Are you using an ad blocker?


Of course you are, and so am I. Online ads are on the rise and can be very annoying. Thankfully, ad blockers easily allow you to block advertisements and increase the speed of browsing. But did you ever wonder what the consequences of using ad blockers are? And what about the latest developments in this industry? This 3-minute read will get you up-to-date.

The online advertising industry

Online advertising is one of the few industries that can bend on growth rates between 15-20% each year. In the past 10 years, internet advertising has seen a CAGR (compound annual growth rate) of 17%. Mobile internet advertising even shows a CAGR of 110% over the past 5 years.

press-release-6-11-152Graph 1: Revenues of online advertising for Q1 from 1996-2015.

The rise of ad blockers

With the rise of online advertisements, there has been a rise in the adaptation of ad blockers as well, especially in the last few years. A recent report from Adobe shows that globally around 200 million people are currently making use of ad blockers, a growth of 41% in comparison to 2014.

adblock graph

Graph 2: Global monthly active users that have an ad blocker

As we speak, ad blockers are mostly used on non-mobile devices. However, Apple’s newest iOS 9, which runs on iPad and iPhone, might change this trend. The new software update of Apple makes it possible to use ad blockers on both iPhones and iPads. Mobile ads seemed to be the future of advertising, but might stagnate due to this development.

Companies are missing money – a LOT of money

There are a lot of companies and content creators who are dependant of online ad revenues. Ad blockers are bad news for them. Some websites, among which Wired.com, kindly request you to whitelist their page, in order to keep their websites running. But how big is this ad-blocking problem for these companies? According to the report of Abobe and PageFair, $22 billion(!) of ad revenue is lost due to ad blockers this year. If the increasing adaptation rate of ad blockers continues as it did in the past few years, the results for content creators and companies can be devastating – and might affect the average internet user as well.

What will the future bring us?

A decrease in ad revenues might result in less content on the web, as ad revenues won’t always enable people and companies to cover their expenses. The entry barrier to create and share quality content might rise, as revenues derived from this content will get more uncertain. A second consequence might be that there will be more places where you will need to pay to access content. Personally I can see the upside of this second consequence, as it makes us, as internet users, more picky in what and how much content we consume.

Seen from a business perspective, the increase in the usage of ad blockers might lead to a change of business model for a lot of companies; they cannot just simply rely on ad revenues anymore. In the future we might see websites with a Spotify-type of business model: view content for free if you are willing to accept ads (whitelist a website if you are using an ad blocker), or pay a subscription fee if you want ad free content.

Studies and examples such as Spotify Premium have shown that users are willing to pay for an ad-free web-environment. Would you be willing to pay, or would you rather see ads in return for free content?

Sources:

http://www.iab.net/media/file/IAB_Internet_Advertising_Revenue_FY_2014.pdf

http://blog.pagefair.com/2015/ad-blocking-report/

http://blogs.wsj.com/cmo/2015/09/16/apple-software-update-brings-ad-blockers-along-with-apple-news-sponsors/

http://www.npr.org/sections/alltechconsidered/2015/07/20/424630545/with-ad-blocking-use-on-the-rise-what-happens-to-online-publishers

http://bits.blogs.nytimes.com/2015/08/10/study-of-ad-blocking-software-suggests-wide-use/

Advertisements

Tags: ,

21 responses to “Are you using an ad blocker?”

  1. 358535ss says :

    I believe this is an interesting topic and a trend to keep an eye on in the near future. With the introduction of iOS9 by Apple and herewith the introduction of their ad blocker, a Wall Street analyst said: “In a worst case scenario, this is Apple against the entire mobile publisher and advertiser ecosystem.” I agree with this statement to a great extent, since Apple now reaches a much broader audience for ad blocking than before. As mentioned in this blog, earlier on, ad blockers were mostly solely applicable to non-mobile devices. Now it is available for all iPhone and iPad users (with iOS9). Thus, the impact Apple might have on the entire publisher and advertiser ecosystem can be devastating. I definitely feel that this will cause an inevitable change in the online business models.

