You won't find brands like Gillette, General Electric or Crayola advertising on the Pirate Bay, the site where visitors can access oceans of movies and TV shows for free, illegal downloads. But you'll see their ads on the torrent platforms that people use to do the actual downloading.
The blind eye turned by some major marketers is causing growing tension with media companies, ad sellers and others in the digital ecosystem.
"It has become easier and easier for consumers to get their hands on newer, quicker and faster ways to get ad-free content that they don't have to pay for," said Sherrill Mane, senior VP-research, analytics and measurement at the Interactive Advertising Bureau. "And those who create the tools that enable this activity should not be supported through any legitimate revenue streams. Marketers can't say, 'But I want my ad there.' Well guess what? It shouldn't be there."
On Tuesday, more than 30 marketers and ad agencies took a pledge to take "reasonable steps" to reduce the risk of placing ads on sites with pirated content as well as platforms people can use to download that content. Participants in the effort, which was spearheaded by the online ad industry's Trustworthy Accountability Group, includes Unilever, Walt Disney Co., Johnson & Johnson, Walmart, Allstate, MillerCoors, Comcast, NBC Universal, Viacom, GroupM, Horizon Media, Starcom Mediavest Group and ZenithOptimedia Group.
The most popular torrent client is BitTorrent, which claims more than 170 million active users. It serves 3.4 billion ads per month, according to BuySellAds, a company that works with BitTorrent.
"BitTorrent has one of the largest millennial audiences, a notoriously hard to reach demographic and our audience has proven to spend more than the average internet user," said Christian Averill, VP of communications and brand at BitTorrent. "The millennial generation as a whole is one that is resistant to corporate marketing and not tuned-in to traditional media channels."
Mr. Averill said BitTorrent is not an illegal entity. "BitTorrent is of course not a piracy website or a source of infringing content," he said. "In terms of content, we've worked with every major studio and label at one level or another at this stage and will continue to work with them and the brands interested in reaching that audience."
Performers and publishers currently offering authorized downloads as BitTorrent Bundles include British Broadcasting Corp., The Onion, The Fader, Foster the People, David Cross, Diplo, Thom Yorke and Moby.
In August of last year, General Electric ran a campaign that was created in partnership with the Barbarian Group. "They were wonderful to work with and they had a crazy idea: Can an ad in the digital age actually be a work of art," Mr. Averill said. "They enlisted electronic dance music artist Matthew Dear to create music out of the sounds of General Electric's industrial machines and released that as a BitTorrent Bundle, which was downloaded 1.7 million times."
A spokeswoman for General Electric was unable to provide comment by deadline. Representatives for Crayola and Gillette did not respond to requests for comment.
"We have a very positive outlook for the coming year," Mr. Averill added. "We have a full suite of advertising opportunities across desktop and mobile. Video ads in particular have grown significantly."
Most of the people who download torrents are tech-savvy, with ad blockers and anti-tracking measures installed on their web browsers, said James Avery, CEO of ad-tech company Adzerk, which helps BitTorrent display ads during downloads. The audience is also known for avoiding mainstream marketing channels and media, at least as it is traditionally consumed, he said.
He added that business is booming.
"BitTorrent has perpetual growing traffic and people don't understand how much traffic they actually have," Mr. Avery said. "Revenue has been growing for them and it has been growing for us. It has been a fruitful relationship."
Some of BitTorrent's biggest customers include video game publishers, even though their games are also regularly pirated through torrent platforms. "Gamers are the toughest customers of all and their bullshit radars are extremely sensitive," Mr. Averill said.
Popular video game news site IGN.com knows all too well how difficult it can be to reach hardcore gamers. Todd Northcutt, VP of product at IGN, said 25% of IGN's audience were running ad blockers in 2014. Today, that number has ballooned to 40%. "They are super tech savvy and they know what they want and what they don't want," Mr. Northcutt said.
Some publishers may calculate that advertising on torrent clients might be a necessary evil. Electronic Arts, for one, used its torrent client to promote the "Army of Two" video game. A spokesman for Electronic Arts only said the company has not advertised with BitTorrent in the "recent past."
Fusion, the TV network and digital property co-owned by Walt Disney/ABC and Univision, is considering advertising through a torrent client to promote "Hell's Satans," a new show aimed at millennials, according to Boris Gartner, Fusion's chief strategy officer. "You have to fish where the fish are," Mr. Gartner said. "There is a massive audience there and engaging content in front of those people makes sense."
Asked whether a media company should refrain from advertising on platforms where some people pirate media, Mr. Gartner suggested that might not be realistic.
"We haven't done it yet," Mr. Gartner added. "But we would definitely do it and the ROI we would look at would just be eyeballs. If you are a complete purist and you think you want to have all of your content consumed only on your platforms, then sure, that is ideal. But the reality is the bulk of the consumption isn't going to happen on one platform."
Last week, the Interactive Advertising Bureau released its first report outlining the various costs associated with challenges to the ecosystem including ad fraud, ad blocking and piracy. It said pirated content takes an estimated $2 billion from the movie, music and TV industry, and estimated that eliminating piracy would generate an additional $456 million in annual advertising around legitimate content.
Ms. Mane, the IAB executive, told Ad Age that marketers need to stop giving torrent clients ad dollars.
"If there are entities that provide technologies that enable consumers to download infringed content freely, and those entities are also collecting advertising revenue, then the advertising money has to stop flowing to those companies," Ms. Mane said.