InMind study exposes global brands advertising fuelling online piracy

A recent study by market research company InMind - commissioned by leading media groups in the Ukraine - has exposed online advertising malpractices in the form of the systematic placement of online adverts for global brands on sites publishing pirated content. Providing essential revenue for websites of pirated content, the commonplace practice is fueling the illegal industry and worsening the situation in Ukraine.

Citing a recent research report by InMind, leading Ukrainian media groups have identified a number of the world’s largest brands as being some of the biggest advertisers on Ukrainian websites publishing pirated content, generating huge amounts of revenue for the sites. With advertising inventory growing rapidly - the market being worth an estimated 100 million UAH (£ 7 632 190), an annual increase of 90% in 2013 by the Ukrainian Advertising Coalition, online advertising practices are consequently enabling pirate websites to grow at a cost of Ukrainian anti-piracy efforts.

“Malpractices within global online advertising are a huge problem for the anti- piracy movement in Ukraine. What this shocking report demonstrates is a disconnection between official statements from both Western governments and corporate organisations, and the reality of industry activities that is facilitating a worsening of the piracy situation,” explained Pavel (Paul) Mykolyuk - Director of the law firm Vindex, industry expert and key member of the recently formed Clear Sky content partnership.

Studying advertisements appearing on the most visited pirate websites in Ukraine - notably Ex.ua and Fs.ua - the InMind report reveals global brands Nokia, Canon and Nikon as taking the top spots in terms of volume of adverts appearing on the sites while consumer brands InBev, RB and Unilever are also named in the study.

“The continuation of global brands to provide funds for publishers of pirated content in Ukraine - whether unwittingly or otherwise - deals a devastating blow to the anti piracy movement and this is an issue that simply must be addressed throughout advertising industry networks and across the content supply chain if online piracy in Ukraine is to be eradicated,” added Mykolyuk.

According to statistics published by research agency Gemius, online advertising in the Ukraine increased by a record breaking 59%, a growth that resulted in the industry being valued at around 42 million euros in 2012. With a surge in the number of internet users within Central and Eastern Europe fueling this growth - specifically with the Ukraine reaching 15 million during the last quarter of 2012 according to market research expert GfK Ukraine - the opportunities for online advertising within the Ukraine continue to grow unregulated in terms of the placement of online adverts.

Having openly committed to pursuing an integrated strategy that sees the partnership support proactive anti piracy legislation, demand media self regulation and encourage a change in online consumer behaviour in Ukraine, media groups have deemed this latest report from InMind a shocking wake up call for the international digital community as a whole, with the partnership calling for international collaboration and transparency as a matter of urgency to address these key issues.

Charging this lack of accountability among brands and advertising networks as playing a key role in creating further opportunities for publishers of pirated content, Mykolyuk explained:

“While domestic efforts to stifle the problem of online piracy are being ramped up in terms of legislation and self regulation within the media industry, websites publishing pirated content are being funded by global brands by way of lucrative online advertising revenue.”

Dmitry Lisitski, CEO of internet holding company 'United Online Ventures' added:

"Advertisers are mostly interested in gaining maximum coverage for minimum spend. To minimise their expenses, advertising agencies include in their media plans, the many popular pirate websites that don't invest in the content they publish. Advertising legislation does not prohibit placing ads on pirate websites, similarly the legal system does not yet recognise the existence of pirate sites. As such, officially the advertising agency placing adverts does not violate any rules. As a result, we can observe a huge volume of highly regarded brands advertising with pirates."

This recent study comes to light at the same time as claims by the National Office for the Protection of Intellectual Property that show unprecedented measures against copyright infringement and piracy being taken by the government in Ukraine. Pledging 100 million UAH - approximately £7.6 million - of budget to purchase legal computer software for the public sector for the first time in 10 years, the anti-piracy movement is seen to be gaining support from government and private sector businesses alike.

“Here in Ukraine, we understand the depth of the problem of piracy within our society at all levels. Taking a strong stance against piracy and copyright infringement, we are tackling each issue with a combination of initiatives designed to eradicate this toxic problem from our country for good. However having studied this recent report, we are concerned that our domestic efforts are being thwarted by a Western attitude that deems it acceptable to ‘look the other way’ while contributing to the revenue of this illegal industry through online advertising,” concluded Mykolyuk.

ENDS

Notes to Editors

At the time of publication of this news release, the Ministry for Interior in Ukraine has announced its confiscation of servers from Fs.to, formerly Fs.ua on October 15, 2013.

"Vindex" is a legal firm specializing in IP protection, providing legal assistance to copyright holders. In July 15 2009, Director of Vindex Pavel Mykolyuk signed as Outside Counsel of Adobe Systems Inc. for Ukraine and more recently - on June 3 2010 - Pavel Mykolyuk took up the role as Outside Counsel of Graphisoft in Ukraine. Mykolyuk is widely considered an expert in the field

Dmitri Lisitski is CEO of United Online Ventures, the largest internet holding group in Ukraine. Established in February 2012, United Online Ventures owns the largest Internet portals in Ukraine with the biggest share of Internet audience - bigmir.net, tochka.net, and I.UA - taking up 6th, 7th and 3rd places respectively among Internet consumer ratings according to Gemius. In addition, the holding group includes online ad agency Digi Media and Internet agency MI6.