    On the one hand I agree that the businesses cannot rely on ad revenues only. Instead they should come up with new creative ways to make money. Some argue that this may trigger a reaction of publishers to disable their content for the ‘Safari’ Internet browser application of Apple. I doubt this is creative thinking, but you might ask who is to blame?
    On the other hand, consumers have to reconsider their needs. For instance, if we take a look at the publisher industry we should ask ourselves several questions. Do you want to be able to read the (news) articles of your favourite well-known publisher with advertisements? Or do you feel the need to use an ad blocker, which in some cases disables you to make use of the site? Subsequently, will the ad blocker diminish the high quality online content that was available in the past?

    To answer your last question, I am not willing to pay for an ad free online environment yet. However, while commenting on this blog I am reconsidering my wants and needs. I do not want to be a thief of the online content I desire to consume.

    Sources:

    http://uk.businessinsider.com/how-apple-ad-block-in-safari-and-ios-9-will-affect-publishers-and-advertisers-2015-6

    http://www.npo.nl/de-wereld-draait-door/16-09-2015/VARA_101375376/POMS_VARA_2013271

  2. Hidde says :

    Interesting post.
    I think that online-advertising took a wrong turn by getting too much eye catching and invasive. I’m talking about pop-ups and flashing banners.
    People then reacted by wishing they could shut them off, and so an ad-blocker was born. No-one minds advertisements on the TV as long as the commercial breaks don’t happen too often and don’t have annoying ads. The internet should lead this example. If anything, I think ad-blockers force the advertising industry to rethink about how they should advertise in a non-annoying way. Google is doing quite a nice job on this I think.

    The sites that I do visit often and where I know they don’t have these bad-ads, got an exception on the ad-blocker I’m using. Also, more often I do see websites with a premium subscription where the ads are disabled. Guess it will go one-way or the other.. Let’s see what the future will hold

  3. 358278jd says :

    I think it is a very interesting development we see here. Now that ad-blockers will also become available for mobile devices, I agree it should be seen as an incentive for the advertising industry to re-think the way they advertise online.

    However, this development of ad-blockers for mobile devices will may not be as impactful as we would have thought. This morning I read an article on nu.nl, in the tech section, which announces the withdraw of the ad-blocking app “Peace” from the App Store. You can read the article here: http://www.nu.nl/apps/4128968/maker-populairste-ios-adblocker-trekt-app-terug.html.

    Because the article is in Dutch, I will summarize it for you guys. The maker of the most popular iOS-adblocker, Marco Arment, announced the withdraw of his App “Peace” from the App Store on a blog on his own website. He stated that he was very sorry to all of its users and fans, but that the big success of Peace just did not feel right. The app has been the bestselling app in the App Store for 36 hours straight and should have been the highlight of Arment’s career. But as Arment explained in his blog, however a lot of people benefited from his app, a lot of people were hurt by its success too. Peace blocked all adds at once, but in reality it is a much more complicated process.

    I believe the withdraw of this popular app could definitely have an impact on the development of the advertising industry, in case of adds for mobile devices. However, there are more ad-blockers available in de App Store, so I would not expect the impact to be too big.

    Source: http://www.nu.nl/apps/4128968/maker-populairste-ios-adblocker-trekt-app-terug.html

  4. manonhoogendoorn says :

    Thanks for sharing this post with us!

    After reading your blog I was wondering what the consequences of Ad blocking is on Google, since Googles revenue depends on advertising.

    Google is the biggest provider of ads on the web and uses two different technologies for it: DFP and AdX. The first technology is called DoubleClick for Publishers, in short DFP. Google provides the infrastructure for publishers to serve ads. It serves ads for a lot of major publishers. The second system is called DoubleClick Ad Exchange, in short AdX. AdX brings together buyers and sellers (ad networks, agencies and third-party) across the industry. Publishers are able to set up an open auction for their ad inventory, in which they can set the rates they would like that inventory sold at.

