What is an untrustworthy supply chain costing the US digital advertising industry?IAB US benchmarking study

November 2015

ii

Table of contents

Malvertising+ 16

e n ings 3

nvali tra 26

n ringe ntent 4

t a gr n 1

st i a t s ar 2

1

n 2 1 t e ntera tive vertising reaissi ne s Me ia ntertain ent vis r

ra ti e t er r a re ensive st t at esti atet e st i a t an ntr st rt igital a vertisings l ain in t e Me ia in a strategi ns lting

r assiste t e in rgani ing an a inistering t e st

s l ain is a le e n i s ste e le r esses an res r es r i erent anies

inv lve in ving a r t r t e start t e s ste t r g t e eliver t t e ns er r t e r ses

t is st e nsi ere t e igital a vertising s l ain i e ving an a vertising reative t r g t e

internet ntil it rea es a ns er s r ser an t e igital e ia s l ain ving ntent t r g t e

internet ntil it rea es a ns er s r ser

e ante t etter n erstan t e i a t eli erate a tivities esigne t e l it t e rrent state t e s l ain r illi it gain t als ante t n re a t t e re er ssi ns nintenti nal a tivities

sinesses t at ave t igital a vertising as a legiti ate siness in e ar

n te art ne t e st et een Mar an e te er 2 1 is in l e areas t at ave a ig egree illegal a tivit in ringe ntent alvertising

an invali tra e ill n erta e art t t e st in earl 2 16 en e ill s n e ia trans aren re tati nal i a t an ran sa et

ase n t e res lts ase ne t e s rve as

1 enti e areas rr ti n in t e igitala vertising s l ain

2 sti ate t e er ial st i a t tt e e s ste

e resear et l g r t e st in l e

• Study of studies e assesse a n er st iest at t er rgani ati ns ave n te in relevants l ain areas ver t e last several ears e avere eren e e re rts t esti ate ertain sts

• Voice of the industry e sele te an nta te s l ain anies in l ing t lis ers an a te anies t lete a re ensive 13 age

esti nnaire t at in l e alitative an antitativeareas t e nta te 3 anies lete t e

esti nnaire

• Data analytics r several s e i areas e taineata ire tl r t ir art eas re ent an anal tirgani ati ns t esti ate ertain sts

n te t is st in e en entl n e al t e i n t a it t e in r ati n r vi e t s an

r vi es n ini n r t er r s ass ran e it res e t t t e re rt s n ings

inall e is t sa t an an e ress r gratit e t t e ll ing s ns rs t is st

Premier Supporting Participatinge s Mati en

Me iaMat a is lse intet el n Me i e l g

t a gr n

2

st i a t s ar 2 *

Cost impact — $1.1b/13%

• st reven e r al are relate a l ing 1 (page 22)

• st r ire t in i ents 2 4 (page 20)

• st reven e r la listing (page 21)

• st t g t 1 (page 20)

Types of corruptionIn

valid

traffi

c Malvertising+

Infringed content

Cost impact — $4.6b/56%

• sts t a vertisers 4 4 (page 33)

• st t g t 16 (page 35)

Cost impact — $2.5b/31%

• st a an a r ntent reven e 2 4 (page 8)

• st reven e r ass r s aring 4 (page 12)

• st t g t 33 (page 14)

Incurred costs

$4.8besti ate st

Lost revenue opportunity costs

$3.4besti ate st

41

st s ar

t e

te e age n ers a ve ntain a etaile e lanati n r esti ati n a r a es

* ll a nts are in llars

3

e in str nee s t eal it t e r le e e tivel an t e ra nee s t e t t its eatBob Liodice, ss iati n ati nal vertisers resi ent an intervie e eet tv 26 e r ar 2 1

e n ings

• a st ie ateg r as an esti ate st i a t a ve 1 illi n n ivi all t e re resent signi ant sts t

t e in str t at s l n t e ign re However, as each category can be interrelated, they need to be considered collectively and equally when being addressed by the industry n e ellent e a le is a ns er visits an in ringe ntent site ntaining al are t at in e ts t e ns er s r ser it a r t t at is later se t rive invali tra t e in str an eli inate t e

r ts earne serving a s ne t t in ringe ntent it an re e t e a nt ne availa le t rive illegal

a tivities in t e s l ain t als as t e rt nit t isr t t e rr ti n li e le relate t invali tra el t e in str re lai s e t e 2 illi n in sts

elieves t at an i r ve ent in s e n a ental ra ti es s as n ing r siness artners an

investigating ne relati ns i s sing a ress in r ati n ta s an a gr n e s is riti al

• t 4 4 illi n sts t a vertisers r invali tra re resent t e st signi ant rti n in rre sts n ter s istri ti n t e sts relate t er r an e ase ri ing els s as st er li

an 3 relate t st er nt M ase ri ing els sts elate t ns er ns ti n rrentl

2 t e sts are r es t an 2 are r ile e als n te a range rates e g M ase ile vi e as a 12 1 invali tra rate ile M

ase is la es t as a rate 6 6 As the digital advertising industry continues to be dynamic related to pricing models, consumer consumption by delivery platforms and pricing by ad units, assessing the invalid

the rapid changes to business and fraud approaches

• t 2 4 illi n in ringe ntent re resents t e st signi ant rti n l st reven e rt nit sts ne e eat re t at rives ns ers t in ringe ntent is

t e esire an a ilit t a ess re entl istri te ntent at n ire t st in t e nvenien e t eir es t is ar t sa at t e i a t l e t istri ti n

annels i a ess ere eli inate l ns ers t rn t a s rte r a r ntent annels

an l a t all e e a ing st ers ere s n n l sive a n ing ever r a r a s ggests a tential a vertising reven e in rease 4 6

illi n an a tential a r ntent reven e in rease 2 illi n r t e in str e 2 illi n re resents

a r i atel 21 illi n ns ers l e illing t s en a nt n at is rrentl lassi e

as in ringe ntent Unless the industry collectively takes

infringed content consumers will continue to increase r ving te n l g an an i t t at a e it easier r

ns ers t tain ntent ai s t r te t t e an n it sers an an in reasing lt re ral a e tan e ns ers are all ntri ting a t rs t t e sa e

ti e it is e ing in reasingl i lt r ns ers t eter ine et er ntent is tr l in ringe n even i

t e an tell t e i eren e t e ave a i inis ing ear legal re er ssi ns

• e re aining areas re resenting 16 t e t tal are esti ate at 1 4 illi n ese areas in l e t e st t

g t illegal a tivities l st reven e r ass r s aring l st reven e r sear engine la listing en a e site is i a te al are an l st reven e r al arerelate a l ing

4

Infringed content

5

n ringe ntent lan s a e

s ri ti n nit

s ri ti n nities all sers t r se r les n e sites lin ing t ntent ste t er nne te

ters r servers via a 2 istri ti n s ste

Primary revenue: vertising Ancillary revenue: nati nsMajor content: M si vies s t are ga es te t an r gra s

t re r nt nitn a st re r nt nit sers an r ase an

nl a igital e ia r t e site s n serversPrimary revenue: ransa ti ns Ancillary revenue: vertisingMajor content: M si vies s t are ga es te t an r gra s

ive strea ingive strea ing r vi es lin s t ire t

strea s live ree t air an a ervie in l ing s rting eventsPrimary revenue: vertisingAncillary revenue: nati nsMajor content: ive

an r irairt al rivate net r an r ira

ena les sers t a ess ntent illegall assing ge l ati n li ensing restri ti ns

ere is li el n ire t reven e t ri inals ever it l i a t ge targeting an

eas re entMajor content: M vies an r gra s

e e strea inge e strea ing ers a sting site ere

sers an l a an ire tl strea vi e ntentPrimary revenue: vertisingAncillary revenue: nati ns an s s ri ti nsMajor content: M si vies an r gra s

2 nit eer t eer 2 nit

all s sers t r se r les n e sites lin ing t ntent ste t er nne te ters

r servers via a eer t eer istri ti n s ste

Primary revenue: vertisingAncillary revenue: nati nsMajor content: M si vies s t are ga es te t an r gra s

ree i nitree i nities give sers a ess t 2 lin s r ire t nl a s rate igital e ia ntent r ree t als ena les t e t a r ntri te ntent

t t e site r a iti nal ntent a ess an r alitPrimary revenue: s ri ti ns Ancillary revenue: vertising an nati nsMajor content: M si vies s t are ga es te t an r gra s

in e ti nis is a t l ar r a are t at alters t e site M

ri r t t e r ser ren ering a serve i ressi nPrimary revenue: vertising Major content: is la ntent

6

Comprehensive descriptionnline igital ira is t e illegal ra ti e sing t e

internet via ile r t er evi e t a ess in ringe ntent via e sites an eer t eer net r s ntent a in l e vi e s live events si vi e ga es te t

s t are an a li ati ns r a siness ers e tive rig t in ringe ent erat rs generate reven e t r g

a vertising s s ri ti ns nati ns an transa ti ns

Broad digital infringed content categories include:1

• Ad injection is is a t l ar r a are t at alters t e site M ri r t t e r ser ren ering a serve i ressi n

it t er issi n r ensati n t t e e site r ntent ner

• Embedded streaming e e strea ing ers a sting site ere sers an l a an ire tl strea

vi e ntent enerall t ese sites are nan iall s rte igital a vertising s s ri ti ns an

nati ns

• Freemium community ree i nities give sers a ess t 2 lin s r ire t nl a s rate igital

e ia ntent r ree e als ena le sers t a r ntri te ntent t t e site r a iti nal ntent a ess

an r alit

• Live TV streaming ive strea ing r vi es lin s t ire t strea s live ree t air an a er vie

in l ing s rting events ese sites are largel a s rte alt g s e als a e t nati ns r sers r nan ial s rt

