A groundbreaking study published in Nature by researchers at Stanford and Carnegie Mellon exposes a multi-billion dollar flaw in online advertising: Due to programmatic advertising, through which brands are unaware of which websites get their advertising, a majority of prominent brands are inadvertently funding online misinformation. The study, which used NewsGuard data to identify misinformation sites, finds that this creates brand reputation risks about which senior executives at top brands remain largely unaware.Unlike other misinformation research before it, which has focused on the demand for misinformation — how false content spreads, who shares it, and what types of interventions reduce belief in falsehoods — this study provides comprehensive analysis of the supply of misinformation: how falsehoods are monetized, what role advertisers and ad tech companies play in this pipeline, and how consumers react to the phenomenon.The study analyzed data from more than nine million ads from 42,595 unique advertisers placed across 5,400 websites between 2019 and 2021. The researchers found that 74.5% of websites identified as sources of misinformation (using data from NewsGuard) were financially sustained by advertising. This heavy reliance on advertising underlines the importance of scrutinizing where ad dollars are being spent.One of the study’s most striking findings is that major brands from a wide range of industries — spanning household products, technology, finance, health, and education — regularly advertise on websites that spread misinformation. The research reveals that at least 46% of brands in each industry had instances of their ads appearing on misinformation sites, with the proportion as high as 82% of brands for some industries. Across industries, the average rate of brands advertising on misinformation sites was 67%. The study found that among the 100 most active advertisers, 55% had their ads appear on misinformation websites. In many industries, brands placed ads on unreliable sites with the same frequency as on reliable websites.The study found that only 20% of corporate executives such as CEOs and CMOs believed that their own company’s advertisements recently appeared on misinformation websites, indicating what the authors called a “presence of a false uniqueness effect among decision-makers.”“This study provides unprecedented data confirming the shocking likelihood of so many brands—two thirds of advertisers—unintentionally supporting misinformation,” said NewsGuard Co-CEO Steven Brill. “This study for the first time also reports how the programmatic advertising industry is so non-transparent that even senior executives at companies are often unaware that they’re part of the problem, with two thirds of companies funding misinformation but only one fifth of executives thinking their company has the problem.”The analysis also highlights the role digital advertising platforms play in exacerbating this phenomenon. When brands and their agencies used these platforms — Google’s ad platform being the most widely used — they were found to be approximately ten times more likely to appear on misinformation websites. This reliance on automated ad placements with little human oversight explains much of the inadvertent funding of misinformation, despite potential consumer backlash and brand reputation risks.Stanford researcher Wajeeha Ahmad, who led the study, emphasized the implications for consumer trust and brand integrity: “As consumers become more aware of misinformation and its sources, brands associated with such content may suffer a decline in demand for their products and services,” Ahmad said. “We find that consumers switch away from using companies whose ads appear on misinformation outlets. This switching effect persists even when consumers are informed about the role played by digital ad platforms in placing companies’ ads on misinformation websites and the role played by other advertising companies in financing misinformation.”Key Findings:  Dominant Business Model:5% of misinformation websites rely on advertising revenue, compared to a higher prevalence of subscription models among non-misinformation sites.  Widespread Issue: 46% to 82% of the 42,595 companies studied in each industry placed ads on misinformation sites. Among the 100 most active advertisers, 55% had their ads appear on misinformation websites.  Platform Influence: Companies using digital advertising platforms are ten times more likely to have their ads appear on misinformation sites.  Consumer Trust at Risk: Brands associated with misinformation risk losing consumer demand.The study’s findings align with previous research conducted by NewsGuard and Comscore that found brands unintentionally send more than $2.6 billion in advertising revenue to misinformation publishers each year. For example, during the COVID-19 pandemic, more than 4,000 brands unwittingly advertised on websites spreading health misinformation about vaccines and other topics, including hundreds of blue-chip advertisers.Last month, NewsGuard announced a new suite of tools to protect advertisers from the ads appearing on misinformation related to ongoing high-risk news topics such as elections, building on its previously announced News Advertising Safety Tiers that enable brands to advertise safely on news content while avoiding misinformation with continuously updated inclusion and exclusion lists.NewsGuard’s brand-safety segments can be activated directly via integrations into a wide range of supply-side platforms, demand-side platforms, and contextual advertising platforms including The Trade Desk, Peer39, Comscore, Pubmatic, Connatix, OpenX, and others. For more information, click here.(Image by Gerd Altmann from Pixabay)