Ad Blocking: The Threat and the Way Forward

Posted by Christian Manie On March 09, 2016

Programmatic Summit 2016 was a resounding success. Publishers, agencies, ad tech companies and pretty much everyone involved in programmatic came to hear about the state of the industry and thoughts on its future from leaders in the field.

Crucial to this topic was a well-attended panel titled “Addressing Industry Hot Topics: Ad Fraud, Ad Blocking and Viewability”.

Moderated by Lachlan Brahe,VP, ANZ,Comscore, the panel saw a lively discussion between Fairfax Media’s Tereza Alexandratos (digital ad development director), Yahoo7’s Ben Chamlet (head of trading and programmatic),OMD ‘s Dan Robins (head of Interactive), and Google’s Rhys Williams (head of media technology solutions).

The nature of the threat

Brahe asked the group what they see as the biggest risk to the industry. The panel was mostly in agreement on the impact of ad blocking and its risks to the industry, but the general consensus was that it is too early to know the impact it currently has or might have in the near future.

Williams remarked that ad fraud can be solved with a lot of hard work, viewability will eventually be sorted out between buyers and sellers, but that if the use of ad blockers continues to rise then fraud and viewability cease to matter.

This was a sentiment echoed by Alexandratos who said she thinks it could be a major threat, because if it grows, “… it obviously just destroys the industry as a whole.” She went to say that that it is just one of a number of risks that publishers like Fairfax need to factor in.

How big of a threat?

There was a lot of debate around the clear and present threat presented by ad blocking. At a separate panel exploring programmatic opportunities, Timothy Whitfield, GroupM ‘s technical operations director, said that the sky wasn’t falling just yet, saying that ad blocking has become a “Chicken Little” scenario in programmatic circles. “Someone says a number, then someone repeats that number and it amplifies. When I measured it … it was 7.3 percent in Australia,” said Whitfield. He went on to say that, despite that, “now 10 percent is an agency discrepancy and we were under the discrepancy for ad blocking.”

According to a study conducted by Adobe and PageFair, use of ad-blocking software globally grew 41 percent in 2014-15, with an estimated 198 million active users, costing publishers around $22 billion. (It’s worth noting that the most recent IAB study out of the U.K., conducted in February 2016, has ad-blocking use at 22 percent of the adult population, up from the October 2015 figure of 18 percent. That equates to just over 9 million people in the U.K.)

Speaking on the same panel covering programmatic opportunity, Big Mobile’s CEO Graham Christie said that, if you were to agree on the 200 million figure, it still only represents about “3 percent of the people online globally.”

Yet, all the debate around the present state of ad blocking aside, it was made clear by every speaker who touched upon the issue that it is a matter that could, if left unchecked, deliver a massive disruption to not only the ad tech companies, agencies and publishers, but to status quo of the established online eco system.

An additional problem

It’s commonly said in the digital industry that many internet users don’t understand that ad revenues enable the free dissemination of online content. The U.K ad-blocking study noted that 56 percent of people “were not aware that blocking ads meant the website would lose revenue.”

Unfortunately, the same study says that, even once they have been educated to the effect of ad-blocking software, 65 percent are no more or less likely to stop using ad blockers. And herein lies the issue that needs to be addressed: How do you persuade those people not to use ad blockers?

An emphasis on publishers

Alexandratos stressed it was something the whole industry needs to tackle together uniformly, because consumers view all publishers in the same way. “One or two bad experiences, even though as an industry we think we are doing a really good job of improving things – and on the whole we probably are – there are still a lot of poor experiences out there that do effect things, like page load … you get those dodgy pop-ups … that stuff still exists,” she said. She continued on to say consumers paint the whole industry with that one brush and it is these lingering issues that contribute to ad blocking.

Yahoo7’s Chamlet said that if advertising is delivered in “a way that’s intrusive, or breaks up their experience, or delays their content, the content they are trying to get access to, of course, even though it’s the perfect offer for them … it’s not going to resonate.”

Areas to address

In an October 2015 statement by IAB Senior Vice President and Tech Lab General Manager Scott Cunningham said, “We messed up. As technologists, tasked with delivering content and services to users, we lost track of the user experience.”

So how does the industry get back on track?

Data science needs to be refined. Both content and being smarter with the data were themes underpinning the opening keynote address by Expedia’s Vic Walia. He highlighted the investment the company has made toward refining its data science and its focus on segmentation (they now have 12 main categories and tailor all their advertising accordingly). Expedia has a “test and learn” culture that has a strong emphasis on experimental design, and runs many controlled tests to gauge the results of its efforts. This extends beyond the ROI that the company sees from these tailored ads: The higher return speaks to their excellent use of data and the power of good creative/messaging in their ads. It means users find value in the advertising, and that is something that any company should appreciate and strive for. The experimentation with data with the goal of delivering truly relevant ad content is something that all parties should strive for.

The improvement of the actual content in advertising will definitely improve the user experience. There were murmurs throughout the day regarding creative suffering online due to a narrow focus on targeting, and that the industry needs to swing its attention back to making great branded content as part of the effort to counter ad blocking: Ads need to entertain and educated, as well promote a brand message. If the internet is full of crap ads, who can blame people for blocking them?

Given the stats from the aforementioned U.K. study on ad blocking, it would seem there also needs to be a concerted effort to educate the general population on exactly how the internet exists economically, in regard to ad-funded free-content models. Initiating a conversation (even at the point of detecting ad-blocking software online) and explaining the effect it will have on content in the longer term, will go a long way to mitigating the threat. (The IAB U.S. has just released its D.E.A.L. initiative which is basically that.)

A unified solution

In his opening remarks at the IAB’s annual Leadership Summit in January, IAB U.S. CEO Randall Rothenberg called ad blocking a war against freedom and diversity. He went on to say that ad blocking companies also have done the industry a favour. “They have forced us to look inward – at our own relentless self-involvement – and outward, to … our actual customers.”

Consumers will accept certain things for free access to content, but there needs to be a reasonable trade-off: Stuffing pages full of tracking tags, delivering quantity over quality and profiling the hell out them (all while sucking up all their data usage) apparently isn’t working – as evidenced by the rise of ad blocking.

Most speakers and attendees at the summit seemed to be in agreement that the industry needs to come together and focus on the user experience with an approach that covers education, better use of data and making superior content. A unified effort across these areas by all the players hopefully will solve the ad-blocking issue (and keep us well supplied with cute cat videos, sensational subway buskers, extreme sports mishaps, standup comedy, and all the other stuff we love but would probably never pay for). The bottom line is: If the right user sees value in timely advertising, ad blocking becomes a negligible problem.


Christian Manie