• P2P community is all s sers t r se r les n e sites t at lin t ntent ste t er nne te

ters r servers via a eer t eer istri ti n s ste sers an generall nl a t e esire ntent les r

ree as t e nities are largel a s rte alt g s e als a e t nati ns r sers r nan ial s rt

e in str s l a s e ial attenti n t ne er in ringe ntent istri ti n lat r s t at ine 2 an

strea ing ara teristi s an all sers t a ess vi e an si ntent sing a lean an legiti ate l ing a li ati n ese lat r s i er r tra iti nal 2

lat r s in t at t e strea as nents are elivere t er 2 arti i ants rat er t an asse ling a sen

le rst an t en st ring it n a ser s ar rive

• Storefront community n a st re r nt nit sers an r ase an nl a igital e ia r t e sites n

servers ese sites are generall a s rte r ee ase

• Subscription community s ri ti n nities all sers t r se r les n e sites lin ing t ntent

ste t er nne te ters r servers via a 2 istri ti n s ste e r vi e lin s r ire t nl a s rate igital e ia ntent it t e e e ti n ree t

air an a t i all r a s s ri ti n ee lternativel t ese nities a e a s rte

• VPN and proxy piracy an r ira ena les sers t a ess ntent illegall giving gl al sers a ess t ertain ase igital ntent illegall e g vi e ntent r servi es a ing t e s s ri ti n ee an t en

assing ge l ati n restri ti ns is rr ti n area is e a er ate li ate vi e li ensing agree ents in

i a legal servi e ill ave a i erent ntent li rar e en ing n t e ntr

iti nall t ere is t e iss e ass r s aring et een

a il e ers r in ivi als are res r e ling t e an t eir ntent a ess an r ira an s eti es e ine it ass r s aring t reate a i erent level rr ti n e g a ser living in an t er

ntr ses a t a ess an servi e taining a ass r r s e ne lives in t e

1 The six business models for copyright infringement — A data-driven study of websites considered to be infringing copyright a gle an r M si issi ne re rt it resear n te ste s eti a 2 ne 2 12

Infringed contentKey drivers of infringed contentFactors that impact the growth of infringed content consumption can be divided into two groups:

• Infringed content site factors

• ro ta le it a lo cost of entr

• ell organi ed siness odels t at ne entrants can easil re licate

• n e anding digital niverse t at rings ore otential cons ers o a se t e infringed content ar et for so e of t eir o n content

• I roving and idt t at a es it easier for certain infringed content a roac es

• gro ing acce tance of infringed content se cons ers

• n increasing n er of s ort oriented co anies t at rovide tools to sers

• Infringed content ser factors

• Increasing de and for content it o t aiting for a release or t e ne t e isode

• esire for lo er content costs

• esire to access content re otel

• I roving tec nolog and and idt a ing it easier to o tain infringed content

• esistance to a ing for content it advertise ents

• as availa ilit of tools t at rotect t e anon it of infringed content sers

• n increasing c lt re of oral acce tance ilt on ears of receiving a ig degree of free content in ot er areas

• if c lt identif ing et er content is tr l infringed

• ac of fear of legal re erc ssions

Industry initiatives to combat infringed content

2

• artici ate in t e ssociation of ational dvertisers and erican ssociation of dvertising gencies

4 s Statement of Best Practices to Address Online Piracy and Counterfeiting ese leading ractices reco end t at ar eters and t eir agencies incl de t e follo ing conditions in edia lace ent contracts and insertion orders it ad net or s and ot er inter ediaries involved in t eir originated digital advertising ca aigns on ot do estic and foreign internet sites

• ll s c inter ediaries s all se co erciall reasona le eas res to revent ads fro eing laced on t ose sites

dedicated to t e infringe ent of t e intellect al ro ert rig ts of ot ers eca se t e ave no signi cant or onl li ited se or r ose ot er t an engaging in ena ling or facilitating s c infringe ent

• ll s c inter ediaries s o ld i le ent co erciall reasona le rocesses for re oving or e cl ding s c sites fro t eir services and for e editio sl ter inating nonco liant ad lace ents in res onse to reasona le and s f cientl detailed co laints or notices fro rig ts olders and advertisers

• ll s c inter ediaries s o ld ref nd or credit t e advertiser for t e fees costs and or val e associated

it nonco liant ad lace ents or rovide alternative re ediation

• artici ate in est ractices for ad net or s to address irac and co nterfeiting ic reco ends ad net or s

• Maintain olicies t at ro i it e sites dedicated to selling co nterfeit goods or engaging in co rig t

irac fro artici ating in t e ad net or s advertising rogra s

• Maintain and ost t e est ractices g idelines on t e ad net or s e site

• Incl de in ad net or olicies lang age indicating t at e sites s o ld not engage in violations of la

2 Statement of Best Practices to Address Online Piracy and Counterfeiting e ssociation of ational dvertisers and t e erican ssociation of dvertising gencies 4 s 3 Ma 2 12

or s to ac ieve certi cation co anies st de onstrate t e can rovide t eir advertising ecos ste s agencies and advertisers it tools to li it t eir e os re

to ndesira le e sites or ot er ro erties e st also eet one or ore of t e esta lis ed ore riteria for igital dvertising ffectiveness ese criteria incl de 3

• Identif ing ad ris entities s is involves assessing and identif ing e sites or ot er edia ro erties t at

ave a discerni le ris of ena ling t e na t ori ed or illegal distri tion of co rig ted aterials and or co nterfeit goods

• reventing advertise ents on ndesired ad ris entities dvertisers and agencies need to e a le to restrict t e

dis la of t eir advertising on ndesira le sites or ot er edia ro erties t at do not eet eac advertiser s or

agenc s standards

• etecting reventing or disr ting fra d lent or dece tive transactions is eans i le enting rotocols and ca a ilities to nd and li it ad lace ents on s t at

se fra d or dece tion to avoid t e standards set t e advertiser or agenc

• Monitoring and assessing t e co liance of ad lace ents is incl des detecting and re orting s t at are not in

co liance it advertiser or agenc instr ctions to allo re edial action

• li inating a ents to ndesired ad ris entities sing tec nolog and rotocols to revent a ents to ndesired sites and ot er edia ro erties

is rogra as of ciall la nc ed in e r ar 2 15 s of cto er 2 15 no s are certi ed

• artici ate in an ongoing dialog e it content creators rig ts olders cons er organi ations and free s eec advocates

• gree to e certi ed against t e inventor alit g idelines fro t e r st ort cco nta ilit ro

lternativel aintain inde endent alit ass rance vetting and a diting rocesses and or to s ort s c eas res across t e ind str

• cce t and rocess valid and s f cientl detailed notices fro rig ts olders or t eir designated agents regarding infringed content e sites t at a e

artici ating in t e ad net or on recei t of a valid notice erfor an a ro riate investigation into t e co laint a e a ro riate ste s s c as re esting t e e site no longer sell co nterfeit goods or engage in co rig t irac cease to lace advertise ents on t e

e site or re ove t e e site fro t e ad net or

• artici ation in t e igital ss rance dvertising roviders s certi cation rogra of is rogra is for

t ose ad net or s and ot er inter ediaries involved in originated digital advertising ca aigns on ot do estic and foreign internet sites

lients don t reali e t at t eir ads are f eling t e

ro ts of t e irate sitesJohn Montgomery, ro M onnect ort erica

air an intervie ed eet tv 16 e te er 2 15

3 Core Criteria for Effective Digital Advertising Assurance r st ort cco nta ilit ro tt s tagtoda net content loads 2 15 2 ore criteria nal df accessed ove er 2 15

Infringed contentCost impact to industryInfringed content segmentation

ere are fo r ain t es of digital infringed content sites 1 direct do nload sites 2 lin ing sites 3 2 sites and 4 video strea ing ost sites

In ter s of esti ating t e cost i act e o tained sage data e g n er of do nloads ni e visitors or ni e I s fro t ree different so rces and t en a lied certain rate data e g Ms or ont l a for content costs nder t e t o rinci al reven e odels i e ad reven e odel and a

a for content odel or t e ont l a for content cost e sed is re resents t e additional reven e o tained

if infringed content as 1 eli inated e additional reven e co ld co e fro ont l strea ing service direct do nloads of sic or videos fro an online store rc ased video on de and an additional ca le o ada ter or a tic et to t e ovie t eater

ften cons ers are attracted to infringed content distri tion c annels eca se of t e i ediate access to recentl distri ted edia s c as a ne ovie song or television series e sed lti le so rces and a roac es to triang late t e cost i act range to t e ind str r goal as to esti ate t e otential reven e t at co ld e earned if t is content sage data as cons ed at legal sites as o osed to infringed sites or e a le sites are generall s scri tion ased it ini al advertise ents s a res lt e treated t e content as a legiti ate c annel and ass ed so e anner and video ad i ression activit

Estimation approach 1 e tili ed t e follo ing Ma 2 15 sage etrics o tained directl fro an anal tics co an

t at eas res e sites for r oses of identif ing content infringe ent related to ovies television and sic

DDL Linking sites P2P Video streaming

16 3 1 16 36 2 13 1 111 3 12 454 5

e anal tics co an calc lated t e sage s rrogate for a ont l ni e visitor reac etrics a ove lti l ing

a ont l glo al reac esti ate er illion sers across all sites in eac categor t e esti ated n er of glo al internet sers of 3 1 t e ercentage of

sers divided 1

e lti lied t e sage data a ove an esti ated ont l cost of 12 ont s re licating t e ann al reven e fro a a for content reven e odel to calc late t e follo ing

1 5 1 6 4 36

in ing 3 45 44

2 1 3 6 4 3 4

ideo strea ing 1 1 5 641 312

otal esti ated reven e 64

e anal tics co an also rovided t e follo ing Ma 2 15 esti ated visits ese ere de ned as an entr to a e do ain fro a different e do ain or fro t e eginning of an e t ro sing session ic e ires after 3 in tes of inactivit

