Thursday, November 12, 2015

Ad-block surge challenges digital publishers

The number of consumers actively blocking digital advertising has grown dramatically in the last five years, posing a difficult and daunting challenge to publishers across the web. Now, new developments may accelerate the troublesome trend. 

Between 2010 and the first half of this year, the number of global consumers installing ad-blocking technology on their browsers grew by nearly tenfold to 181 million, according to a survey published recently by Page Fair, a company aiming to help publishers and marketers reverse the tide.  

While active ad-blockers represent only about 7% of the world’s wired population, the practice has been adopted widely in the United States and United Kingdom, according to the Reuters Institute of Journalism at Oxford University. 

“Forty-seven percent of our U.S. sample and 39% in the U.K. don’t always see ads because they use ad-blocking software to screen them out,” said the Reuters Institute in its comprehensive annual survey of the media business. 
Elsewhere in the world, Page Fair found ad blocking ranged as high as 37% and 35%, respectively, in Greece and Poland and as low as 13% and 10%, respectively, in Italy and France.

In addition to those who actively block ads, the Reuters Institute found that 30% of respondents in the U.S. and 39% of respondents in the U.K. ignore ads when perusing the web. Further, the institute discovered that 3 in 10 respondents in the U.S. and U.K. “actively avoid sites where ads interfere with the content.”

Although marketers will be disappointed to learn that so many people tune out their carefully crafted messages, publishers at least get paid for ads that visitors ignore when visiting their sites. 

When blocking technology prevents an ad from being served, however, the publisher doesn’t get paid. And that is turning into a growing problem for everyone from gaming-site operators to the news media.

Page Fair estimates that ad blocking will deprive digital publishers worldwide of $22 billion in sales in 2015 – a sum projected to nearly double to $41 billion in 2016. The company estimates that blocking cost publishers $7 billion in sales in 2013.  

About half of the global revenue loss occurs in the United States, where Page Fair projects that blocking may crimp digital ad expenditures by 22% to deprive publishers of some $20 billion in revenues in 2016. Some analysts argue that the estimate is too high, leaving the magnitude of the potential revenue loss open to debate. But there can be little doubt that ad blocking is gaining steam.    

The reason ad blocking has accelerated in recent years is that the popular web browsers began providing free plug-ins to automatically nuke most ads. In the first six months of this year, the number of users enabling the ad blocker on Google Chrome climbed 51% to 128 million, the number of ad blockers on Mozilla’s Firefox rose 17% to 48 million and the number of blockers on Apple Safari grew 71% to 9 million. 

The majority of the ad zapping to date has occurred on desktop computers, because the penetration of ad blockers is far lower on mobile devices than desktops, according to Page Fair.  But that is about to change, because Apple, which came later to the “block party” than its competitors, is throwing its considerable weight behind improved ad blocking for its widely deployed Safari browser. Here’s why this is a big deal:

Even though Firefox holds only a tiny share of the mobile browser market, its users account for 40% of the ad blocking detected by Page Fair, thanks to the long-standing availability of ad-zapping software on Firefox. 

Safari, which is a far bigger player than Firefox because it enables 52% of mobile browsing activity, heretofore has not had a competitive ad-blocking capability. But that changed with the introduction of the recently released iOS9 operating system. As the new operating system rolls out, Page Fair expects “ad blocking on mobile Safari to trend towards the levels seen in the mobile version of Firefox.”

A number of analysts and commentators share Page Fair’s belief that the widespread adoption of ad blocking on mobile Safari will accelerate the growth of a challenge that publishers and marketers to date have been largely helpless to counteract.

Page Fair, among other companies, encourages publishers and marketers to improve the relevance of their ads while also paying ad-blocking services to let ads from their clients slip through the filters.  In addition to such efforts, some publishers have resorted to warning visitors that their sites could go out of business if too many users block too many ads.   

While there is nothing wrong with any of the above strategies, none to date seems to be slowing down ad zapping. It looks like advertisers and publishers have more work to do. 

© 2015 Editor & Publisher

7 Comments:

Blogger Steve Ross said...

Blockers are needed to handle newly obtrusive ad types. The advertisers killed the golden goose.