    What will be the impact of Ad-blocking on Google? When a visitor uses an Ad-blocker, it will not be able anymore to click on the advertisement and Google cannot make money from it anymore. The last years, the revenue of advertisement grown from 43.69 billion in 2012 to 59.06 billion in 2014. The advertisement revenue accounted for 89,5 percent of the online company’s total revenue (Statista, 2015).

    What will be the effect of Ad Blocking on their revenue model? Since the total revenue of Google highly depend on advertisement, what will happen when the use Ad Blockers becomes more common?

    https://www.google.com/intl/nl/doubleclick/publishers/welcome/#error=no_adsense?auser=0 http://science.opposingviews.com/impacts-adblock-plus-googles-revenues-3128.html http://www.theverge.com/2015/9/17/9338963/welcome-to-hell-apple-vs-google-vs-facebook-and-the-slow-death-of-the-web
    http://www.statista.com/statistics/266249/advertising-revenue-of-google/ https://www.doubleclickbygoogle.com/solutions/digital-marketing/ad-exchange/

  5. 358345mh says :

    Thanks for sharing this post with us!

    After reading your blog I was wondering what the consequences of Ad blocking is on Google, since Googles revenue depends on advertising.

    Google is the biggest provider of ads on the web and uses two different technologies for it: DFP and AdX. The first technology is called DoubleClick for Publishers, in short DFP. Google provides the infrastructure for publishers to serve ads. It serves ads for a lot of major publishers. The second system is called DoubleClick Ad Exchange, in short AdX. AdX brings together buyers and sellers (ad networks, agencies and third-party) across the industry. Publishers are able to set up an open auction for their ad inventory, in which they can set the rates they would like that inventory sold at.

    What will be the impact of Ad-blocking on Google? When a visitor uses an Ad-blocker, it will not be able anymore to click on the advertisement and Google cannot make money from it anymore. The last years, the revenue of advertisement grown from 43.69 billion in 2012 to 59.06 billion in 2014. The advertisement revenue accounted for 89,5 percent of the online company’s total revenue (Statista, 2015).

    What will be the effect of Ad Blocking on their revenue model? Since the total revenue of Google highly depend on advertisement, what will happen when the use Ad Blockers becomes more common?

    Sources:

    https://www.google.com/intl/nl/doubleclick/publishers/welcome/#error=no_adsense?auser=0 http://science.opposingviews.com/impacts-adblock-plus-googles-revenues-3128.html http://www.theverge.com/2015/9/17/9338963/welcome-to-hell-apple-vs-google-vs-facebook-and-the-slow-death-of-the-web
    http://www.statista.com/statistics/266249/advertising-revenue-of-google/ https://www.doubleclickbygoogle.com/solutions/digital-marketing/ad-exchange/

    358345mh

    • lindatram7 says :

      It is definitely true that ad blockers are rising, but currently it is not a huge problem yet. I don’t think it will be even in the near future considering the amount of people who don’t use adblocker yet.

      Second, with Google the advertiser can choose to pay for an ad only when people click on it. People who use adblocker will most likely not click on your ads anyway, so i don’t think you have anything to lose, cause if those people don’t click, you don’t pay.

      Of course, should the number of ad blockers keep rising in the future it may become a problem eventually. It is always recommended to focus on the ad strategies. I agree with what Hidde says, no one wants to see annoying ads, or see an ad 20 times a day. That all depends on the strategy of the advertiser. It is their job to make sure the right ads are shown to the right people (target group) at the right time. I think if targeting is done specifically and in the right way, it won’t be such a big problem and less people will feel the strong need for an adblocker (and perhaps your website can get whitelisted too).