DDL Linking sites P2P Video streaming

22 65 42 26 31 61 1 6 56 11 2 24

10

advertising reven e t at ear e goal of t e Media in st dies as to esti ate t e reven e and ro t earned at t e to infringing content st d or t is st d e sed t e vol e etrics and t en ass ed co ens rate Ms ere earned for t e content involved i e nor al Ms for alit content as o osed to lo dollar Ms ic t e infringing content sites t icall earn

DDL Linking sites P2P Video streaming

14 0 600 1 500 21 311 00 324 000

e lti lied t e ont l ni e visitor data a ove to an esti ated ont l cost of 12 ont s re licating t e ann al reven e fro a a for content reven e odel to calc late t e follo ing

1 431 321 600

in ing 42 6 2 000

2 2 045 23 200

ideo strea ing 5 104 000

otal esti ated reven e 5 315 020 00

e st d also rovided t e follo ing esti ated ont l average age vie s for sites

DDL Linking sites P2P Streaming

1 1 600 000 1 2 00 000 3 3 00 000 1 0 100 000

e anner ad reven e elo as calc lated ass ing an 11 35 M for 12 ont s to ann ali e t e ont l average 3 2014 data o tained for one vie ed i ression er visit

a conservative ass tion e video a dio ad i ression

e calc lated t e anner ad reven e elo ass ing an 11 35 M4 for 12 ont s to ann ali e t e Ma 2015 data

o tained for one vie ed i ression er visit a conservative ass tion e video a dio ad i ression reven e esti ated elo ass es a a 21 2 M5 for eac visitor

ses t e sage etric a ove to a content osting site an average sage of fo r ti es a ee for 12 ont s c t ree ad nits vie ed er alf o r and d an average of a f ll o r of cons tion ased on t e content e g ovies television

rogra ing

Banner ad revenue

on sites

Video/audio ad revenue

on sitesTotal ad revenue

DDL 31 2 614 100 336 354 131 615 6

Linking 112 544 32 220 5 3 333 302 15

P2P 25 65 2 5 110 244 136 63 51

Video streaming

16 044 5 6 32 41 2 3 4 4

Total estimated ad revenue

$185,734,379 $508,422,322 $694,156,701

Estimation approach 2 e sed t e follo ing ont l average ni e visitor data ased on 3 2014 fro a

licl availa le st d erfor ed Media in on e alf of t e igital iti ens lliance e st d Good Money Still Going Bad: Digital Thieves and the Hijacking of the Online Ad Business iss ed in ril 2015 esti ated t at t e to infringed sites t e to 5 6 infringing sites ere eas red in 2014 earned 20 illion in advertising reven e 6

Media in erfor ed an initial st d in 2013 for t e sa e organi ation It esti ated t at t e a or sites osting infringed content earned an esti ated 22 illion in

4 IAB internet advertising revenue report: 2014 full year results — April 2015 I tt ia co content loads 2015 05 I Internet dvertising even e 2014 df accessed ove er 2015 5 I id 6 Good Money Still Going Bad: Digital Thieves and the Hijacking of the Online Ad Business, Digital Citizens Alliance, tt s edia gractions co 314 5 5 5 3 24 4 46 4 3 6 2 a ec6 ce 0 4543 0a edc 0 63f511 df, accessed ove er 2015

I id IAB internet advertising revenue report: 2014 full year results — April 2015, I , tt ia co content loads 2015 05 I Internet dvertising

even e 2014 df, accessed ove er 2015

Infringed content

11

e calc lated t e anner ad reven e elo ass ing an 11 35 M12 for one vie ed i ression related to eac

do nload a conservative ass tion e video a dio ad i ression reven e esti ated elo ass es a 21 2

M13 e a lied to t e 2 do nloads considering a li el n er of s ots for t e edia t e e g , t ree ad nits for a 30 in te s o , 12 ad nits for a 2 o r ovie and si ad nits for an o r of a dio la or e a le, t e

33,362, 12 esti ated video ad i ression reven e for as calc lated dividing 522,600,000 do nloads 1,000

and t en lti l ing it a M of 21 2 er ad nit and t en lti l ing it t ree s ots er o r

Banner ad revenue

on sites

Video/audio ad revenue

on sitesTotal ad revenue

Movies ,144,320 205, 35,125 214, ,446

Music 3,506,163 3 ,442,012 42, 4 ,1 4

TV programming

5, 31,533 33,362, 12 3 ,2 4,445

Total estimated ad revenue

$18,582,016 $278,540,049 $297,122,065

reven e esti ated elo ass es a a 21 2 M for eac visitor ses t e sage etric a ove to a content osting site

t e sage is an average of fo r ti es a ee for 12 ont s c t ere are t ree ad nits vie ed er alf o r and d an

average of a f ll o r of cons tion ased on t e content

Banner ad revenue

on sites

Video/audio ad revenue

on sitesTotal ad revenue

DDL 26,0 5, 20 1,3 5,5 1 11 ,4 1,4 1

Linking 24, ,360 60,1 0,1 0 5,0 ,540

P2P 52,2 3,560 130,611, 3 1 2, 5,2

Video streaming

25, 1,620 5 ,143,43 3,035,05

Total estimated ad revenue

$129,158,460 $339,310,927 $468,469,387

Estimation approach 3 e sed t e follo ing ann al sage data fro a 2 eas re ent co an for 2014

Movies Music TV

P2P downloads 05, 00,000 30 , 00,000 522,600,000

Unique IPs 55,000,000 3 ,000,000 2 , 00,000

e divided t e 2014 ni e I esti ate a factor of 5 1 esti ate of I addresses sed in t e co ared to t e

o lation and lti lied t is factor a cost of 12 ont s re licating t e ann al reven e fro a a forcontent reven e odel to calc late t e follo ing 10,11

M sic reven e 04, 14,2 6

ideo reven e 1,01 ,656,3 1

otal esti ated reven e 1, 23,5 0,65

I id

10 Regional Internet Registries Number of IP Addresses Per Country, ert, g e ert co addresses erco ntr , accessed e te er 2015 11 Internet Usage and 2015 Population in North America, Internet orld tats, internet orldstats co stats14 t , accessed e te er 2015 12 IAB internet advertising revenue report: 2014 full year results — April 2015, I , tt ia co content loads 2015 05 I Internet dvertising even e 2014 df, accessed ove er 2015 13 I id

12

o calc late o r nal ro nded esti ate, e a lied a 0 and 30 eig t to t e id oint of t e ad s orted and a forcontent odel, res ectivel

e ad s orted reven e odel re resented 456,144, of o r nal esti ate, ereas t e a for content reven e

odel re resented 1, ,5 5, 3 t is co onent of t e calc lation re resents a ro i atel 21 illion cons ers s ending er ont nder a a for content

odel it t e eli ination of infringed content

e sed a 30 eig t for t e a for content odel for conservative r oses eca se t e rice elasticit for t is area is not no n i e , antit de and decreases as rice increases, and it is not no n a sent t e availa ilit of free infringed content o an cons ers o ld eco e a

a ing c sto er

o assist in eval ating t e different antit etrics a ove, e note t e follo ing

• Data roac 1 so rces rovided a ont l average as of Ma 2015 ased on Marc , ril and Ma In roac 2, Media in rovided a ont l average as of 3 2014

roac 3 so rces rovided 2014 data

• Coverage roac 1 so rces eas red tens of t o sands of sites In roac 2, Media in foc sed on t e to 5 6 infringing sites ased on re oval re est data fro a searc engine trans arenc re ort roac 3 so rces incl ded a 2 cens s ca t ring t e a orit of t at

niverse

• Measurement roac 1 so rces sed le a data In roac 2, Media in sed co core, Integral d

cience, eri ite and Inco ro roac 3 so rces did not se an additional eas re ent data

EY summaryr goal as to esti ate t e otential reven e t at

co anies co ld earn if t e ind str eli inated infringed content distri tion c annels and diverted t e content

sage data and cons tion to legal distri tion c annels I ediate access to recentl distri ted edia is a e driver t at ro els cons ers to ard infringed content If t e ind str eli inated access to t e free infringed content, cons ers o ld li el loo to different c annels to ll t eir void o ever, e cannot de nitivel deter ine t e e act

i et een ad s orted and a for content reven e odels e sed a 0 30 s lit for o r calc lations s s c ,

to esti ate t e cost i act across t e fo r categories, e calc lated a lo end, id oint and ig end nder o r t o reven e odels

Pay-for-content revenue model

Dollar valueUsers consuming

infringed content*

Low end 4, 2,66 ,256 52,000,000

Midpoint 6,631, 52, 6 6 ,000,000

High end ,2 1,23 ,6 6 6,000,000

* ote it o r data so rces, e ere na le to de d licate individ als across seg entation e g , one individ al

a cons e content fro 2 , , lin ing and video strea ing s a res lt, t e e act n er of infringed content cons ers a e lo er

Ad-supported revenue model

Dollar value

Low end 405,31 ,4

Midpoint 651,635,5 1

High end , 53,652

Final rounded estimate

Total dollar value

2,400,000,000

Infringed content

13

VPN piracy and password sharing

ons ers are a le to illegall access digital content t ro g ass ord s aring In so e cases, t is action is co o nded

en cons ers ass t eir act al geolocation sing a virt al located in anot er geolocation negative side effect of sage is t e acc rac i act to so e assive digital eas re ent a roac es, as ell as co ntr ased digital ad targeting sent a c ange to co le content agree ents, t e corr tion i act is li el to gro as servers

eco e ore accessi le, and idt strengt increases and glo al internet access enetration increases

o esti ate t e cost i act, e sed licl availa le st dies or certain esti ates oted licl ccording to researc iss ed lo al e Inde in t e rst arter of 2015 32 co ntries ere eas red 14

