Advertising Industry Losing Billions To Ad-Blocking Software
- by Laurie Sullivan @lauriesullivan, August 14, 2015
The
estimated loss of global revenue due to blocked advertisements in 2015 totals more than $21.8 billion, and will rise to $41.4 billion in 2016, according to a study. This could explain the slowing
growth of revenue from search and display ads supported by Bing, Google, and Yahoo.
The number of people globally using ad-blocking software grew by 41% during the first half of 2015 compared with the same time period in the prior year, per a study released by Adobe Systems, and PageFair. As of June 2015, there were 198 million monthly active users for the major browser extensions that block ads.
The number grew by 48% in the United States during the first half of the year compared with a year ago, rising to 45 million active users during the second quarter of 2015. Oregon has the highest ad-blocking rate in the U.S. at 16.4%, followed by Washington with 15.5%, and Vermont with 15%. Washington, DC has the lowest ad-blocking rate in the U.S. at 8.2%.
When it comes to search engine advertising, some might argue the brand only pays for ads served and clicked on. True, but advertisers can spend hundreds to millions of dollars to create and optimize ads that never get seen by the consumers for which they're intended. Content creation seems to have become one method of advertising and marketing to circumvent the roadblock.
In the Adobe and PageFair study, Firefox and Chrome lead the mobile space with 93% share of mobile ads blocked, but with the ability to block ads becoming an option on the new iOS 9, the number will rise. Today, about 16% of mobile Firefox users block ads. Use of ad blocking in Europe grew by 35% during the past year, up to 77 million monthly active users during Q2 2015.
The report estimates mobile will facilitate future ad blocking growth. The release of iOS 9 later this year, could become the "game changer," because it will allow users to easily install ad blocking from the App Store. In Q2 2015, mobile accounted for 38% of all Web browsing, but only 1.6% of ad block traffic on the PageFair network from mobile devices occurred in the quarter.
Services from search engines like Bing, Google, and Yahoo may become an important alternative to generating revenue. Mark Hibben, an independent iOS developer, writes in Seeking Alpha that revenue and profit will begin to drain from the ad-supported advertising model and into the subscription-supported part. He points to a post from New York-based Marco Arment, Web and iPhone software developer, predicting the demise of the Web advertising business model.
Some might think Arment's prediction a bit extreme, the Adobe and PageFair study suggests ad blocking behavior on Web sites has a direct correlation to audience demographics. Visitors to gaming Web sites are more likely to block advertising, which those on health, charity, and government or legal websites sites are less likely.
Rounding out the predictions, eMarketer points to June 2015 numbers from the Reuters Institute for the Study of Journalism at the University of Oxford suggesting in the United States 41% of PC users and 11% of mobile users report regularly using ad-blocking software.
Ad and tracking blocking are signals from customers to marketers. Those signals say "stop tracking us," "quit slowing page loads to a crawl," "quit creeping us out with unwanted personalization," "quit abusing our privacy" and other useful input. Lost revenues are what advertisers and their agents pay for not getting the message that their systems are not okay with the marketplace — which is the customers they are trying to reach. Blaming those customers is a huge mistake, yet pro forma for the industry, which is entirely B2B rather than B2C. Apple is a B2C company that is attuned to its customers, knows what they want, and accomodates them. This is why ad blocking as an option is built into iOS9. It's also why Apple can say what it does at http://apple.com/privacy . Go read it. Can you imagine the online advertising business saying the same thing? It would be good to start, because the messages coming from the marketplace could hardly be more clear — or less deserving of blame by those not listening.
There is hope for online advertising, by the way. It's going back to non-personalized brand advertising that informs the marketplace, creates strong and positive impressions and creeps out nobody. More here: http://bit.ly/wheatchaff .
I don't block ads because they're creepy. I use AdBlockerPlus on my Chrome browser because I don't want to see any ads. It has nothing to do with privacy or personalization. If an advertiser want me to see their message, it'd better be on a billboard or some other unavoidable medium. Ads on the web and TV are just to easy to block or skip.
It is time to think about bringing things home and creating an onsite community to augment your marketing and customer loyalty initiatives.
Community today is key and a customized onsite community can augment your social channel initiatives by engaging current and potential customers in non-invasive ways they will welcome and look forward to.
Differentiating yourself with an onsite community by offering current and potential customers member only benefits, monthly drawings, a forum et. Will augment all of your marketing initiatives emanating from your own real estate and provide a host of benefits that cannot be duplicated elsewhere today.
The more there is to block with more reasons to block (See Doc Searls comment), the more blocking will occur. Do not track with less ads leads to less blocking. Then costs will have to be dealt with via transmission, retransmission and million $ per actor episodes not to mention other ivory tower drains.
As I have commented in other posts, the digital "medium's" split personality regarding ads needs to be resolved. Either organize yourselves as an ad medium---with strict rules about how much ad clutter to allow per page, how ads are displayed, what constitutes "visibility" realistically, etc.-- and stop enabling ad avoidance or your growth in ad dollars---especially from branding TV advertisers--- will slow dramatically. Already, upwards of 30% of the most desirable consumers use ad blockers and can not be reached by a branding advertiser, no matter how many websites or GRPs are used----nothing like this put offish situation exists in any of the "legacy media. Yep, TV ratings may be fragmenting and the share of ad-free TV viewing is slowly rising---no doubt about that. But, digital must clean up its act or TV advertisers will have no where else to go in a big way and they will mostly stay put.
This is what happens when you place all emphasis on a supply - the ads themselves - for which there is no consumer demand whatsoever. The only people who even think and/or care about ads are those who buy and sell them, period.
If the ads didn't slow the loading of my webpages so much, I wouldn't care so much. But they do. Thus, AdBlock has changed my online experience so much for the better, I would recommend it to everyone.
Part of the problem, too, is how slow American bandwidth is compared to much of the rest of the developed world -- the service providers and advertisers are trying to have it both ways: less-than-great internet speeds, yet maximized commercial messaging. That's a deadly combination for consumers, and it's no surprise savvy web users are blocking ads.
What Ed Papazian said about organization as a formal ad medium, says it all.
Online advertsing is disruptive and not in the hip, jargon-y way. Not in a good way.
I resent having my online travels interrupted by ads that stop me mid-read, autostart, autoplay, autoblare and yes, Doc Searls, slow page load to a crawl or worse, crash my browser with bloat overload. Once I realize a site is so afflicted, I rarely return (and I've got little love for the brands so advertised). Rich media is little more than a fancier p*rn storm. I don't know how much of it is "gee-whiz, look what we can do" and how much of it is trying to trick blood from a stone.
Take a breath. Step back. Consider the user experience. Contrast it with the old-school static banners that I know I've paused on, made note of as sponsors of the content I was appreciating. And yes, clicked through on when I was ready to, because they did a good job of grabbing me (without having to tap dance like Baby Jane).
The solution is simple. The impacted advertisers should change to banner and/or CPC. Being a PART of desired content is a whole lot better than being an annoyance. Not to mention that it makes consumers more apt to return to a site that does not flood them with pop ups.
Dave, branding advertisers are not gong to accept passive banner ads. What's needed is new editorial formats that allow more visually intrusive ads to appear---like they do on TV---in some sort of ordered sequence that the user can grow accustomed to, without having the user's experience with editorial content constantly interrupted and interefered with---sort of like commercial breaks. This will take a lot of thinking and testing, but I believe that sensible alternatives to the chaos we see today on our digital media screens will benefit both the publishers and the advertisers---to say nothing of the users.