META Meta Platforms Inc

By Jack Nicas 

" Yoko Ono: 'I Had An Affair With Hillary Clinton In The '70s,'" read the headline in World News Daily Report, a website that peddles made-up stories.

Next to the story? An ad for the 2017 Ram 1500 truck, made by Fiat Chrysler Automobiles NV.

Big brands, often inadvertently, are helping fund the websites at the center of a growing controversy over misinformation on the internet.

Ads from companies such as Choice Hotels, SoundCloud and Bose Corp. appear on sites with false or misleading news. Those companies are among thousands of brands that could appear on such sites based on a user's browsing history or demographics.

Industry executives say some fake-news sites can generate tens of thousands of dollars in monthly revenue from online ads.

Well-known brands' appearance on fake-news sites reflects the complexity of online advertising, where computers can place a different ad each time a user clicks on a webpage. Multiple middlemen are often involved, leaving both publishers and advertisers uncertain about which ads will appear where.

"We don't even get passed the name of the publisher" where an ad will appear, said Adam Berke, president of AdRoll Inc., which helps advertisers like LendingClub Corp. and Air New Zealand place ads online. He said AdRoll finds ad space on websites through several partners and doesn't have the resources to vet websites.

One of AdRoll's partners is Alphabet Inc.'s Google, which along with Facebook Inc. announced steps last month to prevent fake-news sites from generating revenue through their ad-selling services.

Google, the biggest player in digital advertising, said it would stop placing ads on sites with "deceptive or misrepresentative" content. But so far, enforcement appears spotty: Many Google-placed ads, including those for big brands, continue to appear on the sites, even including ads for Google's new Pixel smartphones.

In a statement, Google said, "We're in the process of implementing the new policy and these early stages have demanded increased human review."

AppNexus Inc., which runs an online-ad exchange, said it also tries to not place ads on fake-news sites. Last month, AppNexus pulled its ads from the right-wing news site Breitbart because of what it said was hate speech on the site. Some big brands, including food company Kellog Co. and insurer Allstate Corp., have blocked their ads from appearing on Breitbart. Breitbart didn't respond to a request for comment.

In a blog post last month, Dan Greenberg, chief executive of ad-software firm Sharethrough Inc., urged ad-tech firms to stop placing ads on fake-news sites.

"Maybe it's true they didn't know. Maybe it's true they didn't care," Mr. Greenberg said in an interview. "But it's not fair going forward for that ad company to say they still don't know."

The business model for ad-tech firms is complicated. Depending on the agreement, they charge advertisers for clicks or views, and then share that revenue with the websites where their ads appear and sometimes other middlemen.

Among the big brands whose ads have appeared on sites featuring fake news, Fiat Chrysler said it uses software that automatically blocks its ads from appearing on websites with hate speech or adult content. But the company said there is no "'truth filter' technology" -- so fake-news websites have to be added one by one to a blacklist.

SoundCloud said it hasn't tried to block its ads from "fake or parody news sites" but is now exploring whether it should. Choice Hotels and Bose didn't respond to requests for comment.

One executive at a large financial-services firm, who declined to be named, said the company was frustrated to continually find its ads appearing in dark corners of the internet, including one near a story on a website called The US Patriot that falsely claims first lady Michelle Obama didn't give birth to her children.

Attempts to reach The US Patriot and World News Daily Report for comment were unsuccessful.

The executive said three people manually review a list of thousands of sites where the company's ads appeared to determine which are unsuitable. Each month, the company asks Google and other ad partners to ban dozens of questionable sites, the executive said, but there are many the team doesn't spot.

Several companies said it is difficult to label a site as a purveyor of fake news. Even sites that publish almost exclusively false content, may also include opinion pieces and generally true stories, albeit with misleading or false headlines.

Augustine Fou, an independent ad-fraud researcher, said the recent changes are unlikely to force fake-news sites out of business. Because ad-tech firms make money when ads are shown, they have little incentive to block any site that shows their ads.

"If you think about their motives, I don't think anyone is in a hurry," he said.

Another source of revenue for fake-news sites: content-recommendation widgets. These often include photos of scantily clad women or grotesque images, with headlines like "15 Models Wearing Nothing But Milk! #13 Is Awesome" and "The Shocking Truth About Aging Skin."

These widgets, provided by companies such as Taboola, Content.ad Inc. and Revcontent, appear all over the web -- including on many legitimate news outlets -- and don't shy away from fake-news sites.

Taboola didn't respond to requests for comment.

Mike Rosenberg, Content.ad's chief revenue officer, said employees approve each website that wants to run its widgets, but "we certainly can't verify the truthfulness of every article."

Revcontent CEO John Lemp said he is skeptical of the push to ban ads from certain sites, calling it censorship. "Sensational headlines have been part of journalism for years," he said.

Write to Jack Nicas at jack.nicas@wsj.com

(END) Dow Jones Newswires

December 08, 2016 05:44 ET (10:44 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.