Predictions for the Future of Ad Blocking and Digital Advertising

Image from: http://www.dsero.com/img/home-splash-stop.pngOver the past few weeks, it feels like the marketing discussion around Ad Blocking has reached a fervor, particularly as Apple started allowing Ad Blockers on Mobile, pushing awareness of ad blocking into the mainstream. Let’s discuss the future of ad blocking and digital advertising.

Situation

Most content publishers (whether large like The Wall Street Journal or small, like this lowly website) generate revenue by showing advertisements. However:

  • People (usually) hate ads
  • Ad Blockers (AdBlock likely the most well known) have been around for the last ten years
  • Publishers are increasingly not getting paid (by showing ads) for their content, with an increase in ad blocking users of perhaps 5x over the last two years to nearly 250M today – in Europe and the US, % of users blocking ads can range from 15% to over 30%
  • Creating good content does cost significant money (try writing it!)
  • The decline of newspapers has shown that in most cases, people are unwilling to pay for content, thus subscription revenue is not a valid option for most publishers

Publisher Point of View

Publishers can claim ad blocking is similar to media piracy (music, movie downloads). I feel this argument is valid – they provide content on the implied agreement that you will accept (and click on, if appropriate) the ads they show. Using ad blocking breaks this agreement. If 30% of your readers are not viewing ads, 30% of your traffic is not (simplified argument) generating revenue.

Advertiser Point of View

Advertisers are not as affected by ad blocking, in the sense that blockers prevent ads from even being rendered, thus they are not affected when paying under CPM (cost per thousand impressions). However, I wonder what percentage of users who are blocking ads would be affected by ads if people saw them. For example, if these users are more affected by ads than non-blocking users, advertisers are missing out on a more lucrative (cost effective) source of conversion. The other effect is that CPM rates could be higher than they should be (but not CPC – cost per click) because CPMs now have to address the cost of providing content for users who use ad blocking in the CPM figure (cost of creating content for 100% of viewers charged over the 70% actually viewing without blockers). However, this should not actually be the case for ad inventory that is simply going to the highest bidder through programmatic means.

User Point of View

As you are reading this, imagine, would you look at ads if you didn’t need to? I would guess not. Regardless of medium, if you can get something for “free” (consume content without ads, not pay directly for content) easily, you will – when piracy was easier than dealing with DRM content, piracy ruled. Perhaps threat of lawsuit affected some, but overall, ease of piracy forced content creators to deliver better products, value-added services, and more reasonable pricing that rendered piracy less damaging. You can see this evolution in Spotify (subscription / in-app ad music buffet) for music, Hulu (similar to Spotify) and Netflix for movies & tv content.

Despite news like IAB Starts Publicity and Engineering Battle Against Ad Blocking, most people do not (and will never) care about ethical concerns. Organizations like the IAB may threaten to sue ad blocking software companies, but it is easy to see this will be a wasteful, and ultimately losing (see battles against torrenting) long term battle. The individual user will always do what is best for himself, which in this case is a faster, smoother internet experience with ad blockers. Just as with piracy, no matter the number of lawsuits or technology battles, ad blocking itself will always be easily available.

Many consumers “don’t make the connection between turning on an ad blocker and cutting off someone’s livelihood,” said Scott Cunningham, SVP at the IAB and general manager of the IAB Tech Lab, which announced a series of initiatives around the ad-blocking issue. (from: Ad Blocking – Unlike Fraud – Comes At The User’s Behest | AdExchanger)

The Individual vs the Faceless Entity (Big Corporate)

I have used ad blocking for extended periods of time over the last decade. Through my work in marketing and advertising, however, I forced myself to turn blocking off at times to make sure I understood the changes in advertising and the ways advertisers are trying to gain attention. While there are sites that do effective advertising, how many times have you been interrupted in similar ways to the following?

  • Watch a 2 minute video, forced to watch a 15 second ad. If given the option, you press skip as soon as you can.
  • Click a link, greeted with an ad right away.
  • Go to a website, and audio starts playing somewhere. You spend several seconds looking for it and turning it off. Particularly annoying at night or in an environment in which the sound is disruptive to others.
  • New browser windows and popups appear randomly
  • Looking for a download link, you see banners trying to trick you that the download is through the banner instead

Often, the content payoff is not worth battling through the ad, and even if you do look at the ad, are you really in the positive mindset to evaluate the ad properly? I think more often than not, I am more likely to attach my negative mood to the ad at a subconscious level. These ads may thus harm both the advertiser and the publisher beyond just the user bouncing away from the content entirely, as I often do.

When it is a case of choosing the individual versus the big “evil” corporation, the individual always knows who to choose. Herself.

Evolution of Ad Blocking: Throwback to Traditional Media

I believe that while publishers may fill up headlines with complaints today, they will eventually realize and act on addressing users’ root needs for ad blocking.

Let’s look at advertising in traditional media as references. In these, advertising is often done naturally, at a pace that does not interrupt your natural media consumption experience. For example, in television, advertisements are inserted in break periods, and as you watch, you build a general feeling of when it is commercial time. Writers write for advertisement breaks, making sure the pacing doesn’t jar you, that scenes naturally lead to and out of breaks. Product placements (i.e. character drinks Sprite) are done naturally. In magazines, ads are shown in the natural manner that you read the publication. As you turn pages to read articles, you sometimes see an ad, which you can then turn over after glancing at it. In newspapers, sections with ads tend to be inserted in a way in which your eyes are not bouncing back and forth between content and ad, fighting to keep focus.

Imagine however, you are reading a magazine, and an ad pops out at you, as in a pop-up book. Or on TV, mid-joke, there is a 15 second interruption with an ad.