      To answer the question whether or not I would pay for ad-free content? At the moment no.. I am not annoyed yet to the point that I need to pay for ad-free content. Also, I actually don’t use adblocker either 🙂

  6. 370068da says :

    I can say that I really liked your post and it did make me think about the current structure of the industry. First I can provide you with a supplement to an earlier comment:

    http://www.bbc.co.uk/newsbeat/article/34302253/peace-ad-blocker-withdrawn-after-maker-marco-arment-says-success-doesnt-feel-good

    Now that it is in English you can read all the details about the withdrawn by Marco Arment.

    Secondly, I found another article about the add blocking controversy. This article argues about the current ad spending, the historical add spending, the rise of ‘native’ ads and the add blocking on mobile phones. The writer of the article stated that add spending has been stable for over 60 years; zero sum element to change in de advertising industry. Besides that, ‘native’ ads are there to argue the effectiveness of add blocking software .This could also be a solution. Lastly, the writer argues that add blocking software on mobile phones will cause a shift of advertisements from web browsers to applications.

    To summarize my comment, I am still arguing with myself if add blocking software is unethical or not. I used to think that business models should be flexible enough for change, but on the other side, I do like to read content on the internet for free. I think business models will change, but let’s see what the future brings us!

    Source:
    http://www.vox.com/2015/9/18/9351759/ad-blocking-controversy
    http://www.bbc.co.uk/newsbeat/article/34302253/peace-ad-blocker-withdrawn-after-maker-marco-arment-says-success-doesnt-feel-good

  7. jobdeibel says :

    Thanks for sharing! I agree that the consequence of the popularity of ad blockers will most probably force firms to redesign their business models and find other alternatives to generate sales. To me, the surge in popularity of ad blockers is a clear signal that customers prefer to not be targeted with those offerings of which companies believe they are interested. Companies should embrace a pull strategy by fully engaging with potential customers in the form of, for example, story telling and not by spamming them with ads. I believe that when customers have the intrinsic motivation to engage with a company, more value can be obtained by of both parties. In other words, ad blockers force companies to practice resonance marketing that will generate more value for both companies and customers. Thus, the rise of the popularity of ad blockers will have a positive long-term effect.

  8. niek441788 says :

    Nice post! Definitely an interesting topic nowadays.

    Did you guys know that former Google employee Ben Barokas might have found a solution for companies to ad blockers? Ben became a big player in the online advertisement market with his company Admeld which offered online advertisements to companies. In 2011, he sold his company to Google and after a short period working for Google he started the ‘anti-ad blockers’ company called Sourcepoint.

    Ben publically announced Sourcepoint this year right after the news that Apple’s iOS 9 would update the Safari browser to allow people to block online advertisements. What Sourcepoint basically does is enable websites to block visitors who use ad blockers. Websites can choose which content to show to ad block-users and which content to hide. If visitors desire to see more, they will have to pay or shutdown their ad blocker.

    Why would companies choose Sourcepoint over white-listing their website on ad blockers? Companies which do so face a considerable risk of reduced visitor numbers which in turn would reduce their advertising revenue. There are several reasons though. First of all, there are many ad blockers available today, especially when you consider ad blockers for each different platform. White-listing on all of them could crank up the cost pretty rapidly. Secondly, companies fear the power ad blockers gain in the white-listing setup as this generates uncertainty in terms of future tariffs.

    The biggest risk Sourcepoint-users face is reduced visitor numbers who might switch to similar websites without Sourcepoint (and without advertisements!). The best way for companies to counter this risk is to unify in the use of Sourcepoint. Currently, Sourcepoint has partnerships with 22 major publishing companies, which will integrate Sourcepoint into their system, and keeps adding more to that list. It seems companies taking the offensive to ad blockers. The question is though, do companies really have enough power to overcome ad blockers or will the consumer’s preference prevail?

