Bing, Google, Publishers Lose Billions Of Dollars From Blocked Ads
- by Laurie Sullivan @lauriesullivan, June 9, 2015
Ad
blocking remains a controversial topic. Based on a variety of data, one company attempts to estimate the financial loss to Google. Of the estimated $41 billion in revenue Google reported in 2014,
PageFair estimates that $17.6 billion came from the U.S. Some $1.9 billion represents the estimated U.S. revenue available to Google on google.com that the company did not generate as a result of the
10% of visitors having ad-blocking technology installed in their browser.
Google recovered about $942 million -- a portion of the $1.9 billion in the U.S -- by being white listed, estimates Sean Blanchfield, technology entrepreneur and CEO at PageFair, which wants to "save the free Web" by allowing publishers to serve ads blocked by browser plug-ins like Adblock Plus from Eyeo. Adblock allows people to block annoying ads, while some "acceptable ads" from Google and Microsoft filter through. The industry calls being "white listed," a hush-hush practice that insiders say requires the engines to pay a fee. The German media estimates the fee at $25 million, he said.
Ad blocking also costs brands billions in lost revenue because they lose opportunities to connect with consumers. Blanchfield believes that Google cofounder Larry Page glossed over a critical question during the company's shareholder meeting last week when an investor asked how ad-blocking technology will influence the company's main revenue stream. Page chocked it up to the industry's need to make more "useful" ads.
"It's a bit of a murky world with pirates battling pirates," Blanchfield told Search Marketing Daily (SMD). He said the browser-based plug-ins block search and display ads, hurting potential revenue earned by search engines as well as publishers.
Blanchfield and team broke down Google's businesses by ad format, extracting U.S.-only revenue and "conservatively" estimating that 10% was blocked, and tallied up the revenue recovered through the Adblock Plus deal versus revenue that is still being lost. The calculations estimate Google recovered roughly $1 billion in U.S. revenue by being white listed, almost twice that amount is still lost due to Adblock Plus and competing extensions.
If 57% of Google revenue is international, and Europe's ad-blocking rates are higher, estimates put the global numbers at roughly $3.5 billion saved, and roughly $6.6 billion lost. Blanchfield even provides the data source to double check his numbers.
If the practice of blocking ads continues, PageFair estimates it will increase by at least 50% this year -- which will cost publishers, along with Google, Microsoft, Amazon and others even more. The practice will extend into mobile advertising, with 90% of the media's revenue derived from advertising. While this is one company's perspective, the details are in the data.
One source tells SMD that content and ads created in XML, a markup language to encode documents, are
less likely to be blocked, but Blanchfield said that's not true. Ad blockers can.
Not all data points to consumers using ad blocking plug-ins. It turns out Genesis Media recently surveyed more than 3,000 Internet users and found that 50.3% are aware of ad blocking software but choose not to use it.
SMD reached out to Google and Microsoft for comment, but have not heard back.
Why should I not block ads on the web, just as I block ads with my TiVo? Advertisers are not entitled to my attention, regardless their business model. If blocking somehow kills the golden goose, another golden goose will pick up the slack. If my beloved AdBlockPlus browser extension is extorting white-listed clients, I am largely unconcerned. My goal is to minimize intrusive ads irrespective of their usefulness.
Is it just the irrelevant ads that are being blocked, or the relevant ones, too?
There's an easy solution for marketers. Buy ad space in newspapers! Remember them?
Ad Blocking is the result of bad ad strategies that render sites unuseable.
In mobile we add to that the fact that consumers are very aware that they are PAYING to see ads they don't want.
Let's use a very simple example, a prepaid account from Metro PCS is $40 a month, for 2GB of data at a useful speed.
Let's see how much of that $40 a month they are paying for ads to be delivered - let's assume X% of the data traffic consumed is used for ad delivery:
Percentage of traffic that is advertising
Effective cost to user:
5%
$ 2.00
10%
$ 4.00
15%
$ 6.00
20%
$ 8.00
Is there any wonder people want to block ads?
The subject of Google and ad revenues is much deeper than just blocked banner ads. Google has also programmed through Panda, to block ads on publisher’s websites. In January 2013, SweepstakesToday.com was asked by Google AdWords, not AdSense, to take down two banners “Above the Fold”. In 2006 or 2007 Google AdSense approach us about putting three banners above the fold in exchanged for a much higher revenue level. The cost to us was to redesign our website layout, CSS and much more. This was about $40,000 in website changes. For us back then this was a lot of money but we did make the changes. So we and Google had a happy relationship for those 6 to 7 years and we made our investment back.
In a series of telephone calls from Google AdWords that came from India, their representative said that if we did not take down two of the three banners on the fold then we would lose money and put on a reduced level of income from their banners. They further demanded for SweepstakesToday.com to take down a non-Google banner. I told the Google rep that this was not a Google banner and he had no right to make this demand. I further told the Google rep that this was against the law to make threats against a company to take down other company’s banners. Being from India he simply didn’t understand.
After we did not take down the banners as Google requested, they did follow up on their threats by reducing our revenue levels per banner, starting showing more junk banners or no banners at all, and further reduced our SEO ranking in Google for the keyword “Sweepstakes”, which we were number one in the world (first spot on the first page) and we ended up on page 22 or higher. The amount lost was considerable.
What this really amounts to is Google struggling to maintain its monopoly on online banner advertisement. I think the solution is to take the rules about banners and putting this decision in the hands of the advertising organizations to see that all are treated fairly.
XO TED !
Also Hispanic newspapers ! Seriously 'traditional' media offers good "digital" and often other things such as radio shows and email marketing that are simply not well tapped by most clients and agencies at the national level. It is reasonable to demand that folks get back to media mixes that make more sense and that corporate marketers stop apologizing on their twitter feeds for reading a print newspaper. All of us can and do consume content across channels under beloved brands so a newspaper reader also watches video on their newspaper web site and consumes the newspaper in their email.
What we who do media planning that includes these trusted brands do is we bring consensuality to the mix. And this is what ups the ROI. That is folks are OK in many cases receiving these digital messages from and through their trusted media content providers - their newspaper or radio station or because they've opted in to an email from their newspaper in their inbox. So they've opted in to the media brand and as long as the advertising is reasonable and exclusive and done more say as a content partnership of say one ad on the email or only one top banner and one side content sponsorship banner people are OK with it. The idea that you can just show the consumer whatever you want without their permission b/c it is efficient and easy to mark up and the idea that a volume game will win is suspect @ heartshare and engagement and the things that really drive sales. Buy-in.
Ad Blocking is simply helping a User to control their device and experience. What's so wrong with that?
I wonder how this quantum compares to the value of ads served but not seen.