Ad Blocking: Good or Bad for Advertising Industry?

There is a growing debate in the industry about ad-blocking and its potential to threaten the advertising ecosystem. Today, blocker usage growth is fueling contentious dialog between ad-blocking software companies and ad-supported content providers.


Blocking – What is it?

The Internet Advertising Bureau (IAB) defines ad-blocking as the technology that consumers use to prevent the download or display of advertising while using digital media. The software usually comes in the form of a browser extension or plug-in, which consumers download.

What the software blocks will vary depending on the vendor. Some will block all advertising and/or tracking codes that can capture user behavior. This is the type of behavior data that is the basis for targeted solutions.

So, is ad-blocking good or bad?

At face-value, less ads mean sapping the revenue that content providers use to fund the experiences that engage audiences. These are the same audiences that advertisers are eager to reach.

Answering the question then should be easy right? Ad-blockers must be having a detrimental impact that will intensify as usage grows.

The outlook, however, is probably more positive than not especially in the long-term. The reason is based on the notion that a healthy debate and consumer feedback around this topic is likely to be a catalyst for beneficial change.

Let’s take a closer look at current blocker usage, the opposing perspectives, and the positives already in motion that shed light on why the debate may actually strengthen the ecosystem.

U.S. Ad-Blocker Usage and Potential Ad Rev Impact is Growing.

According to the PageFair and Adobe 2015 report, there were 45MM monthly active users of ad-blockers in the U.S. as of Q2 2015. This represents a 48% YOY increase domestically.

The primary reasons why people use blockers include: 1) Faster page-load speed because pages render without ads; and 2) Reduced data tracking ability that could compromise user privacy.

Rendering is a huge issue on mobile devices, so marketers need to create content and ads that load fast and look good on handsets, while also reducing data-plan consumption.

Impact to U.S. digital ad revenue is in the billions. Per the PageFair report, blocker usage resulted in an estimated $10.7B in blocked revenue in 2015, and is projected to be $20.8B this year.

PageFair expects that mobile will drive future growth, especially now that Apple’s iOS 9 release allowed blockers in their app store starting last year.

 A Look at the Differing Perspectives

The ad-blocking debate pits blocking software companies against media publishers and related advertising industry groups.

In one corner, for example, there is Eyeo who develops the popular blocker – AdBlock Plus – and holds over 50% of the blocker market worldwide. Their position is consumer-centric and one of compromise centered on their “acceptable ads initiative,” which is meant to help clean-up intrusive experiences.

This initiative, which is based on user feedback, “allows advertisers and publishers who have agreed to make ads that abide by user-generated criteria to be whitelisted.” Users can select this less extreme blocking option, but can still block all ads if desired.

Eyeo sees two primary benefits of the initiative: 1) encourages ad industry to pursue non-intrusive formats; and 2) provides a source of funding for the company. Note: Larger web entities pay a licensing fee for the whitelisting services.

From the opposite corner, there are the content providers and industry groups such as the IAB. One only has to read the IAB President’s keynote speech from this year’s Annual IAB Leadership meeting to understand the sharp discord.

For example, the IAB President had this sarcastic sound-bite about Eyeo, “For that is what AdBlock-Plus is: an old-fashioned extortion racket, gussied up in the flowery but false language of contemporary consumerism.”

Another anti-blocking sentiment expressed in a NY Times piece described that, “blocking ads violates the implicit contract that people agree to when viewing online material much of which is paid for by advertising.”

Out of Conflict and Tension…Improvements Emerging

This is not meant to imply that the ad-blocking debate is over. Far from it. There is too much at stake when blocking threatens a $50B+ industry model.  Not to mention… how do we reach consensus on what an “acceptable ad” is, and who is ultimately responsible for listing and delisting them?

As it should, the debate and discussion has re-focused attention back on consumers. Some say that ad-blocker use proves consumers’ disdain for intrusive advertising. And who really isn’t annoyed by host-initiated video or a pop-up that blocks content?

While industry groups like the IAB will continue its fight, growing blocker usage and the related discussion is leading affected parties to offer proactive best practices to improve consumer ad experiences. These efforts could result in consumers getting more relevant ads, digital companies providing “free” content while still making a profit; and blocker advocates seeing fewer intrusive ads.

So, in the long-run, maybe ad-blocking isn’t so bad after all.

Written by Blake Pierson

Blake Pierson Photo_6.21.16 (1)

Blake Pierson is an advertising and media professional with over two decades of ad-agency and digital industry experience. His background includes developing strategic advertising plans at Wieden & Kennedy and DDB for clients such as Nike, Subaru, Holland America Line and Microsoft.  Additionally, Blake led sales development at AOL for all O&O web properties, and launched new shopper-marketing solutions while at Catalina Marketing. He has been an AMA Tampa Bay member since January 2016, and is a digital content volunteer for the chapter.