    Sources:

    Ben Barokas, CEO of Sourcepoint, http://www.sourcepoint.com

    Lara O’Reilly, journalist Business Insider on Sourcepoint, http://uk.businessinsider.com/former-google-exec-launches-sourcepoint-with-10-million-series-a-funding-2015-6?r=US&IR=T

  9. dirkjanbreeuwer1 says :

    Interesting subject!

    To me it seems that the rise of adblockers is merely the logical response to widespread bad practices within the advertising industry: Websites covered with flashing, irrelevant and generally excessive advertisements were bound to be avoided one way or another.

    You mention that companies could seek to change their business model as a response to this development. I believe the whole marketing industry has already responded with the development of “inbound marketing”.

    Never heard of inbound marketing?

    Best way to describe it is by comparing it to advertising: Where advertising (or other outbound marketing practices) rely on interrupting the user in order to deliver a marketing message, inbound works by creating content that satisfies a user’s information needs instead. Inbound marketing uses tools such as blogs, ebooks, whitepapers, SEO, to attract visitors “in”, rather going “out” and hunting for consumer’s attention.

    The development of tools such as Sourcepoint seems like an immature response, and a reluctance to adapt to changes in consumer behaviour. A user’s attention has value, and if advertisers do not manage to (counter)provide enough value so that the user considers it a fair exchange, then the most likely development would be (as you said) the emergence of “block-blockers”.

    Disclaimer: Worked for an inbound marketing agency so might be a bit brainwashed to the idea ;).

    Sources:

    *http://www.hubspot.com/inbound-marketing
    *http://mashable.com/2011/10/30/inbound-outbound-marketing/#F7Pq23CWdPq7
    *http://www.sfgate.com/business/technology/article/Ad-blockers-rise-as-ads-annoy-bog-down-websites-6524211.php

  10. frisoroscamabbing says :

    I agree with you, i wouldn’t mind to pay – or have the choice to pay – for ad free quality content. You can already see such trends taking place with services like blendle.

    Great read!

  11. nielsuiterwaal says :

    I agree with Hidde on this one. Advertising has become too invasive and (…..) the user experience. Of course websites that have non-invasive ads on their website are in a damned-if-you-damned-if-you-don’t scenario. On the one hand they are forced to have aggresive advertisements to keep up ad revenues and thus contributing to the problem and on the other hand if you do not contribute you miss out on potential revenue.

    I think at this point in time you will see a major shift towards paid content but at one point companies and other content providers will realize that putting content up for free is a great way to get a foot in the door with new audiences. This may cause the pendulum swing to got to the other side again or there might be a time where most businesses will have a freemium option.

    Anyway great point of discussion and I am curious to see how this will play out in the future since it has a major influence on what kind of content can and will be found on the internet.

  12. 371908jg says :

    I think this is a very interesting blog post. The adblocker problem is in the newspaper and magazine industry a huge problem. In my opinion there is a solution: micropayment. Alexander Klopping founded Blendle, Blendle is a website where you can buy one article from a newspaper or magazine instead of buying the whole newspaper or magazine. You just have to pay 10 to 90 cent. The number of articles and the number of users increases very fast. I think micropayment can be the compensation for the shrinking revenue of journalism.

    But how can we apply this to firms like Google? I’m curious to see what the future holds.

    Source: https://www.linkedin.com/pulse/world-ad-blockers-we-need-micropayments-alexander-klöpping?trk=prof-post

  13. 376122rb says :

    Some of the premium publishers have already begun improving advertising on their platforms. If we take a look at Google, they advertise in a more acceptable ad formats, clearly marked to be paid for. Advertisements fit within the general style and context and do not interrupt with the users experience. This same format is adopted within Facebook and Twitter with its news feed ads. By making it as user friendly and not disturbing they are trying to prevent from adblockers.