• 51 of sers cited access to etter entertain ent content as t e n er one reason for sage Man of t e ot er reasons related to anon it and accessing restricted sites o ever, t e t overall reason at 22 as to access restricted do nload sites s c as torrent sites ic are generall sed to o tain infringed content

• e ig est ercentage of sers of ro servers at 35 live in atin erica considers t ese esti ates relevant to t e infringed content assess ent in t e edia

ar et eca se of t e gro ing n er of eo le igrating fro atin erica to t e It is ossi le t at so e fa il

e ers re ain e ind and can access content re otel sing a and a s ared ass ord

• ere are a ro i atel 2 illion server sers in t e is ts t e in a tie it ra il for t ird

lace in ter s of server sers nl ina at 15 illion and India at 45 illion ave ig er n ers of

sers considers t ese esti ates relevant to infringed content assess ent in t e edia ar et eca se t ese individ als tend to se t ese servers to access torrent sites to o tain infringed content

14 ason Mander and eli Mc rat , s and ro ervers, GlobalWebIndex, tt glo al e inde net , accessed ove er 2015 15 OTT Password Sharing Will Impact Pay-TV Network Revenue, Too, ar s ssociates, ar sassociates co log article ott ass ord s aring ill i act a tv net or reven e, accessed e te er 2015 16 Internet Users by Country (2014), Internet ive tats, tt internetlivestats co internet sers co ntr , accessed e te er 2015

• server sers s e o nger 2 of ages 16 to 24 and 36 of ages 25 to 34 vs 11 of ages 55 to 64 , ale 31 of ales vs 21 of fe ales and er inco e 3

of to arter of inco e gro vs 2 of t e otto arter of inco e gro

ccording to a recent researc re ort fro ar s ssociates, t e ractice of ass ord s aring ill cost t e s scri tion video on de and ind str ore t an 500 illion

orld ide in 2015 i ercent of road and s scri ers indicated t e access a s scri tion video service aid for so eone o tside t eir o e 15

o esti ate t e cost i act of ass ord s aring to t e ind str in t e , e considered t e follo ing

• ons er rice elasticit is not no n e g , antit de and decreases as rice increases, and it is not no n

o an cons ers o ld eco e a a ing c sto er if t e are c rrentl accessing content for free

• services li el alread consider ass ord s aring en esta lis ing t eir ricing strateg e g , ont l fee can increase ased on t e n er of conc rrent strea s

s a res lt, e conservativel a lied a 5 factor t is factor re resents t e a ro i ate ercentage of eo le connected to t e internet o live in t e to t e 500 illion fro t e ar s ssociates glo al esti ate to

calc late an esti ated ro nded cost i act of 4 illion for t e onl 16

as na le to o tain an esti ate on t e i act of and ro irates

14

Attitudes from publishers and ad tech organizations

s it relates to o r voice of t e ind str st d , t e co ined lis er and ad tec res onses identi ed strong s ort

related to co ating t e iss e of infringed content

• of res ondents indicated t at t e lace ent of advertising on sites osting infringed content rts t e digital advertising ecos ste

• sa t at t e ad tec co anies ave a res onsi ilit to eli inate advertising on sites osting infringed content

• s ggest t at advertisers care et er t eir ads a ear on sites t at incl de ainstrea infringed content

e igital Millenni o rig t ct M is a la t at rovides alif ing online service roviders it a safe ar or

fro onetar lia ilit for co rig t infringe ent clai s ne of t e re ire ents of t ese safe ar or rovisions is t at t e service rovider re ove or disa le access to allegedl infringing aterial on receiving a re est t at eets certain re ire ents

In an ar 2015, orrent rea , an online ne s lication dedicated to infringed content, re orted t at co rig t

olders as ed one searc engine to re ove ore t an 345,16 ,134 allegedl infringing lin s fro its searc engine in 2014 a 5 increase co ared to t e revio s ear 1

e over el ing and ra id increase of ta edo n re ests as led content o ners to rel on tec nolog e g , ots ,

incl ding t ose sed o tside agencies, to scan t e internet for infringed content

o esti ate t e cost i act of M ta edo n re ests, e a lied a 5 factor re resenting t e a ro i ate ercentage of eo le connected to t e internet o live in

t e to t e 2014 re ests of 345,16 ,134 and lti lied it 1 er re est to esti ate an overall ind str esti ated ro nded cost of 33,000,000 1

e conservativel selected a cost of 1 er re est for o r esti ate eca se act al costs are not availa le It also

as een re orted t at for an co anies, t e rocess is a to ated

“It is largely useless …ere illegal lin s t at

are ta en do n rea ear instantaneously e result is … ot costly and increasingly ointlessCary Sherman, ecording Industry ssociation of erica air an and , “ aluing Music in a igital orld, Forbes.com, accessed

e te er 2015

1 Google Asked to Remove 345 Million ‘Pirate’ Links in 2014, orrent rea , tt s torrentfrea co google as ed re ove 345 illion irate lin s 2014 150105 , accessed e te er 2015 1 I id

Infringed content

15

urt er ore, t e study results for t e ad tec res ondents indicated t at t eir attitudes and initiatives ere oving in t e rig t direction to co at infringed content

• 100 indicated t at t eir organi ation includes co it ents in t eir contracts not to urc ase inventory on sites it infringed content

• said t at t eir organi ation erfor s easures ai ed at e cluding sites it infringed content in res onse to reasona le and suf ciently detailed co laints fro co yrig t olders and advertisers

• 1 noted t at t eir organi ation erfor s easures s eci cally ai ed at re oving or e cluding sites it infringed content fro latfor s t at use fraud or dece tion to avoid t e re uire ents set y t e advertiser or agency

• indicated t at t eir organi ation s leaders i is against advertise ents eing served to sites it infringed content

• said t at t ey ave itnessed t eir staff discussing concerns regarding advertise ents a earing on sites it infringed content

• 42 suggested t at t eir organi ation as designated an individual or role res onsi le for itigating ris of ads a earing on sites it infringed content

“Internet usage continues to gro at a ra id ace, and it it, so does internet ased infringe entDavid Price, et a es irector of iracy

nalysis, “ i ing t e iracy universe, NetNames, e te er 2013

16

Malvertising+

1

Malvertising+ t reat landsca e

Malvertising+elivery et ods

• Deceptive download: tric ed into do nload

• Drive-by download: unintended soft are do nload

• redirection to unintended site

• Watering hole: targeted drive y do nload

ses and ur ose• Ad bot creation: uses infected ac ine for ad fraud

• Nuisanceware: adds un anted features

• Ransomware: alters syste until ay ent is ade

• Scareware: scares user to ay for unneeded “

• Spyware: collects consu er activity it out consent

• Virus/infection: as a ility to use consu ers device

o an attac er vie s t e landsca e

1

2

3

reating fraudulent content fraudulent ads, fraudulent agencies,

drive y do nload ads, dece tive do nload ads, ad scri ts, s y are, ranso are, scare are, viruses

ltering good content code in ection, lin i ac ing, re ository co ro ise

ontent ining coo ie i ac ing, atering ole targeting

DSPAgencyAdvertiser PublisherNetworkSSP

Data aggregators

Exchange

Third parties 321

2

1

2

1

2

1

2

3

1 2

3

2

3

2

3

Computer

1

Comprehensive descriptionMalvertising+ fro “ alicious advertising uses t e digital advertising ecosyste to in ect al are onto consu ers devices, ere t e digital advertising ecosyste includes ad content alvertising fro alicious advertising e “+ in t e ter alvertising+ refers to co ro ised t ird arty scri ts intended for easure ent or related ur oses Malvertising+ refers to t e otential distri ution of al are across a larger o ulation of consu ers y co ro ising a single advertise ent or scri t t an ould e ossi le t roug co ro ising a single e site or content source

e sites t e selves are generally not infected instead, t e al are arrives t roug infected ad content or co ro ised

t ird arty scri ts delivered to t e ro ser along it t e e site content

In addition to alvertising+, ot er al are a roac es include is ing e ails, social edia and content se arated fro any advertising ese are outside of t e sco e of t is study

In t e t o categories t at follo ased on delivery et od and ur ose , t e lists ertain to all for s of al are, including alvertising+

The following are broad malware categories based on delivery methods:

• Link hijacking results in an advertise ent or scri t auto atically redirecting users to a e site t at t ey ave not decided to visit ese sites t en often deliver al are to a consu er s ro ser

• A drive-by download advertisement or script leads users to unintentionally do nload soft are to t eir device

it out t eir no ledge

• A watering hole attack is si ilar to a drive y do nload advertise ent or scri t o ever, it targets a s eci c audience, dra ing users to a site ere t ey ave a s ared interest or attern of visitation t at as een designed to, or co ro ised to, deliver t e al are to t e consu er s device

• A deceptive download advertisement or script atte ts to lure users to aut ori e a do nload it out understanding t e conse uences or e a le, a ro an orse can disguise itself as a legiti ate rogra and rovide re ote access to carry out alicious activities e g , generate ad i ressions, relay s a , steal data and onitor activity

In t e rst t ree categories, t e user does not need to clic on t e advertise ent to e infected e need to clic on t e

al are to eco e infected is a co on isconce tion

The following are broad malware categories based on purpose:

• Spyware s ies on t e users activity e g , collecting eystro es and critical data suc as nancial and login it out t eir no ledge

• Ransomware alters t e user s syste e g , loc ing t e user out and t en dis lays a essage de anding ay ent to return t e syste to t e revious state

