My last blog introduced you to ad blocking, which has been developing under the radar for the last few years, having reached a critical mass this year. According to a Reuters Institute Digital News Report, 39 per cent of the internet users in the UK and 47 per cent in the US are now using this software.
Battle lines have been drawn up between mobile operators and Apple on one side and publishers and media owners on the other. The last blog covered the major ad blocker, Ad Block Plus, rather generously defining what an ‘acceptable ad’ is, publishers seriously looking at their options and responsibilities, and broadcasters extoling the virtues of TV advertising.
Ad blockers’ business model
So what is the ad blockers’ business model? Cynics might say possibly extortion short term and selling out to global media owners in the long term. Of course you could argue that ad blockers are in fact funded by advertising, via the whitelisted publishers.
Do they really have users’ interests at heart and are they worried about the long-term effect on the ecosystem? Or are they more concerned about making a fast buck?
And what happens when all ads are blocked? Without advertisers who will support the internet and pay for content?
The battle lines are being drawn between mobile operators and digital media companies. Operators feel upset at having invested in high-speed network infrastructure while media owners such as Google reap the rewards. Google claims that people pay for mobile internet packages because of the webmail, apps and video streaming it offers, often financed via ads.
And the advertisers’ perspective? A major advertiser told me recently: "What concerns me is ad blocking companies charging advertisers to whitelist their ads to get through the block. So it’s not really about 'doing the right thing' for the end-user, it’s just another intermediary in the whole messy programmatic food chain taking a cut of our media budget."
Will advertisers end up with a technology tax to be added to the list online brand safety tools encompassing Content Verification, YouTube, ad fraud, viewability etc?
What happens when the ad blocking companies have been successful and all the online ads are engaging? Will the ad blocking companies then shut up shop as their work is done? I doubt it.
Options for advertisers
So how are advertisers fighting back?
Industry agreed best practice wording for pop-ups which appear when ads are blocked could read: ‘Sorry, we can’t serve the page you’ve requested as you are using an ad blocker and this page / website is funded by advertising.’ Publishers already gently inform their users that ad blocking threatens their business model.
Broadcasters such as ITV are stopping users playing programmes on their players if they have downloaded ad blocking software.
They could also fight back by raising the bar... As Pete Markey, chief marketing officer at the Post Office said recently, “Growth in digital has allowed us to see the best and worst of online advertising. What will always succeed is great advertising that connects with consumers. Ad blockers force us to raise our game.”
And fight back by abandoning their allegedly intrusive display and video ads for native advertising, which can avoid ad blockers… Although advertisers are using native advertising more extensively, users have negative views on native if they feel that they are being deceived.
Advertisers are of course working on software which gets around the ad blocking software.
Of course another option is to offer users content without ads, using tools such as Google Contributor. Media owners and publishers could offer users an add-free subscription package. The question is how much will users pay to avoid advertising?
The IAB recently calculated that if the internet’s most popular services didn’t carry advertising, users online would need to pay approximately £44 a month to make up the revenue needed to sustain those sites. Something tells me that users wouldn’t be queuing up to pay this sort of money.
Hot off the press – Apple takes ad blocking mainstream
I told you that things were developing quickly! Apple is encroaching on the ad blockers’ business. By the end of this year Apple iPhone owners might be able to block a range of content, including pop ups, cookies and ads, via its Safari mobile web browser on iOS9, simply by downloading a browser extension. Advertising in apps won’t be blocked.
Potentially this has massive implications for Google, as it is estimated that 75 per cent of Google’s mobile ad revenue can be attributed to users of Apple’s devices. Apple is in the envious position of not having to rely on advertising as its primary revenue source. In 2014 iAd only made up 0.3% of Apple’s revenue. Apple has the potential to block ads on Safari en bloc.
So what’s next?
One of the problems here is that everyone agrees that advertising needs to be relevant, but in order to target ads successfully users’ browsing habits need to be tracked, which a number of users object to.
It has been argued that the debate isn’t about the aims of the ad blocking companies, but their tactics.
Worryingly for advertisers and publishers, AdBlock Plus is winning its legal battles against publishers in Germany – setting out a precedent. Whether it wins the war it’s too early to say. In the meantime the whole online advertising model might change beyond recognition.
Will ad blocking force the advertising industry into a rethink? In blocking ads users might end up with fewer, more engaging ads, but at a cost – having to pay for scaled down, inferior content. With other media such as radio and TV there is a value exchange/trade-off between receiving ads and watching programmes, even if not all the programmes are seen or heard. Online users need to understand that they can’t have their cake and eat it.
At least we have some encouraging news for advertisers. What is interesting is that according to the PageFair / Adobe report the majority of ad block users don’t object to advertising in principle. They are simply acting those ad formats that make it harder to access content.
When I spoke to Bob Wootton, ISBA’s director of media and advertising, recently, he summarised the challenges faced by the industry by saying: “Ad blocking is definitely a worry for advertisers. Equally troubling is the way some of the big players are promising a way through ad-blocking to leverage their market share. The industry can be too clumsy and overly intrusive in the way it uses online channels – and as it stands it’s unsustainable.
"Advertisers, publishers and agencies have a responsibility to ensure that mobile ads don’t ruin the user experience and become an annoyance, encouraging users to block all ads, not just the intrusive ones."
Publishers and advertisers working together to make online ads more useful and appealing to users could ultimately make the ad blockers redundant.
David Ellison is marketing services manager at ISBA