent ACA survey of roughly 100 Canadian marketers, one-third said that "programmatic" buying (the automated kind) now makes up at least 10 per cent of their digital budget, and another third said it was at least 20 per cent. That spending is on the rise. "…We've got to bring some standards and accountability to this digital medium."

Mr. Reaume said he will soon be getting in touch with the Interactive Advertising Bureau's Canadian arm, as well as the Canadian Media Directors Council and its Quebec counterpart, to discuss joining the U.S. initiative on piracy.

In the U.S., the 4A's has had meetings with both the Academy of Motion Picture Arts and Sciences and the Recording Industry Association of America to discuss the problem. It is estimated that, in the U.S., roughly $7-million in advertising revenue is flowing to piracy sites every month. Name brands affected include Wal-Mart, Target, Ford and McDonald's, Mr. Kosmala said.

"Not everyone knows that it's unethical to supply unlicensed access to music. Consumers who go there see brands that they recognize, and it adds legitimacy to the services," said Eric Baptiste, chief executive officer of the Society of Composers, Authors and Music Publishers of Canada (SOCAN). "And companies are advertising there without necessarily knowing it. … We will be intensifying our efforts so that we can be part of the solution."

"There are a lot of these pirated sites, and it's hard for advertisers to keep up," said Grant le Riche, managing director in Canada for TubeMogul, a software platform that manages digital ad buying. It keeps a blacklist of nefarious sites, and has invested in technology that looks for mismatched URLs – shady sites that spoof the URLs of more legitimate media properties to appear more attractive on these exchanges.

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Another side of the same problem arises from non-human traffic – sites that use bots to appear as though they have many visitors, tricking advertisers into placing ads on websites with few actual visitors. The piracy crackdown is just part of a larger fight against this kind of wasted money.

That includes programs such as the Quality Assurance Guidelines Initiative, which grants certification to ad networks in exchange for a promise to better vet the sites can sell ads on those networks.

But there is no perfect solution.

"There are so many resellers driving prices down and cheapening inventory, and a lot of people are turning a blind eye, because of the money," Mr. le Riche said. "You have to be kind of suspicious if you're buying something like Bell Media [websites] at rates that are just impossible."

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