The Digital Double-Edged Sword: Ad Blocking

January 18, 2016 • By Atlantic Re:Think • Blog Post

IN THIS ARTICLE

  • Publishers are struggling to find ways to balance revenue goals with the ongoing growth of sophisticated ad-blocking technology
  • At the same time, despite advances in online ad-serving technology, fraudulent bot traffic still outnumbers humans more than half of the time

Internet companies and even advertising execs are divided on whether ad blockers are killing content on the Web or helping to make it a better place

It’s hard to imagine “Mad Men’s” Don Draper installing an ad blocker, but Boondoggle, an ad agency in Belgium, is betting he would.

To find Draper-quality ad creators for the Digital Age, the firm posted a recruitment video on trade websites that would play only on browsers running ad blockers. In the video, the firm stated that 10 percent of all advertising professionals block ads, and that it was convinced the great ads of the future would come from that group.

It’s anyone’s guess whether ad-blocking users will create the future of advertising, but there’s a growing consensus that they will help shape it. In its 2015 report, anti-ad-blocking service Page Fair estimated that 198 million active Internet users have deployed ad-blocking software worldwide, a 41 percent increase from its 2014 estimate. Digital publishers and advertising professionals are taking a hard look at those numbers, discovering who is blocking ads and how they can be reached otherwise.

Since its launch last year, Adblock Analytics has collected detailed information on consumers’ use of ad blockers through its proprietary traffic-testing service. Founder and CEO Ashley Morgan describes the typical ad-blocking user as a mixed blessing for web publishers: despite avoiding sponsor messages, they are often a site’s best customers — leaving more comments, viewing more pages and spending more time on a site than average users do.

“They are valuable and engaged users,” Morgan says. “You just have to communicate with them in a different way. They are willing to work with you to a certain extent because their actions are speaking.”

Holistic view of ad blocking

While they are a small minority of web users, particularly in the U.S., people who use ad blockers are driving a disproportionately high percentage of Internet traffic, tending to be young, tech-savvy digital natives. And Morgan’s data seem to point to a troubled future for ad-supported content: The people using the Web the most are the ones viewing ads the least, with video games and other tech-friendly sites experiencing the highest rates of blockage.

For digital ad giants Google and AppNexus, the number of ad-blocking users remains too small to lose sleep over. Last year, Google’s Larry Page discounted the threat from ad blockers, saying that Google users don’t block search ads because they are useful. AppNexus senior vice president Pat McCarthy also downplays ad blockers’ significance, citing the steady upward trend of digital ad revenues. “Not everyone wants to get rid of an advertising-powered Internet,” McCarthy says. “Not everyone finds ads to be intrusive.”

Looking forward

One former Google executive is betting big that his old boss is wrong. While running Google’s Global Marketplace development team, Ben Barokas sounded repeated alarms about ad blocking. He had been studying digital ads for decades, first at AOL, then at his ad-optimization service AdMeld, which Google bought for $400 million in 2011. By 2014, Barokas’s anxiety about ad blocking boiled over. If Google wouldn’t address it, he would.

“An increasingly frightening amount of inventory publishers use to monetize the web was starting to disappear,” Barokas says. “It was something that could no longer be ignored.”

Barokas launched his software solution, Sourcepoint, just last year. Ad blockers work by interrupting communication between browsers and remote servers that are known to host advertisements. When Sourcepoint’s software detects that interruption, it can restore the original ad, serve a different one or present the option of an ad-free subscription.

Barokas describes his company’s mission as both regaining ad revenue for Internet publishers and advocating for the free web with readers, reminding them that ads are the reason they get all that content for nothing.

It’s a message several major publishers appear eager to communicate. The Washington Post’s website redirected ad-blocking readers to a subscription offer in September 2015. In November, Yahoo ran a small test preventing ad-blocking users from accessing their email inboxes.

Implications of ad blocking

All that said, ad blockers were invented for a reason. Clicking on a stray link can lead to a swamp of malware-infested, background-loading ads, leaving readers frustrated as browsers slow to a crawl. Privacy advocates warn that ads using Flash and JavaScript can expose browsers to surveillance.

At least one high-profile ad executive actually wishes ad blockers could be an Internet standard. In a Wall Street Journal editorial, Fox Networks’ president of advanced advertising, Joe Marchese, argued that the ad-supported Web favors sites that irritate readers and shortchanges the best of them.

“The ad dollars are going to what I call impression farms,” Marchese says. “They go to whoever can get the most server pixels to fire on a page as fast as possible at the cheapest rate.”

In Marchese’s view, that hurts users and advertisers alike. The proliferation of annoying sponsor messages drives down ad prices. Sites try to make up for the low rate with volume and pages with wall-to-wall ads, which lead to fewer reader impressions. At the same time, fraud is rampant. In 2015, AppNexus found that over half its inventory’s activity was fraudulent, with clicks and impressions coming from bots and other nonhuman or otherwise invalid traffic.

Google is aggressively attacking ad fraud, employing more than 100 programmers in a secretive anti-fraud division. While major ad platforms spend valuable resources fighting fraud, ad blockers profit enormously. Major online publishers, including Google, pay millions for placement on Adblock Plus' white list of “acceptable” advertisements.

Universal adoption of ad blockers may not be the vehicle through which a reset of the system occurs, but Marchese is convinced a reset is urgently needed. He argues for fewer ads on pages overall, which would bring more attention to the remaining commercial messages and allow advertising firms to charge higher rates.

“There will be a little bit of pain for high-quality publishers,” he says, “but in this beautiful free Internet that we love, that’s ad-supported, the dollars are not going to where people get the most value.”

 

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