Every year we hear about how ad blocking is going to become irrelevant. But the reality is that ad blockers are not a fad, they are here to stay.
It is estimated that ad blockers cost the publishers nearly $22 billion in 2015 alone. Publishers regard this as a significant challenge and concern for the entire industry.
Data doesn’t lie
Data points out to the emerging issue. According to the research conducted by PageFair, ad blocking has become a rising trend with the user base that reached up to 236M users per month from 2011 to 2015:
From the chart, it’s very clear that the interest in Ad blocking is directly related to the increase in number of internet users, especially mobile users (which alone is another upcoming factor in ad blocking). Cost of data in India isn’t low (although Jio is aiming to change that), this explains the popularity of ad blockers in India – 122 million as of march 2016 as this PageFair study.
As stated by SecretMedia, in the chart below we can see the impact from ad blocking is not the same in every niche. The gaming industry is the one with the most headaches while fashion/lifestyle seems to have something good going on for now:
Ad blocking’s impact to programmatic display inventory
The impact of ad blocking depends on the monetisation strategy of the publisher. In the ecosystem, the only form of advertising that cannot be blocked is video/audio content as a part of the stream, or display advertising that is basically a part of the web page’s elements. Also, mobile apps content is less affected by an ad blocker than the one on the browsers.
Television and radio broadcasters that receive revenue from non-video display advertising are affected in pretty much the same way as other websites: ad blockers are very effective at preventing their display advertising. Publishers that monetise content using advertising are also affected by ad blocking unless they found some persuasion tactic to make the consumer disable his ad blocker.
The non-skippable video is the one with the most dislikes by the user, but because it is not skippable, it is generating the most ad revenue from any other advertisement out there. This kind of advertising format is mostly used by television broadcasters and radio broadcasters. One thing is clear here: the consumer prefer skippable pre-roll ads.
Vide advertising suffers the most. According to a recent survey of marketers in the US performed by RBC Capital Markets and Advertising Age, 78% of respondents voiced that ad blocking has a negative consequence on programmatic advertising. Also, 20% of them said that ad blocking has “notable negative” effect on programmatic advertising.
Another research conducted by Cowen and Company found that among US senior ad buyers, ad blocking is ranked just below multi-device measurement as the biggest problem with programmatic.
Programmatic video can avoid ad blocking with the help of technical solutions. Programmatic applied to television and radio, remains in its child phase and is more frequent in the US than in Europe, is perhaps better described as data-driven automation of audience-based advertising transactions. Ad blocking is largely irrelevant in this environment, which depends on the set-top box and other forms of data, and delivery continues to take place using legacy technologies.
There are more than 200 million monthly active users of ad-blocking software globally and 45 million in the US alone. The loss of revenue as a result of ad blocking was $10.7 billion in 2015 and was estimated to reach $20.3 billion in 2016. That’s nearly 100% increase!
Web users have their reasons that make them use ad blocking software. Half of web users surveyed said they will start using ad blocking software when their personal data is being misused to personalise ads and 41% said they will install the software when the ad volume they are currently exposed to increases.
From the graph, it’s evident that ad blocking is already a major threat to businesses.
What’s the solution?
You never know how the consumers will react to the ad. That’s been one of the focal points of the “In Consideration of Ad Blocking” panel discussion, organised by AdExchanger.com. The question is delicate from a publisher’s point of view, simply because ad blocking means that the publisher needs to remove ads that bring him revenue.
Even with a sustainable advertising strategy, the consumer might miss some of the ads that can actually awaken his interest in a brand.
Publishers must know how to convince the consumer to pay in order to allow an ad-free content. The key is to know how to sell the ad blocker, and more importantly, to know how to ask for the payment.
The users should have the option to choose how they want to consume the content, with or without ads. Everyone that installs an ad blocker is not against advertising. That is the main space of opportunity to showcase a different ad experience.
Consumers that use ad blocker have to be approached in a different manner. Regular ad forcing just doesn’t work for this specific audience. Consent of the users should be the key when it comes to ads.
How the publishers are fighting back?
The “pay-me-to-read-ad-free-content” tactic seems to be harsh for consumers, but it is inevitable choice for publishers in order to fight back. Ad blocking has become a major threat, especially to the delicate print industry, which often supports much more costly editorial operations.
Paying for a publication is one way to tackle the problem. In that way, websites can still get some revenue to offset the loss due to ad blocking. Some publications are not yet taking a hard line e.g. Washington Post and WSJ that ask kindly for the users to switch off their ad blockers.
The emerging problem with ad blockers is not just for the US alone. In India too, the publishers have started to block users that have ad blockers turned on.
Le Figaro (French publication) also blocked the content for the users with ad blockers, asking for “allowing advertisement” to continue reading the site. Reportedly, 20 percent agreed to the request.
A WSJ article says that according to a research conducted by the German digital media trade body Bundesverband Digitale Wirtschaft, ads were blocked on 19.1% of desktop webpage views during the third quarter of 2016. That’s down from 21.2% from the third quarter of 2015, which marks the fourth straight quarter of sequential ad-blocking declines.
Because Germany’s tech use is one of the highest, this means that this trend is also applicable to the US, which also means the World. 25% of internet users in Germany used ad blockers in 2015, compared with 15% of users in the U.S.
On the flip side, if everyone uses an Ad blocker in the future, then that is a big problem for content creators. Hiding the content and making consumers pay for it is not an acceptable development process for the future of publishing industry.
Clearly, a win-win-win situation has to be fostered. The user has to win, the advertiser has to win, and of course, the publisher has to win. And if the advertiser cannot engage with the user, then the advertiser won’t win.
With the emerging use of ad blocking on mobile devices, the threat is, that the web, as we have known it for 20 years is going to slump and change the ecosystem entirely. Publishers need to display dependable, easy to use and intuitive advertising while keeping the free websites into the ecosystem.
It all comes down to offering a better experience as a publisher. Publishers need to add value to the system, so that the system becomes less saturated with aggressive ads.
To be fair, the advertising industry hasn’t done much to foster a sustainable ecosystem as yet. The publishers, advertisers and Ad tech should collaborate to develop a mechanism to engage the user. This user engagement in the form of a feedback or a stated preference can help the ad blocking industry reach a point where its not destructive to the ecosystem.