Publishers, advertisers and users need to think broadly beyond just a temporary solution, while still maintaining the delicate balance of ‘implicit value exchange’
As we are in the first few days of 2017, we pause to take stock of what has happened in 2016 in the world of advertising.
We have seen seeming ups and downs, particularly the uphill battle faced by plenty of publishers and advertisers worldwide in reaching out to their consumers through ads in the digital landscape. The main reason? Consumers across the world have increasingly become empowered with a new bargaining tool called the ad blocker, which would supposedly give them a piece of mind while carrying out their daily surfing activities.
This has, to a large extent, been an area of sheer contention and struggle for publishers both large and small, local and international, whose easiest and obvious source of income has always been ads. Said source of income has been so easily taken away by the newfound defensive tool that users have been swooning over, leaving many a teary-eyed publishing and advertising industry grasping onto any hope and salvation of turning the tide against this cultural revolution.
What has become of the ad supported web?
It should not be surprising that the ad blocking situation has spun out of control, as it does reflect the general consensus amongst many users that they have been inundated by a flood of advertising. Advertisers are, after all, taking advantage of users’ online presences seeking to sell them stuff all over the shop, from pre-roll video ads, pop-ups, pop-unders, interstitials, sponsored content, native ads, banner ads, and the other ad inventories.
All the consumers wants is peace. However its not easy to achieve peace in an internet world, where money-making is the chief priority of the big companies and publishing firms. Even bloggers are trying to fend off competition by ‘monetising their user base’ in a frenzied manner.
And when things get out of control, you have a push-back of sorts. Ad blocking is symbolic of this situation. It is safe haven for users for good reasons. To make matters worse, monetisation using ads often crosses the boundaries in the fragile relationship between users and the publishers and even advertisers.
The tide of the battle is now hinging on two sides of the argument:
- Content makers are unhappy that their rice bowl is taken hostage by free ad blocking tools readily used by tons of internet users — as a sword for attack and shield for defence against online advertising.
- Users believe it is their birthright to make the decision to block or allow ads on screens, after years of abuse and betrayal by the publishers they supported.
How much revenue has been taken hostage thus far?
The purported damage, according to the pagefair industry report in 2015 shows that approximately US$22 billion has been withheld or lost to the publishing industry ,while the ad block penetration rates grew by 41 per cent globally from 140 million people to 198 million as of 2015.
This figure may seem small compared to the US$170.5 billion worldwide digital advertising expenditure in 2015, but we must remember that ad blocking growth and penetration rates are increasing at an alarming rate. Currently the same pagefair industry research shows that the overall trend was the same as previous reports — 90 per cent growth in global ad blocking rates, from around 237 million users in march 2015 to 408 million users in march 2016.
The major difference in 2016, from 2015 is that we have gone mobile in a big way, substantiated by our beloved Apple Inc, which, in late 2015, introduced native ad blocking on apple iOS9 devices with content blocking and ad blocking Safari extension.
The trend to take note here is that as people go mobile, so will advertising, and so will the rise of ad blockers to curtail the rampant barrage of ads in the mobile sphere. This signifies that the blocking culture backed by Apple is going to cross over to dominate the mobile environment, giving advertisers and publishers no rest.
Critically, today mobile ad blocking is adopted so enthusiastically that there are twice as many ad blockers on mobile compared ti desktop counterparts. Given smaller screen sizes, limited bandwidth and limited data speeds, users have a valid argument here.
Any solutions, peeps?
Here is the important part: Because there are no viable alternatives for the ad supported web at the moment, all current methods revolve around ‘annoying’ visitors who have installed ad blockers. There are four main strategies tested to limited effect by web publishers.
- Anti ad block scripts. There are numerous scripts that allow publishers to block or circumvent ad blockers. What happens is that the script detects an ad blocking user, blocklists the provider, and creates a new script to allow ads to forcefully pass through the filters to reach audiences. This is a cat-and-mouse game, which clearly cannot be won by these scripts. Not only does it destroy publisher reputation, but the advertisers whose brand forcefully made a reappearance to users will have a bad impression on the users as well. Lose-lose situation?
- Blocking adblock users. This simply means visitors with installed ad blockers are not allowed to access the site. They will be asked to turn off ad blockers before continuing or using some features on the site. A study conducted by Forbes magazine showed that this particular strategy was a massive failure as 58 per cent of 2.1 million website visitors refused to turn off their ad blockers. And it is hard to argue that it’s not a failure, when you retain only 42 per cent of your previous visitors. The other 1 million plus visitors may have just defected to your competitors.
- Make content paid. Paywalls have become the main source of revenue for some publishers, and this does not require advertising as a revenue stream — probably the glimmer of hope and best solution so far. But there’s a catch here: People have been accustomed to free web content in a 23-year-old ad-supported web. Making them pay is never a good sell — perhaps only huge newspaper companies with a solid reader base can consider using them.
- Whitelisting ads. Ad block plus (ABP) and a few others allow the whitelisting of ads, but whitelisted ads are unable to recover the full value of lost revenue. It creates a downward spiral on the real-estate value of ads, as we are shooting for the lowest denominator of non-creative text-only ads which were agreeable by 75 per cent of users (most of whom are already banner blind). Thus, no amount of text-only ads are going to useful to recoup any lost revenue. And isn’t it controversial and confusing, that ABP is allowing ads which they formerly blocked to reappear, much to the unhappiness of those whom they swore to protect?
With these 4 seemingly lacklustre solutions on the bargaining table, we are hard pressed currently to find more viable solutions that will aim to bring peace to both warring sides or face a more dire 2017. As ad blocking goes mainstream, marketers and publishers alike have to start working from a standpoint wherein the whole world installs ad blockers, and work from there.
What is the duopoly doing to calm the situation?
Needless to say google has been in the centre of this whole controversy as they were made to bow to the will of the “peoples’ defender” — i.e., Ad Block Plus — to get their ads whitelisted. It is a massive irony that ads have come not under the control of publishers and advertisers, but under the masses who are the real customers and custodians of the internet.
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And crucially Google was not spared in this episode. Google itself loses billions in this ad block saga. In 2015, pagefair estimated that Google had to pay whitelisting fees of US$25million, but in the end it still lost billions because of whitelisting’s apparent ineffectiveness. People mean it when they say “no ads”, no matter the amount of whitelisting one can do.
Facebook famously took ad blockers to task in August 2016, starting a cat and mouse game, which ended in Facebook’s inability to find a resolution. Despite its critical mass and huge user base, it still lost US$1.1 billion which is an 18 per cent lost revenue salvaged due to the ad block war.
When the largest social network starts waging war against adblockers , its high time for the rest to sit up and evaluate the situation and think of ways to improve it. Because if it can claim billions from a mighty corporation, it will vaporise smaller entities in no time, as the problem goes mainstream. More vitally, Facebook circumvention of ads and forcefully showing ads is going to be treading on thin ice. What happened to Forbes applies to other publishers and websites — sheer size alone will not save the day.
What was a little heartening to note, was that Facebook made a major decision in December 2016 to put control back into the users’ hands to decide which ads to block and show, signifying a move wherein it is finally recognising ad blocking to be something that is not only dependent on individuals or a coalition force of publishers to solve. It requires putting users interests first.
But its effectiveness is still unknown. For one, people still will still be at the mercy of what Facebook thinks they should see based on their data and interests, and it becomes a case of choosing ads you hate more, and seeing ads you hate lesser.
What will the future hold for the internet?
As 2017 dawns, the battle is only intensifying with no signs of slowing down, as more people are aware of the existence of ad blockers. Eighty per cent of people who know of ad blockers will install them, as it graduates from being a geek gadget to becoming a mainstream tool. With some telcos already offering lower data bills for users who choose to opt out of network wide ads on their phones, advertisers are forced to seek alternatives.
Moreover all the existing solutions only address how publishers can recoup lost revenue and ‘seek middle ground’ to pacify their users, which is only temporal and cannot be a long-term viable alternative to keep the giant machinery of the internet going. In particular, we want to help keep content free for the generation ahead of us, and to restore calm and equilibrium which was lost in the 2 decades since the dawn of internet.
It calls for out-of-the-box solutions that looks at the macro problem to devise a more foolproof solution than what currently exists, and start moving away from an advertiser-centric understanding of things to a more egalitarian approach that brings all sides to the bargaining table to seek a lasting consensus to a prevalent problem.
Lastly, as the pagefair report figures have shown,US$41.4 billion at stake in 2016 lost ad revenue means this: Startups that intend to address the issue will need to think broadly beyond just a temporary solution and make it applicable to all countries and all publishers (not just the high traffic and famous ones), while still maintaining the delicate balance of ‘implicit value exchange between users and publishers’. Such a startup will be able to cash in on this massive opportunity arising from a decades-old problem, and herald a new ‘Web 3.0′, supported by something better than traditional ads.
The views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, submit your post here.
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