    Goldman sachs says that it are ‘the smaller players in the market “don’t have the resources or incentive to adapt,” and it’s these kinds of sites and their annoying ads — pop-ups, autoplay video, interstitials that interrupt the reading experience — which are driving up ad blocking adoption’

    Once again Google can change this. ‘Google operates the largest ad exchange and ad server through DoubleClick and could become significantly more selective not only on ad types and formats permitted, eliminating those with large file sizes, but also publisher standards on page load times. This could be a catalyst for publishers to streamline the number of third party scripts and tags embedded in the site and accelerate the shift to higher quality ad formats.”

    If internet users don’t need an adblocker anymore by remaining a better browsing experience, companies can retain their advertising revenue.

  14. 360169gm says :

    To answer your first question: yes, ofcourse I use ad blocker when I use my laptop. It’s free anyways. However, I’m not sure if I am willing to pay for an ad blocker. I also spend many times on my iPhone and I always ignore the ads during web browsing sessions. People who use adblocker is simply because they’re not interested, so most people who use ad blocker wouldn’t click on advertisements anyways. And it is quite logical that ad blockers are rising, since the amount of ads is rising, and consequently many people (like me) are getting more bothered by als these ads. If you ask me your last question, it depends on the policy of the application that provides add blocking. The reason I say this is because I recently read an article about Apple allowing an ad blocking application, named Been Choice, in their iTunes store. Been Choice offers a content blocker for Safari and a VPN service. The last one performs an inspectation on your content and after this specific content can be removed. This seems very beneficial for those who doesn’t want all those annoying ads. However, there is a flipside. Been Choice hides a paid surveys operation. Users are offered a choice between ad blocking and sharing data. Users will receive a compensation, when they agree to share their behavioral data with advertisers, publishers and app developers. According to their privacy policy they will pull device info, device ID’s, content of your communications and transactions and information about you. They admitted that your giving up your personal data even more than with traditional ads. In this case I rather see ads in return for free content!

  15. 360169gm says :

    To answer your first question: yes, ofcourse I use ad blocker when I use my laptop. It’s free anyways. However, I’m not sure if I am willing to pay for an ad blocker. I also spend many times on my iPhone and I always ignore the ads during web browsing sessions. People who use adblocker is simply because they’re not interested, so most people who use ad blocker wouldn’t click on advertisements anyways. And it is quite logical that ad blockers are rising, since the amount of ads is rising, and consequently many people (like me) are getting more bothered by als these ads. If you ask me your last question, it depends on the policy of the application that provides add blocking. The reason I say this is because I recently read an article about Apple allowing an ad blocking application, named Been Choice, in their iTunes store. Been Choice offers a content blocker for Safari and a VPN service. The last one performs an inspectation on your content and after this specific content can be removed. This seems very beneficial for those who doesn’t want all those annoying ads. However, there is a flipside. Been Choice hides a paid surveys operation. Users are offered a choice between ad blocking and sharing data. Users will receive a compensation, when they agree to share their behavioral data with advertisers, publishers and app developers. According to their privacy policy they will pull device info, device ID’s, content of your communications and transactions and information about you. They admitted that your giving up your personal data even more than with traditional ads. In this case I rather see ads in return for free content!

  16. 356104sf says :

    I am an ad blocker user myself, but I sometimes experience that some websites do not work anymore with an ad blocker enabled. Like with RTL XL, it is not possible to watch any video anymore with an ad blocker. So some websites are trying to keep their current business model by making ad blockers useless. On the other hand, YouTube is already planning to introduce a subscription version of their service (The Guardian, 2015). With this version, viewers will pay to remove the advertisements. This new business model of YouTube is almost the same as that of Spotify. You can see/ listing to all the content but you have to pay if you want to do this without advertisements. So big websites are already planning the implementation of the “view content for free if you are willing to accept ads (whitelist a website if you are using an ad blocker), or pay a subscription fee if you want ad free content” concept.
    I am curious which business model will be the standard for these kind of websites in three years from now.

    http://www.theguardian.com/technology/2015/apr/09/youtube-monthly-subscription-remove-ads

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

%d bloggers like this: