The threat to advertisers from Adblock Plus, mobile operators and Apple
The number of people using ad blocking software has recently hit a critical mass, with over 215 million or 7% of the online population using the software. The figure grew by 70% last year, according to an Adobe and PageFair study, and it is estimated at 47% of users in the US use adblocking software. The FT reported in May that several mobile operators plan to block advertising on their network from late 2015 for customers who opt-in, though some are considering applying ad-blocking to all users.
There is literally so much going on in ad blocking that I have had to split this blog in two. This blog provides a background and establishes the battle lines, and the next one provides some possible options and solutions, as well as Apple’s introduction into the mix.

Firstly, definitions: it’s a numbers game

First we need to define ad blocking – as ‘software in a web browser which prevents ads from loading’. Second, we need to establish that this isn’t something new. The ad blocking threat to advertisers has been around for about five years, with real take up by users accelerating over the last two years.

The number of people using ad blocking software has recently hit a critical mass – more than 215 million or 7 per cent of the world’s online population. The figure grew by 70 per cent last year, according to an Adobe and PageFair study. A Reuters Institute Digital News Report claimed 39 per cent of the internet users in the UK and 47 per cent in the US are now using this software. And in Germany the figure is 30 per cent.

Ad blocking software has, until recently, been designed primarily for PCs and laptops. However, ads can now be blocked where the eyeballs are – on tablets and smartphones – and in May, Adblock Plus, the world’s most popular ad blocker, announced that it is launching an ad blocking browser designed for Android mobiles.

Mobile operators vs publishers and media owners

Also in May the FT reported that mobile operators are allegedly planning to block advertising on web pages and apps, inevitably bringing them into conflict with publishers and media owners such as Google, AOL and Yahoo.

Right now ad blocking is based upon users making a conscious decision to opt in to download the software. However, who is to say that users won’t automatically be opted out of being served ads by mobile operators fairly soon? How many users will actively opt back in to receive ads? Not many I suspect!

A default opt out might soon be applied across entire mobile networks, covering millions of subscribers all at once.

Adblock Plus’s ‘white list’ and ‘acceptable ads’: Discuss!

Adblock Plus initially blocked all ads. It now operates a ‘white list’ of approximately 150 websites, whose ads avoid the block. According to another FT report, over the past couple of years a number of the big media owners such as Google have allegedly handed over a great deal of money to ensure that they were included on Adblock Plus’s ‘white list’. Google allegedly lost about $6.6bn revenue to ad blockers in 2014.

As Google, which relies on showing advertising for approximately 90 per cent of its revenues, appears to have the most to lose from ad blocking, it is rather ironic that Chrome is the most popular browser used to download ad blocking software.

Adblock Plus claims that only 10 per cent of the companies ‘whitelisted’ actually have to pay for the privilege. Of course it’s the biggest global companies that afford to hand over big bucks. If these companies don’t pay up, their ads are blocked, even if they are deemed 'acceptable'.

The rest of the companies included on the white list, the long tail, those that don’t have to pay, still have to meet various criteria to prove that their ads are ‘acceptable’. AdBlock Plus determines that acceptable ads "aren’t annoying, don’t disrupt or distort page content, are transparent about being an ad, are effective without shouting at users and are appropriate to the site or tweet that users are on". Acceptable ads can’t include animations or sounds and can’t be pop ups that cover other content.

Publishers’ responsibility

Publishers have a great deal to lose as advertisers won’t want to pay for ads which are blocked. Therefore it’s in their interests to ensure that pop ups and autoplay video ads don’t interfere with page loading and navigation and to reject tedious ads and ensure there aren’t too many ads appearing on their real estate. On the other hand they need to sell as much inventory as possible.

We need to be aware that a smartphone’s battery life can be severely affected by rich media videos, which can interfere with page loading and navigation, eating into a user’s data plan. Not forgetting the privacy angle, with ads dropping cookies on users’ devices and data being shared with opaque third parties.

Some publishers are looking to develop more direct relationships with advertisers. A new breed of online publisher, typified by the likes of the Vice Media Group offering uncomfortable, immersive, investigative journalism, is emerging.

Online vs TV ads

But of course this is all very subjective. Some of the most irritating ads, on TV and online, are amongst the most successful in building brands and shifting product. You can probably recall a couple. And some of the most aesthetic, creative and artistic ads aren’t even noticed.

I think that most of us agree that online ads need to improve. Publishers need to accept that cramming their sites with disruptive ads will eventually drive users away. However, I don’t think that the situation is helped by commentators slamming online at the same time as glorifying TV, radio and OOH ads. It’s not exactly black and white – online advertising is still a relatively new medium and we’re all learning. I don’t think that ads on ITV in the fifties won too many awards.

One observer recently stated, and I quote: “The TV adverts in between the action at the Superbowl in America are the most talked-about things in the country for a day or so after the event. People genuinely like them because they’re funny, cute or just generally interesting.” And they cost up to $12.4 million – research finding that these investments don’t necessarily translate into sales. Let's concentrate on TV ads shown in the UK week in week out – I’m sure there’s some room for improvement.

And by being targeted online, ads avoid wastage, being served to the right person at the right time in the right context. No matter how engaging an ad for dog food is on TV, for those viewers who don’t have a dog it’s simply not relevant. At least Sky’s Adsmart offers the opportunity to target audiences, serving different TV ads to different households watching the same programme, not only for linear broadcasting, but by the end of the year also for on-demand services and Sky Go.

David Ellison is marketing services manager at ISBA