One of the things I do to follow online media economics is to test ad efficiency myself. My most common gig is to buy pageviews on Google AdWords for a simple 3-line ad to promote my wife's Granola recipe ebook on Amazon.com. $5 a day two years ago bought about 8000 views. It now buys 1200. The 8000 views generated 70 clickthroughs a day and 7 or 8 sales. Now I'm down to 5-8 clickthroughs a day, and two sales a week. Yes, the ratio of views to clicks fell, but not by as much as the views fell! It is no longer profitable to run the ad. (A sale now generates $2 for us; after dropping the price slowly over time.)

Nevertheless, the price I pay at AdWords is a heck of a lot cheaper than what I'd pay to run a survey, and I think my results are more accurate.

The biggest drop occurred this May -- a cut from 6500 views to 4000 in one month. I frankly expected it. I got $%^&* sick about noisy, bandwidth-eating videos popping up on already opened pages in my own browser tabs. I installed a tough blocker! This had little to do with the ease of installation. It had to do with the obnoxious nature of the ads -- more akin to those restraint-free telemarketers that insist I must have installed my emergency landline for their use alone.

If the industry is going to claw back some views, it will have to control the advertisers, just as magazines and newspapers once did.

5:45 PM  
Blogger Anthony Fioranelli said...

People are getting smarter. If they want to buy something they know where to go online to get it. They can't be bothered by the constant pop ups. Early on when you couldn't block pop ups, advertisers went overboard and turned people off.

1:05 AM  
OpenID reiss said...

Please remember that blocking ads are only halve the story. The other halve is readers blocking information about their reading habits to the newspapers. As an Adblocker you not only refuse to see the ads, but you refuse to tell the news provider anything about your selves. It is the digital newspapers use of cookies and the subsequent sale of information about readers that most adblockers give as a reason for keeping the blocking shield on the computer, tablet and smart phone. So, Adblocker might be invented as an answer to invasive and annoying adds (in particular among gamers and Youtube-watchers), but it is the relentless use and sale to third party companies that keeps the shield up. A report from The Norwegian Data Protection Authority, November 2015, states that an average of 43 different companies are sold records of reader behaviour by Norwegian online newspapers and. Further, that between 100 and 200 cookies were placed on the browser while reading the front page of six different Norwegian newspapers.
My point is that the surveillance of digital newspaper readers has become unbearable and we are acting accordingly by boycotting commercial information in and monitoring-data out.
So what can newspapers do?
Softblocking – by appealing to readers that adds are paying for expensive journalism, so please turn your blocker off. So for, very little success if any. Who cares, when information is for free.
Hardblocking – by blocking adblockers out. Some success, but hard for omnibus newspapers who need to recruit young readers. (NYT are now basically read by 60+).
Ignoring Adblocker by not writing about it. In fact the only strategy that so far has succeeded and is probably the only reason Adblocker is not more downloaded.
Starting a cat and mouse game by adding new technology to avoid adblock and thereby force feeding readers adds. This is expensive and a strategy newspapers are bound to loose in the long run against young creative masters of the digital universe.
Making adds less intrusive and more relevant. This might work, but then the editorial department has to spend time and effort checking the commercial content. And it might be too late. Users who have enabled Adblocker will not notice the efforts and turn off the blocking, and new users will still want to turn off the newspapers monitoring.
Add more content marketing to hide adds from Adblocker. Thus you might jeopardize readers trust in journalism, which is not highly prominent in the first place.
Start a paywall and get subscriptions. Paywalls works and it is a good idea to tur your searchlight from the add-market towards readers experience. However, paywalls makes it harder to recruit new and young readers. But moving towards a more stable income and pleased readers sounds like a good idea.
The problem might be impossible to solve digitally, and the only solution is to go back to print first, by securing the old local market hegemony by investing in journalism and printing. You might find it interesting to read H. Iris Chyi: Trial and Error: U.S. Newspaper’s’ digital struggles toward inferiority. Her report was written long before Adblocker became an issue and a huge problem for the newspaper industry.

3:29 AM  
Blogger RickWaghorn said...

If anyone has taken the time to read Clay Sirky's seminal essay on the Collapse of Complex Business models, then the cycle at work here will be instantly familiar - certainly to those that have gone one stage further and read Joseph E Tainter's work on the collapse of complex societies...

'Complexification' to use the term he deployed in our recent email exchange on the parallels to be drawn between Rome and AdTech.