• Scareware is soft are t at a ears legiti ate e g , tool to t e user s o ever, en it runs, it infor s t e user

atte ting to scare of an issue and as s for ay ent in return for ing t e issue

• Nuisanceware adds un anted or unintended features to a user s e g , tool ars, idgets, etc

e need to clic on t e al are to e infected is a

co on isconce tion of t e u lic

Malvertising+

1

• virus infects t e user s device and ta es over art or all of its functions for alicious ur oses e g , relay s a , ar co uters, steal data and onitor activity

• Ad bot creation uses t e infected ac ine as a ot for i ression and clic fraud

The following are ways malvertising+ can be established:

• reating fa e advertisers or advertising agencies t at retend to re resent legiti ate clients in a uy

• aining access to a li rary of af liate ar eting ad creatives and i ac ing t e to deliver al are

• o ro ising t ird arty scri ts delivered it t e ad or age content t at are intended for easure ent or related ur oses

• ttac ing al are to a selected do nload t at a ears legiti ate to t e consu er

or several of t e et ods listed a ove, nefarious al are attac ers use al are delivery its availa le for relatively ine ensive rice via t e e and advertising to infect a consu er s device

Malvertising+ is able to exist and prosper in an ecosystem

• ot rioriti ing security it in t e creative uality assurance function, or aving insuf cient tools and resources to g t it

• single ea lin in t e digital advertising ecosyste t at can e co ro ised to in ect al are

• raditional defenses li e antivirus and ot er tools are una le to deter ine in ti e et er a co ro ised t ird

arty scri t or advertise ent, suc as a las o ered anner ad ic is not de ned as alicious itself , is si ly

serving ad content or so et ing ore sinister

• ttac ers o use tactics to sli ast t e ltering syste s is ay include 1 ena ling t e alicious trigger after a

delay of several days follo ing t e a roval of t e ad 2 only serving t e ad ad or scri t to every nt consu er 3 targeting to, or a ay fro , s eci c consu ers ased on identi er infor ation suc as I address, o erating syste ,

ro ser and ot er ara eters 4 leveraging rogra atic

or real ti e idding syste s to furt er target consu ers it s eci c o erating syste s, ro ser versions, las

versions, geogra ic locations, or I addresses t at ay indicate residential, university or cor orate users, and

otentially t e institution or usiness t e consu er is it in 5 launc ing attac s on ee ends or olidays

en it is li ely ad o erations ersonnel are a ay fro t e of ce or ill ta e longer to res ond to al are attac s and 6 e edding al are in M eaders, and steganogra ically e edding alicious code frag ents in i age and les t at are lin ed toget er to for an attac string at run ti e

• sing ad serving tools and controls t at can scan t e creative to detect and disa le in ected or unintended code i e , al are efore allo ing ads to launc is ould

entail scanning las or ava cri t les, eit er anually or y using sites t at rovide al are scanning tools

o anies s ould run t ese analyses on syste s outside of t eir syste to revent infection of t eir internal syste s and to revent t e identi cation of t e environ ent as a test environ ent in ic t e al are s ould re ain

idden and dor ant

• valuating usiness artners, including advertisers, agencies and t ird arties it o co anies or

ac ground c ec s, credit c ec s, etc , to deter ine if t ey are re uta le and legiti ate co anies

• ssessing t ird arty tec artners diligence regarding t eir evaluation of usiness artners, internal security fra e or , and uality assurance over ad content and scri ts received fro artners

• Identifying and closing oles on sites or internal syste s

• e orting usiness artners involved in t e ad serving transaction t at andle t e ad content or rovide t ird

arty scri ts in su ort of t e transaction to t e advertiser and agency

• inding a ay for t e good actors in t e industry to s are infor ation to el reduce t e level of alvertising+

20

e eig ted and ro ected our voice of t e industry data to calculate an annual esti ated rounded cost of 1 ,000,000 to ire t ird arty vendors to assist in onitoring ads served for ur oses of identifying al are orty nine ercent of t e res ondents indicated t at t eir organi ation ired a t ird

arty vendor

ue to t e otential da age to t e u lic, several searc engines lace any e site found to ave al are on a

lac list otential visitors to t ese sites are arned t at t e site ay e unsafe lternatively, t e site ay e e cluded fro searc results altoget er or legiti ate e site o ners, t e lac list as several signi cant conse uences, including re utational i act, reduction in traf c referred y t e searc engine, do nti e i acting revenue and direct costs to

andle t e security incident

ccording to a 2014 arnegie Mellon niversity study conducted y t e oft are ngineering Institute, ore t an 30 illion do ain na es ere added to one of 1 different internet lac lists eaning a ro i ately 4 5 o served fully uali ed do ains on t e Internet ere lac listed during 2014 1 e study also noted t at only 3 4 of t e

lac listed do ains ere on ulti le lists is is largely ecause of a lac of co on ter inology a ong t e list roviders and a lac of infor ation on t e algorit s used s suc , it is dif cult to evaluate t e ef cacy of t e lists

Cost impact to industryDirect incidents

en alvertising infects a u lis er or ad syste , t ere are costs incurred to investigate, re ediate and docu ent t e incident or ur oses of esti ating t e cost i act, e o tained data related to t e nu er of alvertising incidents

2,52 for t e rst si ont s of 2015 ese incidents ere identi ed y a t ird arty digital security co any t at onitors a signi cant nu er of u lis er ages and a s on

a daily asis e annuali ed t e incident nu er 1 5,054 and t en a lied a 50 and 500 cost er incident ased on in uiry it t e security co any t is is t e general range of t e cost to calculate a lo end and a ig end range e t en divided t e id oint y 25 a ro i ate coverage

onitored y t e co any to esti ate an overall rounded cost i act

Direct incidents

Dollar value

Low end ,252, 00

Midpoint 50, , 50

High end 2,52 ,000

Overall rounded cost of impact 204,000,000

e security co any also noted a 260 increase in t e levels of alvertising during t e rst si ont s of 2015

ased on t e co anies t ey onitor uring t e sa e ti e fra e, fa e las u dates ave re laced fa e antivirus and fa e ava u dates as t e ost co only used et od to lure consu ers into installing al are

1 eig Metcalf and onat an ring, “ lac list cosyste nalysis date 2014, Carnegie Mellon University/Software Engineering Institute, tt resources sei c u edu asset les ite a er 2015 01 001 42 614 df , accessed ove er 2015

Malvertising+

21

“ isits to ainstrea e sites can e ose

consu ers to undreds of un no n or otentially dangerous t ird arties“ nline dvertising and idden a ards to

onsu er ecurity and ata rivacy, er anent u co ittee on Investigations Ma ority and

Minority taff e ort, nited tates enate, 15 May 2014, tt s sgac senate gov edia

er anent su co ittee on investigationsreleases re ort online advertising and idden

a ards to consu er security and data rivacy accessed ove er 2015

study noted the following:or ur oses of esti ating t e cost i act of lac listing, our

study as interested in legiti ate e sites ose usinesses ere i acted y a al are security incident uring 2014,

a ased non ro t anti al are organi ation received 2 ,000 re uests fro e sites t e direct re uest increases t e li eli ood t at t ese re resented legiti ate sites i acted y lac listing re uesting t e organi ation to revie t e e site and delist t e site fro t ese lac lists e vast

a ority as cleaned it in t o days it out assistance, ic could re resent cleanu or t e al are only e isted

for a s ort eriod of ti e o ever, a ro i ately 2,000 re uested a anual ins ection y t e organi ation, ic is a strong indicator t at t ey ere not free of al are o assign a cost related to lac listing, e considered t at t e a ority of t ese sites re resented s all usinesses furt er su orted y our voice of t e industry study, ere only 13 of t e I e ers ad een i acted , and according to t e I , t e

average annual revenue of a s all usiness it a e site, en ad usted for in ation, is 6 35 illion or 1 ,3 6 er

day 20 e conservatively selected a 50 negative i act or ,6 3 er day for lac listing over an average of t o days

t is eriod as used ecause ost incidents ere addressed it in t o days o ever, so e too longer , ic results

in an esti ated cost of 504,1 4,000 related to t e total i act of al are lac listing ecause t e organi ation esti ated 10 or less of t e cases ere due to alvertising,

e calculated a range i act of ero to 50,41 ,400 it a id oint of 25,20 , 00 used in our esti ate elo to

e conservative

e also eig ted and ro ected our voice of t e industry data to calculate t e i act to t e larger organi ations it in t e digital advertising ecosyste and esti ated a cost of

31,325,000 s a result, t e total rounded cost i act is esti ated at 5 ,000,000

13of t e co anies in t e study indicated t at t eir organi ation

ad een su ect to lac listing y a searc engine or ot er organi ation

s it relates to t e cost i act of lac listing to t eir organi ation,

for t e 13 of t e co anies in t e study o indicated t at t eir organi ation ad een su ect to lac listing y a searc engine or ot er organi ation

6 indicated t e cost as

indicated t e cost range as

20 Small Business at a Glance, ntre reneurco , tt entre reneurco age 216022, accessed e te er 2015 analysis

22

Malvertising+ ay also result in consu ers using a ig er nu er of ad loc ing ec anis s or t is art of our study,

e did not consider ad tec nology co anies t at a e oney using t reats it u lis ers