My natural response would be, this is ridiculous! I would likely stop watching or switch to content that does not disrupt me. This is often how I see my experience with internet advertising.

Expect Digital Marketing and Content Revenue Models to Evolve (Predictions)

  1. Ad blocking will continue to rise in the short term. This will create revenue issues for many publishers, but this will also force publishers, as music and video companies did, to adapt their models.
  2. Companies will adjust (as they always have, just as in this example: Google says it won’t make advertisers pay unless ads are 100% viewable). In an evolutionary sense, if a world with ad blocking is not sustainable for publishers, this is the next step. If users refuse to look at ads, publishers will look at new revenue models. Or even return to old ones, like subscription.
  3. Smaller, individual sites will be unable to command subscription fees, or enough in donations. These sites will either die, or aggregators will appear providing subscription revenue for a network of sites. Does this sound familiar? It’s what cable providers do. We all pay a package fee, even if we use 10% of the channels offered. This fees is then disbursed across all partners which in aggregate is enough to fund content creators. Would you pay $20 a month for unlimited reading (to most sites)? I think that future is coming. This is no different from what you see with Netflix and Spotify. Wait a minute, couldn’t Facebook do this with Instant Articles, its product to help publishers deliver articles quickly while controlling the ad experience? Isn’t Apple doing something similar with News and Apple Music? Why, yes.
  4. Facebook, Google and other Internet media giants will lead the way in acceptable internet advertising standards. Some ad blockers will agree to allow these non-disruptive ads in, others won’t. Depending on the level of adoption, this will make subscription / ad revenue dependent services tilt accordingly.
  5. Advertisers will Demand Quality Impressions from Publishers (see below for more on this)

What do Good Ads Look Like?

I believe that ads do serve a need. They provide information for things that you may not be aware of, advertising is the origin of push discovery. If we remember traditional media, ads reached a happy balance for the user. When they begin to push too far (ridiculously obvious product placement), users push back, and the balance must be restored. This is what we see in internet advertising today when users install ad blocking.

I believe a large problem is the focus on pure CPM, the number of impressions, rather than the quality of that impression – are you giving a user enough time to focus on your ad without delivering in a way that is obnoxious? Think back to TV and magazines, in which I would argue, yes. The medium (magazine page, TV screen) switches completely over to the ad. In internet media, however, oftentimes, if I can just show some kind of banner on my site, and it’s then rendered somewhere on a person’s screen, I can say mission accomplished to the advertiser. From the advertiser side, I understand why this may not be so effective for my company.

Let’s look at an example below from IGN (screenshot from Sept. 30, 2015)

IGN Ad Takeover Example2

The “Wildstar” banner above is a normal banner. As you scroll down, it disappears. From my experience, you are probably scrolling down right away. If you put the ad in front of me, making me get through it, as discussed before, I will fight through it or leave. Thus, I can claim this as an impression for my CPM count, but I bet the advertiser is not too happy with its quality.

Let’s take another look at IGN below:

IGN Ad Takeover Example

This is actually the full screen of IGN, with a “takeover” seen on the sides from Wildstar. Basically, a takeover means the advertiser takes the background of the site. As the user scrolls, the ad continues. It’s not obnoxious and has a chance to stay with the user, when he has time to process it. Perhaps he will never click on it or read it carefully, but that brand has a chance to sink in, as it might on TV or print. It doesn’t interrupt your experience but can still seep in.

It’s much more natural, and assuming the takeover doesn’t change when the user changes pages within IGN, pretty good. This an experience publishers should be providing, at higher cost, for clear resonance. Yes, there are lower quantities available, but the quality is higher, and publishers can and should charge accordingly for it to make up the difference. Programmatic ads should still be possible as standards are created on how to create takeovers.

There are other examples in online media today that I love. I experienced one on a long form article on The Verge. As you scrolled down, an ad would slowly appear in-between sections of content. You saw it coming, and you could keep scrolling to get past it. However, the size of the ad was essentially full screen, thus through the process of scrolling, you would experience it for a few seconds. Because the process was seamless and natural, as in magazine reading, you didn’t have to play whack-an-ad to close it. You experienced the ad at your own pace, the feeling was great. I saw this same form of ad on mobile through Bleacher Report’s app recently as well.

Those seconds of full screen bliss are an advertiser’s dream and I think they are directly comparable in attention to traditional media ads. Those small 200 x 200 banners that are hiding in some corner in-between content – don’t we all simply learn to ignore them completely?

Good ads have to parallel what we experience on traditional media (in terms of the mental process and stress level) – you can see them coming, you are not shocked into them, you take a natural action (like scrolling down).

Evolve or Die

Despite all the hoopla and concern over ad blocking, this is simply an evolutionary phase. Companies and users will adjust until there is a balance that creates a sustainable model for content. Publishers are right in that users don’t realize that they have to pay for content one way or another, but publishers shouldn’t fight momentum, trying to hold on to their idea of how that money should be generated.

I would love to hear what you think about the future of internet advertising! Feel free to comment below.

For more information see:

Ad Blocking – Unlike Fraud – Comes At The User’s Behest | AdExchanger,

Ad Blocking Is a Hot Topic for Marketing, Media Executives – WSJ,

Ad Blocker – UntangleWiki, Study of Ad-Blocking Software Suggests Wide Use – The New York Times,

Widely Cited Ad Blocking Study Finding $21.8 Billion Loss Is Incorrect,

The ethics of modern web ad-blocking – Marco.org,

Apple’s Ad-Blocking Is Potential Nightmare for Publishers – CMO Today – WSJ,

Ad Blockers and the Nuisance at the Heart of the Modern Web – The New York Times,

Adblock Plus Changes ‘Acceptable’ Ads Program)

2 Replies to “Predictions for the Future of Ad Blocking and Digital Advertising”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s