Ad blocking: what on earth is going to be done?

Ad-blocking is now estimated to cost publishers nearly £15bn a year – and the problem looks like it’s getting worse. It’s time for much firmer action, writes Raymond Snoddy.

Where do viruses come from? Until the middle of last week it’s very likely that few of us would have heard of the Zika virus and now already it’s a global public health emergency on par with the Ebola virus, according to the World Health Organisation.

Of course these things mutate quickly but the apparent suddenness of it all is probably a trick of the media – a failure to give sufficient weight to a creeping crisis in far off places until it finally becomes too obvious to ignore.

This week mosquito-induced microcephaly, which leads to the development of babies with abnormally small brains and heads, is a major crisis which affects us all, or at least those with ambitions to become pregnant.

The Zika virus is about real babies and real suffering but in the very different world of the media where only profits and businesses are at stake rather than lives, it may still be time to declare a global crisis – the crisis of ad-blocking.

The dangerous virus started to go mainstream as long ago as 2014 but burst into the full light of day last year, and the danger is that it will begin spreading exponentially unless something is done to stop it.

According to an Adobe-PageFair study published in August, ad-blocking was estimated to cost publishers nearly £15 billion a year and that there are already 198 million active ad-block users around the world.

The study believes that ad-blocking increased by 41 per cent in 12 months and that in the year to June 2015 US ad-blocking grew by 48 per cent to a total of 45 million users.

More current figures published last week from GlobalWebIndex found that in the last quarter of 2015, following publicity that ad-blocking had spread to the latest Samsung and Apple mobiles, the use of ad-blocking had risen 10 per cent to 38 per cent on desktop PCs.
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At the same time 37 per cent of mobile users had used ad-blockers in the past month with only 21 per cent of those surveyed saying they had no interest in doing so.

The demographics of mobile ad-blocking show, unsurprisingly, but ominously for the media, that the 16-34-year old age group are the main users of ad-blocking apps.

The consequences, if the spread continues, could not be more serious for the advertising industry and the media they help to support.

It goes without saying that existing publishers, or at least those who have not sheltered behind subscription paywalls, are deeply dependent on online advertising revenue to bridge the ever-present gap caused by falling print sales.

A small invisible trace of the possible effect of ad-blocking can be seen in the most recent results of Mail Online where online advertising growth slowed to 16 per cent to £73 million compared with a 41 per cent rise the previous year.

The migration of ad-blocking to the latest mobile devices could help limit what many media owners see as an area of potential future advertising growth.

Unlike medical viruses the ad-blocking virus is so potentially lethal to media businesses because it offers consumers a wide range of obvious benefits.

It stops advertising that appears disruptive in its tracks, ends the personally intrusive nature of programmatic advertising, speeds up the entire process of viewing content and even reduces energy consumption and extends battery life on mobile devices.

There are also some, particularly among the young, who say they simply don’t like advertising.

The contract that it is the advertising that helps to pay for the desirable content is at best implicit, poorly understood among the average consumer and very difficult to enforce when circumvented.

Potential free-loaders are everywhere, not least in those who are happy to watch the output of the BBC without any intention of paying for it.

The case against the ad-blockers was very eloquently spelled out recently by Randall Rothenberg, president and chief executive of the Interactive Advertising Bureau of the US.

Rothenberg believes the practice presents a potentially existential threat to the industry.

“As abetted by for-profit technology companies, ad-blocking is robbery, plain and simple – an extortionist scheme that exploits consumer disaffection and risks distorting the economics of democratic capitalism,” says Rothenberg – who also regards ad-blocking as a wake-up call for brands and advertisers who abuse the good will of consumers.

The IAB executive is happy to quote Nobel laureate economists Kenneth Arrow and George Stigler who believe that it is advertising that keeps prices low and facilitates the entry of new firms and products into the market. And it is not that advertising that is under threat.

Rothenberg reserves his most ferocious ire for ad-blocking companies who essentially run a protection racket, “shaking down” publishers for payments to circumvent their barriers.

But what on earth is going to be done – apart from making greater efforts to make online advertising less intrusive and irritating, something that may be necessary but hardly sufficient.

Rothenberg is better at diagnosing the problem than coming up with a remedy.

“Disruption is not uncommon in this disruptive business. But we have to disrupt the disrupters – by identifying them as the profiteers they are, and by giving consumers the internet they deserve,” is the best the IAB executive can come up with.

Merely identifying profiteers may not be enough to stop them precisely because they are profiteers.

Firmer action than that may be necessary by publishers – by blocking content to those who are using ad-blockers and telling consumers in no uncertain terms why it is happening.

City A.M. is one of the publishers which has shown the way by politely explaining to would-be online readers that the reason they cannot see their content is perhaps because they are using an ad-blocker and of course it’s advertising that pays for the content…

The virus must be tackled, urgently, but for some sections of the media online ad-blocking inadvertently hands over a competitive advantage.

Difficult to block a print ad, or disrupt live commercial radio, and of course the only way to avoid the universal advertising medium of outdoor is to close your eyes – a little dangerous when driving.