The Drum's digital editor Ronan Shields asks what's the agenda behind Three's ad blocking experiment.
The news broke earlier today (26 May) that Three is to move ahead with its ad blocking strategy with a day-long trial next month that will see it pair with Shine Technologies to block ads served across its network.
Three claims it is introducing the experiment, as it wants to improve customer privacy, reduce data costs and provide a better experience accessing the web on phones.
To back up this argument, a spokesman at the telco told me that experiments have shown that up to 40 per cent of its subscribers’ data plans are consumed by bandwidth-hungry ads, which are ultimately hampering the user experience.
As well all know, the pro-ad blocking lobby is on the rise in terms of popularity – numbers from eMarketer suggest 27 per cent of UK internet users will use an ad blocker in 2017, with smartphone users accounting for almost a third of this number.
Increasingly, the cause of ad blockers is starting to receive a sympathetic hearing from those within advertising, with the sound of media buyers and brand-side marketers voicing their opinion that we need to ‘put the consumer experience first’ a now commonplace feature for those of you who attend the industry conference circuit.
However, the sources I spoke to about the latest developments with Three’s ad blocking plans are doubtful of the carrier's philanthropic claims over ad blocking, and I think I have to agree. After all of all the UK mobile operators, Three was arguably the most vocal when it comes to the positive (and profitable) role telcos can play in the advertising business.
The fact is, there’s just too much opportunity for the telco to generate a healthy revenue stream here. When we reference a recent report from Adobe and PageFair, which estimates that ad blocking will impact publishers to the tune of $41bn each year, it’s plain to see that mobile operators are just leaving money on the table.
One source I spoke with, Ciaran O’Kane, ExchangeWire CEO, said the move from Three was likely its play to get in on the money that the likes of Facebook and Google are generating from mobile advertising (the former’s most recent earnings call demonstrated that ads served on mobile devices generated 82 per cent of its revenue during the last quarter alone).
Similarly, Nigel Gwilliam, a consultant on emerging media and technologies at the IPA, cast doubt on the consumer-friendly claims of the technology employed by Three on the trial (called Deep Packet Inspection), labelling it as “alarmingly invasive”. In fact, others I spoke to compared Shine Technologies’ positioning similar to the long-deceased Phorm (a.k.a 121Media) which attempted to forge a niche for itself in the online advertising sector by helping them with contextual advertising. Although, in previous conversations I’ve had with Shine’s Roi Carthy he described the company as a ‘nuclear bomb’ at the end of a mobile operator's network.
Others have suggested that Three’s move is just the first step towards implementing an ‘ad serving tax’ where advertisers will have to pay an additional $0.01 fee telcos impose on the average CPM to let ads run via their gateway.
As mobile operators move towards a data-driven future – and I have written long and often about mobile operators’ attempts to monetise their vast swathes of consumer insights – getting in on the advertising business makes sense for them, especially since the premiums they are able to charge for talktime and data plans, etc gradually erode.
This signifies the paradigm in the ad tech sector; thought leaders are dubbing this the ‘programmable age’ (consigning the ‘programmatic era’ to the past), and it will be interesting to see just how prominent a role companies such as Three, etc. will play in it.