In a 2014 study erfor ed y age air and do e, a ro i ately 1 of res ondents cited rivacy concerns as t e reason for using ad loc ing 21 d loc ing ty ically re oves ost for s of advertising fro e sites, including

anner ads, te t ads, s onsored stores and video re roll ads y ically, users can install it in seconds as a ro ser e tension availa le on ost o ular ro sers is action

as t e otential to i act u lis er inventory levels e g , less revenue to u lis ers and associated tec co anies It can also in i it rands fro reac ing certain target de ogra ics or e a le, 54 of ales surveyed et een t e ages of 1 and 2 indicate t at t ey use ad loc ing soft are e study also identi ed t e ro e and irefo

ro sers as t ose ost used a ong t e ad loc ers e re aining ro sers ere all under 3 age air noted t at ad loc ing is availa le on all des to e ro sers, ut it is e ce tionally o ular on ro sers t at re uire end user installation, suc as ro e, irefo and era onversely, ad loc ing is very lo on re installed ro sers li e Internet

lorer and afari

ccording to direct esti ates rovided y age air to , t ere ere a ro i ately 40 illion ont ly active ad loc users it in t e as of une 2015 or 15 of t e total online o ulation naly ing t is at a u lis er level, age air noted

t at t ere is a ide range in t e a ount of ad loc ing it so e e sites range as 1 5 to 65 of t e ads loc ed

Blacklisting

Dollar value

Low end 0

Midpoint 25,20 , 00

High end 50,41 ,400

Impact to larger organizations within the digital advertising ecosystem

31,325,000

Overall rounded cost of impact 5 ,000,000

21 Adblocking goes mainstream, age air, tt do nloads agefairco re orts ad loc ing goes ainstrea 2014 re ort df, accessed ove er 2015

“… lac listing is not a suf cient defense an organi ation needs ot er defensive easures to add de t , suc as gray listing, e avior analysis, cri inal enalties, s eed

u s, and organi ations eci c ite lists

eig Metcalf onat an ring, “ lac list cosyste nalysis date 2014, Carnegie

Mellon University/Software Engineering Institute

Malvertising+

23

• d revenue generated er erson not loc ing as 20 0 ased on 2014 digital ad s end

of 4 5 illion divided y 236, 3 , 60 2 , 34,232 digital o ulation ulti lied y 4 6 of t e internet o ulation esti ated to e not loc ing ads 22

• Missed ad revenue as esti ated at ,025,44 ,00 ased on 20 0 ulti lied y 43,165,36 ad loc ers 2 , 34,232 ulti lied y 15 4 of t e o ulation

esti ated to e ad loc ing

• s 1 of t e age air res ondents attri uted t e reason for ad loc ing to rivacy directly related to security and

al are , e calculated an esti ate of 1,534,325, 1

• e also eig ted and ro ected our voice of t e industry data to esti ate an overall ad loc ing cost of

15 ,6 5,000 and t en a lied t e 1 factor fro t e age air study to esti ate a cost of 26, 04, 50 ad loc ing associated it alvertising+

• e 1,000,000 esti ated rounded cost as ased on t e id oint et een 26, 04, 50 and 1,534,325, 1

study noted the following:

“ d loc ing is eginning to ave a aterial i act on u lis er revenues

Mi e aneis, rust ort y ccounta ility rou , “ u lis ers and ad loc ers are in a attle for online advertising, FT.com, 2 Marc 2015, ttft co intl c s s 2 c 4a64 e d3af 11e4 d00144fea de t l a 3r a reu, accessed

ove er 2015

4of t e co anies in t e study indicated t at t ey easure t e level of ad loc ing at t eir

e sites or via t eir latfor s for t e ad tec nology co anies

For those measuring the ad blocking

indicated t e level as less than 10%

2indicated t e level as 10% to 20%

11indicated t e level as 20% or greater

As it relates to the cost impact of ad blocking to their organization

2indicated t e cost as under $200,000

indicated a range of $200,000 to $499,000

12indicated a range of $500,000 to $999,000

indicated a range of $1,000,000 or more

22 IAB internet advertising revenue report: 2014 full year results — April 2015, I , tt ia co content u loads 2015 05 I Internet dvertising evenue 2014 df, accessed ove er 2015

24

Attitudes from publishers and ad tech organizations

ased on our voice of t e industry study, co ined u lis er and ad tec res onses related to al are indicated an o ortunity for a stronger control fra e or as

• indicated t at t eir organi ation ad a rocess for vetting t e u strea and do nstrea artners in t eir su ly c ain

• 63 indicated t at for t e alvertising found on t eir latfor it in t e last year, t e source of detection as

outside t e co any i e , client, t ird arty vendor or ad tec

• 62 indicated t e tone fro t e to of t eir organi ation related to alvertising as strong or very strong

• 5 indicated t at t eir organi ation s s e ticis related to co ating alvertising as ig or very ig

• 4 of t e co anies indicated aving ired a t ird arty co any to assist t eir organi ation in t e onitoring of

alvertising

• 46 indicated t e involve ent of a security de art ent related to t e roactive controls for identifying

alvertising

• 43 indicated t at t ey considered al are en erfor ing organi ational ris assess ents

• 34 indicated alvertising as not investigated ecause it as not a riority for t e co any or t e co any ad insuf cient tools or resources to do so

• 22 indicated t ey aintained etrics ased on al are investigations

• 1 indicated t eir organi ation used ad oc a roac es to addressing al are

• indicated t at t ey ad a cy ersecurity insurance olicy t at included a section on al are

• indicated t at t ey re uired a ervice rgani ation ontrol re ort covering security and integrity for t e

u strea and do nstrea artners in t e su ly c ain t at includes a section on al are

“… t e attac s t at are docu ented u licly are only t e ti of t e ice erg ere are so e ca aigns t at are so advanced t at no one ill ever see or ear a out t e

ero e egura, “ arge Malvertising a aign oes l ost ndetected, Malwarebytes

Unpacked, 14 e te er 2015, tt s logal are ytes org alvertising 2 2015 0 largealvertising ca aign goes al ost undetected ,

accessed ove er 2015

Malvertising+

25

26

Invalid

2

d traf c is ty ically designed to deliver t e rig t ad at t e rig t ti e to t e rig t user raudulent invalid traf c generates ad related actions to e tract t e

a i u a ount of oney fro t e digital advertising ecosyste , regardless of t e resence of an audience

egiti ate invalid traf c generates actions in t e nor al course of internet aintenance y non u an actors searc engine s iders, rand safety ots and co etitive intelligence gat ering tools

Invalid traf c landsca e

Invalid traf c can enter t e ecosyste in several

ays, and for several ur oses, including

e a ove et ods affect searc es, dis lays, videos, audio, o ile e and in a lication and social

udience e tension

udience e tension increases inventory y selling t e

inventory of t ird arties as if it elongs to t e site,

incentivi ing t e content artner to increase traf c and t ere y

revenue , ic ay ulti ately include a do nstrea artner sending invalid traf c

raf c sourcing

raf c sourcing increases inventory t roug ay ents to t ird arties to drive traf c to t e site,

ic ay ulti ately include a do nstrea

artner sending invalid traf c

oo ie enric entis a roac

generates invalid activity on valid and re uta le sites to

uild a coo ie ro le of increased value

it in targeted uying syste s, and t en visits fa e e sites to ac ieve ig er Ms for t e ads delivered to t e site

Illegiti ate e sites

Illegiti ate adsu orted e sites generate ad i ressions using invalid traf c to collect revenues fro advertisers

lic fraud

lic fraud generates invalid clic activity to illegiti ately increase cost er clic revenue earned net or clic fraud

or drive co etitor ar eting costs

co etitor clic fraud , ic is ore co only resent

it in t e searcased advertising

ecosyste

2

I does not in any ay re resent legiti ate traf c s suc , it is dif cult to identify and revent its oneti ation urrent studies vary idely in di ensioning t e true i act of I

o ever, t e general consensus is t at I as a aterial cost i act I acts ay include de ressed inventory Ms and a reluctance to invest and allocate digital edia s end da aged re utation to organi ations susce ti le to e osure to fraudulent I and t e overall cost to g t

it t e rise of auto ation and ever increasing co le ity of t e digital su ly c ain, t e revalence of I is e ected to ersist raudulent I in t is environ ent is e acer ated in ad transactions involving un no n sources, suc as

u lis ers urc asing lo cost traf c or o en ad e c anges

In general, I as t e otential to ave a direct onetary i act to uy side organi ations raudulent I s i act ay

e t e result of fraudulent u lis er sites selling inventory to advertisers against no n ro otic traf c directed to t e inventory lternatively, ad actors ay o erate fraudulent

u lis er sites in addition to er etrating illegiti ate coo ie enric ent roug coo ies, ots are directed to ard re uta le sites to uild coo ie ro les t at i ic traits of desira le consu ers for ad targeting e ad actor t en sells inventory on t e fraudulent site against t ese enric ed coo ies at a ig er M In t e latter scenario, t e u lis er s re utation ay e i acted as t e inter ediate ste s of t e coo ie enric ent rocess involve t e resence of I across

re iu or ot er ise re uta le u lis er content sites

Comprehensive descriptionInvalid traf c I induces syste s to generate ad related actions for ur oses ot er t an su ort of t e delivery of t e rig t ad at t e rig t ti e to t e rig t user is includes actions occurring across t e ecosyste , ic i act t e searc , dis lay, video, o ile, audio and social areas I

ay ta e t e for of legiti ate activity, as ell as activity generated y ad actors for fraudulent ur oses

• Fraudulent IVT activity ty ically e tracts t e a i u a ount of oney fro t e digital advertising ecosyste , regardless of t e resence of an audience

• Legitimate IVT tends to generate actions during t e nor al course of internet aintenance y non u an actors, including actions e ecuted y searc engine s iders, rand safety ots and co etitive intelligence gat ering tools

e Media ating ouncil M furt er de nes I in ter s of t e et ods y ic I ay e detected 23

• General IVT is traf c identi ed t roug routine eans of ltration ey e a les include data center traf c ots

and s iders or ot er cra lers as uerading as legiti ate users non ro ser user agent eaders idden stac edcovered or ot er ise never vie a le ad serving, re fetc or ro ser re rendering traf c and invalid ro y traf c

