charliekraus

Ad blocking – A view from several angles

Blog Post created by charliekraus on Nov 20, 2015

Anyone using the Internet for search, or doing pretty much anything else, knows too well the prevalence of advertising on sites. You know Google doesn’t earn their $Billions selling search results, right? The reason you see ads on websites you visit is simple - the owners of these sites sell ad space because it’s a primary source of revenue for them. Sometimes the ads you see relate to what the site is all about, or, more likely, determined by what you have been browsing for recently. Maybe you are thinking of joining the 200M people already using ad blocker software according to a report by PageFair. Let’s explore some of the behaviors driven by the paid advertising revenue model from different points of view.

 

The catalyst for blogging about this topic was my recent experience assisting my daughter’s research for a small four wheel drive SUV. I visited the web sites of a few auto manufacturers to build a short list of suitable vehicles for her to check out. A few days later while searching unrelated topics, I noticed ads appearing in my search results from the auto companies, and their local dealers, which included links to their inventory of the specific models I was researching. This didn’t bother me at all, in fact I found it rather useful, and I took advantage of how easy this made locating the nearest dealer with inventory of the model of interest.

 

Not every experience with online advertising is viewed positively. The main reasons cited for using ad blockers is concern over misuse of private information, the annoyance factor with ad pop-ups that include audio and video, and the increase in the number of ads1. As the use of ad blocking increases, balancing the interests of three large constituencies – content publishers, advertisers, and consumers - is becoming difficult. The below data shows how ad blocking is affecting different industries:

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Ad blocking behavior is a function of audience demographics, with websites aimed at young and tech savvy users significantly more affected. Are gaming companies the canary in the mine, showing what may spread to other industries? Today, the majority of consumers still accept the tradeoff that comes with free TV, movie, news, or services content, but want to avoid intrusive and irrelevant advertising.

 

Is there an alternative to ad supported content access? An obvious solution is to have users pay directly for content, but this hasn’t yet proven to be a viable model. The New York Times announced that they have about 60M people who read the Times online, and 1M digital subscribers – that’s less than 2% paying2. Another possible solution is native advertising, which blends in with a site’s content, and may be more relevant to the reader.

 

In related industry news, there have been a couple of interesting developments at Apple recently. One is a new iPhone app called Apple News, which offers content creators an option for native advertising. The other is that Apple is now making it possible for ad blockers to work with Safari, the iPhone’s browser. Why? Could be that Apple is going after competitor Google, whose mobile ad revenue is increasing. Allow ad blocking – diminish revenue. Also interesting is that Google Chrome makes it easy to install ad blocking software, and ironically, is today the main driver of ad block growth.

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Is there a possible good outcome from all of this? If the advertising industry evolves toward creation of relevant native ads, or well done informative and entertaining ads inserted in moderation, it may strike a balance between reaching their audience and slowing the growth of ad blocking.

1 http://downloads.pagefair.com/reports/2015_report-the_cost_of_ad_blocking.pdf

2 Time Magazine Oct 19, 2015 article The View

Outcomes