Business

What is Ad-Blocking (and why is it now such a big deal)?

Blake Harris 09.24.2015

In recent weeks, the concept and practice of “ad-blocking” has been in the news quite a bit. With stories like NPR’s Apple Ignites Debate Over Ad-Blocking Software and Forbes’ Will Ad-Blocking Millennials Destroy Online Publishing Or Save It?, this has quickly become a real hot-button issue. But what, exactly, is that issue? And what does it really mean to you? To answer those questions and many more, let’s take a closer look at what’s really going on here…

What is Ad-Blocking?

Ad-blocking is one of those wonderfully rare terms that actually means almost exactly what it sounds like. It refers to preventing (or filtering) advertisements for users consuming consuming online content. What makes this now possible on a grander scale—as opposed to, say, simply avoiding, ignoring or X-ing out of unwanted ads—is an influx of ad-blocking software.

What kind of software blocks ads, and what exactly does that software do?

The #1 ad blocker on the market is called…(drumroll)…AdBlock, which boasts the ability to “block all advertisements on all web pages, even Facebook, YouTube and Hulu.” It works on browsers such as Chrome, Safari, Opera and Firefox, and has already been downloaded over 200 million times.

adblock in action

Um…isn’t blocking unwanted ads a good thing?

Yes and no. It’s good in the short-term sense that you can more easily consume the content you desire, but threatens your long-term ability to do just that–consume the content you desire—because that material is typically funded by advertisements. So it has become something of a digital ethical dilemma; one with a potentially landscape-altering long-term impact.

How is this really any different than what TiVo (or DVR) does for television?

Although the primary (and stated) purpose of using a service like TiVo is the ability to easily record programming, a beloved secondary benefit is the power to fast-forward through commercials. So how is this really any different than ad-blocking? Well, for one: in the TiVo scenario, you are ultimately the one who fast-forwards through those commercials. It’s not just something that automatically happens. Which means that sometimes you’ll likely forget to do it. Other times you’ll miss your mark (going too far, or not far enough, and then having to course correct back into the Land of Commercials). And most importantly: even when operating this way, you still are actually still seeing the commercial. Sure, it’s at 2X, 3X or 4X the speed—and without any sound—but you still are likely going to experience some impression of the products, brands and logos featured in the  advertisements that are scrolled past. This not ideal for advertisers, of course, but it’s certainly better than nothing…which is exactly what ad-blocking promises: nothing, no ads whatsoever.

Okay, I can see how that might be a polarizing issue. But why has it become so polarizing over these past few weeks?

Because Apple’s newly released mobile operating system (iOS9) now allows users to install ad-blocking apps. How big a deal is this? Here’s a blurb from a piece in the The Wall Street Journal:

Putting such “ad blockers” within reach of hundreds of millions of iPhone and iPad users threatens to disrupt the $70 billion annual mobile-marketing business, where many publishers and tech firms hope to generate far more revenue from a growing mobile audience. If fewer users see ads, publishers—and other players such as ad networks—will reap less revenue. The move also is a competitive weapon against Apple rival Google Inc., which makes more money from Internet advertising than any other company in the world.

How prevalent is the use of ad-blocking and how much impact does it have?

As mentioned above, the #1 ad-blocking application (AdBlock) has already been downloaded over 200 million times. In terms of the dollars and cents impact, a recent study jointly conducted by Adobe and PageFair indicates that about 16% of US users are blocking ads on their browsers. This, they claim, cost publishers about $10.7 billion last year.

[a pdf of this study can be downloaded here]

$10.7 billion on browsers? Wow! What about for mobile? 

In a research note UBS published two days ago, they suggest that ad-blocking on mobile devices won’t become a mainstream activity and therefore expect that its impact on  advertising sales is going to be much smaller. “At most,” the firm estimates, “the industry might lose $1 billion or so in revenue.”

So…what does this mean to me? 

Maybe nothing at all. If UBS is correct and ad-blocking doesn’t go mainstream, then business may very well continue as is (though keep in mind that “as is” includes 16% of the people already blocking ads on browsers). But given that the three most downloaded apps in Apple’s iTunes store are currently all ad-blocking, it might be worth considering this is more of a change than just a fad. And if that is indeed the case, here are a few things to keep in mind going forward:

  • Do Your Research: If you’re spending ad money on web advertising, be judicious about where your money is being spent. There’s no point in buying ads–or at least paying the same rate as before–if those spots are just going to be blocked by a large percentage of users. So keep an eye on this quickly shifting landscape and, when possible, request metrics as recent as possible.
  • App-ortunity: One place where ads are not being blocked is inside of apps. Perhaps this will change going forward, but likely not any time soon–or at least with uniform transformation– as apps (unlike the browsers) are much more diversely constructed.
  • Quality Content: The best kind of advertising is the kind that doesn’t feel like advertising at all. That’s why, for example, product placement has become so popular in recent years. And the easiest way to avoid eliciting that dreaded sense of I’m-trying-to-sell-you-something is by creating quality content that is enjoyable and entertaining in its own right. So whether that means crafting compelling videos, high-caliber images or considering more unorthodox channels (i.e. podcasts, digital magazines), there’s some solace to be taking in a single, simple notion: If you create something people actually want to see, then they won’t go out of their way to block it.

[note: an earlier version of this piece incorrectly indicated that UBS’s estimate contradicted figures from Adobe/PageFair. It was pointed out, however, that the UBS estimates refer exclusively to mobile and therefore do not present a contraction. This has since been amended].

Blake Harris

Blake Harris

Blake Harris is the author of "Console Wars: Sega, Nintendo, and the Battle that Defined a Generation."
Blake Harris

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