• Sophisticated IVT is ore dif cult to detect and re uires advanced analytics, ulti oint corro oration coordination or signi cant u an intervention, etc , to analy e and identify ey e a les include i ac ed devices,

i ac ed tags, ad are, al are, incentivi ed ro sing, isa ro riated content if a lica le , falsi ed vie a le

i ression decisions and coo ie stuf ng

“ e digital advertising industry ust sto

aving un rotected seandall ot en erg, Interactive dvertising ureau, “I ead e igital dvertising

Industry Must to aving n rotected e Businessinsider.com, tt usinessinsiderco ia randall rot en erg su ly c ain 2014 2, accessed ove er 2015

23 Media ating ouncil, une 30, 2015

Invalid traf c

2

ctions ta en y u lis ers to a i i e ad revenue ay also inadvertently if not latantly su ort and encourage t e

roliferation of fraudulent I it in t e digital su ly c ain lt oug sell side organi ations ay not e i ediately onetarily i acted y fraudulent I , t e re utational

re ercussion ay ulti ately result in a s ift in ad s end a ay fro u lis ers it ractices t at ay facilitate fraudulent I ne suc e a le includes traf c sourcing,

ere y u lis ers sell ore inventory t an currently availa le ey su se uently see out t ird arty u lis ers to urc ase additional traf c to drive t e audience to ard sold inventory to ful ll t e ad uy In t ese situations, t e t ird arty ay li e ise see additional t ird arties to ful ll t e audience de ands of t e rst arty u lis er In t ese situations, t ird arty sources ay resort to using ot traf c to generate t e necessary volu e to eet inventory de ands e initial intent of t e rst arty u lis er

ay not ave een to er etrate fraud in t ese situations o ever, t e environ ent of t e ad uy transaction and

t ird arty relations i s increases t e dif culty of aintaining trans arency and accounta ility related to t e uality of t e audience ful lling t e ad uy

si ilar e a le regarding u lis er driven otentially fraudulent I relates to t e ractice of audience e tension In t ese situations, a u lis er ay re resent to sell inventory under t e u lis er s o ners i , ut ulti ately ful ll t e ad

uy t roug inventory laced on ot er sites o ned y t e u lis er, af liate sites or t ird arties lt oug any of

t ese transactions are conducted t roug legiti ate eans en t e site lace ent of t e sold inventory is trans arent

to t e advertiser, lac of trans arency in t ese transactions ay lead to t e serving of ads outside of t e audience target

of t e edia lan

30

Hijacked device user s device ro ser, one, a or ot er syste is odi ed to re uest M or a e ad re uests t at are not under t e control of a user and ade it out t e user s consent

Crawler masquerading as a legitimate user

ro ser, server or a a es age load re uests auto atically it out declaring itself as a ro ot Instead, t e ro ot declares itself as a valid regular ro ser or a user agent ere t ere is no real u an user In addition, ro ots can e rogra ed to i ic u an e avior to develo a ig ly desira le ro le t at ill incentivi e a targeted ad ca aign to serve an ad to t at ro ot

raf c originates fro servers in data centers, rat er t an residential or cor orate net or s, ere t e ad is not rendered in a user s device t ere is no real u an user

ad injection

device ere a user is resent and additional M or ad re uests are ade y t e ad are inde endently of t e content eing re uested y t e user d are ay also contain a function to in ect an ad fro t e soft are onto a e age as t e user ro ses, rat er t an t e ad eing delivered y t e u lis er of t e e age

raf c is routed t roug an inter ediary ro y device or net or ere t e ad is rendered in a user s device ere t ere is a real u an user

Non-browser user-agent header

device declares a user agent eader not nor ally associated it u an activity

Browser pre-rendering

device a es M or ad re uests a ead of s eci c u an initiated navigation to t e re uested resources, for e a le, t e rocess y ic t e afari ro ser creates t u nails for its ne ta age

Tag hijacking

Ad tag hijacking d tags are ta en fro a u lis er s site and onto anot er site it out t e u lis er s no ledge

Creative hijacking reative tags are ta en fro a legiti ately served ad so t ey can e rendered at a later ti e, it out t e consent of t e advertiser or t e contracted service rovider

Site/ad/audience attributes

Auto-refresh age or ad unit ay e ena led to re uest a ne rendered asset ore t an once and at eriodic intervals

Incentivized browsing u an user ay e offered ay ent or ene ts to vie or interact it ads

Hidden ads ds are laced in suc a anner t at t ey cannot ever e vie a le e g , stac ed ads, ads cli ed y ifra es, ero o acity ads

Misappropriated content ites ay contain co yrig ted content or lin s to co yrig ted content it out t e rig ts to oneti e suc content

Illegitimate sites e sites are uilt ri arily to collect advertising revenue and offer little to no content to u an audiences ese sites are often art of a net or ere eac individual site collects a

s all a ount of revenue to avoid sus icion

Falsely represented/

laundered impressions

M or ad re uests atte t to re resent anot er site or device or ot er attri ute, ot er t an t e actual lace ent dditionally, a u lis er s content anage ent syste M ay e co ro ised en a fa e age is created using a legiti ate u lis er s do ain and ar u code

Ad creative/other:

client is rovided it coo ies fro ot er do ains as if t e user ad visited t ose

Types of IVTe follo ing are additional e a les of t e s eci c sources of I resent it in t e digital su ly c ain

Invalid traf c

31

e addendu also calls for organi ations to aintain a usiness artner uali cation rocess e goal is to deter ine t at u strea and do nstrea artners are legiti ate entities, and t at t ey t e selves ave si ilar

rocesses to vet artners, and identify and re ove invalid traf c fro t e transactions

In addition to industry standards serving as guidelines to artici ants it in t e digital su ly c ain to detect and

address I , all su ly c ain artici ants u lis ers, ad e c anges, agencies ave a s ared res onsi ility in t is effort gencies s ould e a are of t e legiti acy of t e

u lis ers to o ads are eing served and scale re aration en i ressions are identi ed as t e result of I

u lis ers s ould e a are of t e ris s osed to t e value of t eir inventory and avoid ractices t at ay incent I d e c anges s ould or to detect and avoid, including I

it in sales transactions

Third-party vendors

o su ort trans arency and accounta ility, and t e need of uy side organi ations for additional intelligence regarding

t e activities of artici ants it in t e digital su ly c ain, t ird arty vendors ave develo ed and ar eted veri cation and fraud detection tec nologies ese tec nologies can validate ad delivery according to edia

lan, et er t e ad content as ulti ately vie a le it in a user s ro ser, and in certain cases su ort t e detection of fraudulent activity roug t e availa ility of t is data,

artici ants it in t e digital su ly c ain gain additional tools and resources to olice t e ecosyste and s otlig t t e resence of I eyond at li ited ca a ilities ay

ave een availa le to services ad ering to industrystandard ltration et odologies

eri cation and fraud services in articular allo advertisers to easure t e ris relating to t e lace ent of inventory to ic ads are ulti ately delivered uc services identify t e nature of t e environ ents in ic t e advertise ents are served sing t e infor ation, veri cation services can ty ically con r et er t e ad as delivered on lan i e , delivered to t e sites, devices, geogra ies or target

audience , et er t e environ ent of t e u lis er site ay i act t e ro inence of t e advertising i e , ad clutter,

resence of co etitor ads or et er t e content of t e

Current response to address IVTIn res onse to I , industry artici ants ave istorically focused on standardi ation and develo ing tec nology t at can el identify I it in t e ecosyste

Industry standards

it in t e current digital su ly c ain ecosyste , co only acce ted ractices to address t e resence of I include ad erence to ltration guidelines esta lis ed y t e industry

e M is e ected to for ally release t e Invalid Detection and Filtration Guidelines Addendum in cto er 2015 e addendu esta lis es ini u re uire ents to identify and re ove invalid traf c fro advertising transactions

eci cally, t e addendu esta lis es t o categories of invalid traf c e rst, “ eneral Invalid raf c, consists of traf c identi ed t roug routine eans of ltration e ecuted t roug a lication of lists or it ot er standardi ed

ara eter c ec s ey e a les include no n data center traf c, ots and s iders or ot er cra lers as uerading as legiti ate users activity ased ltration using ca aign or a lication data and transaction ara eters fro ca aign or a lication data non ro ser user agent eaders or ot er for s of un no n ro sers and re fetc or ro ser rerendered traf c

e second category, “ o isticated Invalid raf c, consists of ore dif cult to detect situations t at re uire advanced analytics, ulti oint corro oration coordination or signi cant

u an intervention, etc , to analy e and identify ey e a les include i ac ed devices i ac ed sessions it in

i ac ed devices i ac ed ad tags i ac ed creative iddenstac ed covered or ot er ise intentionally o fuscated ad serving invalid ro y traf c ad are al are incentivi ed

ani ulation of easure ents isa ro riated content falsi ed vie a le i ression decisions falsely re resented sites or i ressions coo ie stuf ng, recycling or arvesting

ani ulation or falsi cation of location data or related attri utes and differentiating u an and I traf c en originating fro t e sa e or si ilar source in certain closely inter ingled circu stances

32

Evolving efforts to further reduce the impacts of IVT

s standardi ation and I detection tec nology continue to evolve, t e s ift in focus to ini i e t e i act of I as

een to ard fostering industry ide artici ation in ractices t at use trans arency and accounta ility to esta lis an increased level of trust it in t e uying and selling of online advertising ese initiatives vary fro acro focused efforts, suc as setting standards related to t e et ods in ic uyers and sellers transact usiness, to icrofocused efforts, suc as individual usiness ractices it in organi ations to foster an environ ent focused on identifying and addressing I

Trustworthy Accountability Group

roug a cross industry oint initiative, t e I , t e 4 s and for ed to co at al are, g t internet iracy,

eli inate fraudulent traf c and ro ote trans arency

s it relates s eci cally to I and ad fraud, as develo ed an nti raud or ing rou it a ission to i rove trust, trans arency and accounta ility y develo ing tools, standards and tec nologies to eli inate fraud

is or ing to co at t e negative i act of fraudulent traf c in several ays

• recently announced lans to create, aintain and s are t e raud reat ist e list is actually a data ase of do ains t at ave een identi ed as no n sources of fraudulent ot traf c for digital ads e initial

ilot ase of t e rogra is already under ay, it several a or advertising latfor s artici ating roader de loy ent of t e nal rogra is e ected in t e t ird

uarter of 2015 as oined it several leading ad latfor s in an effort to loc illegiti ate and non u an

ad traf c originating fro data centers In launc ing t e ilot rogra , ill initially use a large ad server s

data ase of data center I addresses and en ance it ased u on roader industry intelligence

u lis er age ay da age t e re utation of t e advertiser i e , rand safety In certain cases, veri cation services

allo for t e loc ing of ad content, in addition to re orting situations in ic ad serving is atte ted to inventory t at is less desira le to t e advertiser

raud services, in contrast, lace additional focus on t e ins ection and revie of data t roug ro rietary eans to unveil fraudulent traf c as uerading as legiti ate traf c

sing veri cation and fraud detection service roviders allo s advertisers t e additional o ortunity to identify artici ants in fraudulent I ractices and see a e goods for I t roug t e re ediation rocess e ecuted y advertisers or veri cation and fraud services on e alf of t e advertiser

it u lis ers or iddle are roviders

i ilar to veri cation services, vie a ility services rovide additional data to advertisers regarding t e uality of t e ad delivery in ter s of et er t e user re uesting t e ad content ad an o ortunity to see t e content ased on t e ad lace ent it in t e ro ser s vie ort s advertisers s ift to ard using vie a le i ressions as t e currency

etric during t e ad uy, t e a ility to oneti e I is furt er ini i ed since ad content is not ty ically rendered vie a le it in a ro ser

“Invalid traf c is osing a serious t reat to

ar et lace con dence in a ealt y and vi rant digital advertising ecosyste George Ivie, “Media ating ouncil Issues Invalid raf c etection and iltration uidelines for u lic o ent eriod, PR Newswire, 1 uly 2015

Invalid traf c

33

Cost impact of IVT

o esti ate t e cost fro fraudulent traf c, e used ad revenue data u lis ed it in t e I Internet dvertising

evenue re ort 25 is el s us to de ne t e si e of ad revenue generated across dis lay, video and searc ad for ats delivered to des to e and o ile latfor s o triangulate t e i act of I on t e digital ad ecosyste , e o tained ulti di ensional uantitative data re resentative of i ressions transacted across eac vendor s latfor t oroug out 2015 fro re resentative t ird arty

easure ent analytics organi ations and ad servinge c ange vendors fter evaluating t e data rovided and ad usting for ias associated it t e digital su ly c ain universe re resented y eac vendor data rovider, e leveraged u lic researc u lis ed y various I , fraud and analytics vendors as art of our study of studies researc to develo a olistic esti ation of I

• ill develo and en ance anti fraud standards and rotocols for all ty es of entities in t e su ly c ain

• ill develo tools ot to identify fraudulent activity, and to etter identify re uta le co anies in t e su ly c ain t at are not associated it fraudulent conduct 24

Media Rating Council initiatives

e M as also coordinated it industry artici ants and trade organi ations to oderni e and strengt en e isting industry standards to lter and disclose I for easure ent

ur oses e ain tenets included it in t is effort focus not only on t e oderni ation of e isting guidelines to re ect t e current online environ ent, ut also on t e standards to re uire rocesses to assess ne I ris s as t ey develo enets ill also consider t e rocesses needed it in

organi ations to understand and address t e ris s t at ot er artici ants it in t e digital su ly c ain ay introduce into

t e ad transaction astly, t e M s goals as t ey relate to t is effort focus on reducing discre ancies t at result fro using yriad ltration et odologies across organi ations and re uiring res onsi le disclosure of t e ltration

et odologies an organi ation uses

ong tail u lis er sites ad a ig er concentration of I , in co arison to re iu and ig ly traf c ed

u lis er sites

24 , rust ort y ccounta ility rou , tt s tagtoday net traf c , accessed ove er 2015 25 IAB internet advertising revenue report: 2014 full year results — April 2015, I , tt ia co content u loads 2015 05 I Internet dvertising evenue 2014 df, accessed ove er 2015

34

ur analysis rovided t e follo ing esti ated ercentage invalid traf c rate a lied to t e 2014 revenue and cost i act of I across ricing odels and ad for ats delivered to des to and o ile latfor s

Desktop Mobile Total

Percentage Revenue Percentage Revenue Percentage Revenue

M ased dis lay 6 6 500,000,000 350,000,000 6 50,000,000

M ased video 11 1 310,000,000 12 1 160,000,000 11 4 4 0,000,000

erfor ance ased 10 0 2,340,000,000 10 0 40,000,000 10 0 3,0 0,000,000

Total estimated IVT cost 9.3% $3,150,000,000 10.2% $1,250,000,000 9.6% $4,400,000,000

Invalid traf c

35

26 The Cost of Malware Containment, one on Institute, s onsored y a alla, anuary 2015

it in t e roduction i ression data analy ed across our vendor artici ants, our researc identi ed trends regarding t e concentration of I consistent it any recent industry studies ese trends include

• e inventory re resented it in our analyses ri arily consisted of dis lay content 5 of i ressions analy ed o ever, e noted t at video ad i ressions contained ig er concentrations of I in co arison to dis lay i ressions 11 4 in video versus 6 in dis lay

• I continues to increase in revalence it in t e o ile ad ecosyste e cost i act of I in o ile ay continue to rise, alt oug t e levels of I it in o ile advertising inventory ay decline slig tly as t e levels of

u an traf c rise

• e inventory re resented it in our analyses ri arily consisted of ad net or and ad e c ange traded inventory

5 of i ressions analy ed en assessed at a do ain or su do ain level, rates of detected I tended to cluster at eit er t e lo or ig end of t e continuu

at is, t ere ere a nu er of do ains and su do ains noted it relatively lo rates of I , as ell as a nu er of do ains and su do ains noted it relatively ig rates of I Interestingly, t ere ere relatively fe do ains and su do ains noted it oderate rates of detected I

• it in our analyses, e noted t at I s ere distri uted si ilarly across t e ad net or and ad e c ange traded inventory in co arison to direct u lis er uys s a reference oint, o ever, e sa only a slig t increase in t e revalence of I as a ercentage of ad net or and e c ange traded inventory, relative to direct u lis er uys

• ong tail u lis er sites ad a ig er concentration of I greater t an 4 1 , in co arison to re iu and ig ly

traf c ed u lis er sites

e eig ted and ro ected our voice of t e industry data to calculate t e internal cost to g t i act for organi ations

it in t e digital advertising ecosyste and esti ated a rounded cost of 16 ,000,000 is cost as ased on an average of 1 ours er ee s ent identifying, rocessing and analy ing invalid traf c o ro ect to a full year, e used a fully loaded age ourly rate of 62 for su ervisory level I security ractitioners in ased organi ations derived fro one on Institute s 2014 I security s ending trac ing study 26 ere are also several t ird arty vendors t at are availa le for ire to assist in identifying and eli inating invalid traf c for advertisers as una le to esti ate a cost for t is initial study ut ill atte t to esti ate a cost in any future studies

EY summary: roug our study, e identi ed t e esti ated cost i act of I on t e digital advertising su ly c ain to

e 4,600,000,000 is includes t e costs fro fraudulent traf c 4,400,000,000 and costs to g t associated it identifying and addressing I 16 ,000,000

e a ority, if not all, artici ants in t e ecosyste , are a are t at invalid traf c e ists ese artici ants a e decisions ile considering t ese issues If invalid traf c

ere to e signi cantly reduced or eli inated, t e su ly and de and relations i ould c ange ere ould e ot a reduction of availa le inventory, and over ti e as con dence on t e uy side i roved, an increase in de and for t e availa le inventory ile eli inating invalid traf c ould not li ely roduce i ediate aterial increases in Ms, t e c ange in t e su ly and de and relations i ould increase

Ms over ti e

36

Attitudes from publishers and ad tech organizations

ased on our voice of t e industry study, t e co ined u lis er and ad tec res onses indicated strong su ort for

co ating t e issue

• of res ondents indicated t at invalid traf c s ould e detected and e cluded fro re orted illed etrics

• indicated t e tone fro t e to of t eir organi ation related to invalid traf c as strong or very strong

• 50 indicated t at t eir organi ation s s e ticis related to co ating invalid traf c as ig or very ig

urt er ore, t e study results for t e ad tec res ondents indicated t at t eir attitudes and initiatives ere oving in t e rig t direction to co at t e issue

• 2 of res ondents indicated t at t ey re uire u strea artners to disclose all t ird arty sources

• 6 indicated t at t ey s ent less t an 50 ours, 11 s ent 50 to 100 ours and 21 s ent 100 to 500

ours identifying, rocessing and analy ing fraudulent invalid traf c

• 66 indicated t at t eir organi ation considered invalid traf c en erfor ing organi ational ris assess ents

• 5 indicated t at t ey al ays or often include contractual o ligations re uiring su ly c ain artners to aintain

rocesses to identify and address invalid traf c

• 2 indicated so isticated a roac es, 4 indicated general detection and 65 indicated ad oc analytic a roac es in res onse to itigate t e i acts of invalid traf c

Invalid traf c

3

For more information, contact:

Executive Director Ernst & Young LLP Media & Entertainment Advisory Services +1 13 425 3650 ac son a ley ey co

Partner Ernst & Young LLP Media & Entertainment Advisory Services +1 13 225 4 54 nic terli i ey co

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