AdBlockers and their rivals - the 'white knights' of PageFair - merely demand that more 'tribute' be pulled from a society already desperately short on reward/resource, be it for the hard-pressed publisher, mystified advertiser or the hapless agency caught firmly in between.

The cost of this complexity eats ever more into the fabric and working of this society and the result is, says Tainter, inevitable.

The final act of complexity is a collapse to simplicity.

I'm an Oxford historian, not a Harvard mathematician.

To beat the Ad:Blockers, to restore reward and resource you do what history tells us we always do when societies collapse...

You build again simply, locally and from the bottom up... As I first suggested at NewsInnovation.com at CUNY in 2007.

Rip out the cost of the complexity, pull the plug on the bots, the algorithms, the wonks, the quonts and the automated blockers and you return to a society where resource and reward is abundant again...

5:48 AM  
Blogger Steve Ross said...

As a lapsed academic, I made a simple observation: Use of ad blockers has increased enormously in the past 6 months. This coincided with a big ramp-up (well documented in Ad Age and other trade press) of REALLY obtrusive and annoying popup video ads starting a year ago.

Follow-on comments do not explain the discontinuity in the trend:

1. Privacy. That issue has always been with us. Is there a "Snowden effect?" Probably, but not massively if somewhat relevant ongoing surveys on privacy are to be believed. Most people have given up on it. My 96-year-old mother has not. She teaches "old folks" how to use a computer, but refuses to have a Facebook account!

2. "People can search for what they want." Hmm. A significant amount of retail purchasing is opportunistic, spur-of-moment. Also, you cannot search for something that does not exist. To riff on Ted Levitt's observation 30 years ago, customers don't want drill bits. They want holes. Ted is long gone, but today he would observe that although they want holes, they still search for drill bits. There are other hole-making technologies that might be simpler.

In my test case, it is doubtful that many people would know there are small ebooks available with good granola recipies. My wife's book has 10 of them, all gluten-free, no refined sugar, small-batch. So AdWords can be set to flash my ad for someone searching granola, sugar-free, gluten-free, desserts, and so forth. My actual DATA shows that sales double when I use AdWords, but the doubling now comes at too high a cost. The cost of the ads exceeds the profit from the generated sales.

3. Complexity. Let's not get too unhinged from reality here. Companies launch video ads to make money. Societal costs are not high on their list of considerations. Now, society bites back and launches ad blockers. The biggest advertisers are lining up to bribe the ad-blocking companies to whitelist them. The bribes (for big companies) and the demolishing of business case (for small advertisers) adversely impacts media.

WE'VE BEEN THERE. Even brain-dead newspapers always restricted ads to some degree, with regard to content (curses and naked ladies, anyone?) and placement. Now online firms have to show the same restraint to save their own business model, and this will rebound back to the benefit of all by reducing the desire for ad blockers.... all that survive this mess.

9:34 AM  
Blogger Curtis Bloes said...

Because of this post, I finally decided to take the plunge. The blocker I chose blocked 15 ads in the first two places I visited! Never going back.

1:34 PM  
Blogger Steve Ross said...

Curtis has the right idea. But look, I help run a B2B magazine, and own a small piece of it. (Broadband Communities, www.bbcmag.com.... and... in... print... 7 issues a year.) Advertising used to be half our revenue. It's much less today, but we need it although we've found other ways to make money -- adding an extra annual conference, building industry-first computer models to help network operators raise money for new builds and run the ones they have, building unique databases that even the FCC relies on. We have never allowed obtrusive ads on our web site. Period. We allow advertisers to link to their videos, but not pop them up. In fact, we don't allow pop-ups. We don't like them. Why should our readers?

Our readers build the (mainly fiber optic) broadband networks that make online commerce possible. But 10,000 of them a year ask for the print edition to be mailed to them, even though we know from our logs that almost all of them also go on line. Why do we keep printing? Because advertisers pay a huge premium to be in the print edition. It hangs around on peoples' desks for months! Our print circ to qualified readers is actually at an all-time high.

We had a rough time early in the recession -- over half our advertiser universe merged or went out of business. But we're solidly profitable by doing the right thing -- paying for good editorial and investigative journalism (one of my stories was a finalist in the national ASBPE competition for best original research last year, won the Northwest Regional competition, and has helped shape FCC regulatory policy). Funny. We had 5 competitors in 2008. Now we have none. Other publications in other industries will get it sooner or later. Newspapers will get it last.

6:41 PM  

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