Have Consumers Won? Ad Blockers and the Demise of the Industry

Finally, it seems the consumer has gotten his wish. The ad community – The publishers, the platforms and the advertisers – are at odds. And in this round, it seems the consumer has won.

The introduction of ad blockers less than a decade ago is starting to take hold. Ad platforms have become increasingly sophisticated, acquiescing to the hungry advertisers, who are intent on gaining more knowledge about their consumers. At the other end of the spectrum, consumers are becoming much more aware of how their information is being tracked, and regardless whether or not it’s aggregated, they want increasing oversight and control.

Advertising has multiplied with the rise of mediums and platforms

No longer do we have only a few mediums for content. In as little as two decades we’ve moved beyond TV, radio, print, billboards. We’ve also raced beyond the standard network channels, and the key national newspapers. We are now exposed to endless content, from our peer networks, our smart phones, and our inboxes.

Consumers are overwhelmed and this fragmentation of channel and information continues.

Consider how much media platforms introduced over time have impacted the speed of reach and consumer adoption:

Let’s put this into context. I saw this excerpt from  Hubspot

• In 1920, there was 1 radio station. In 2011, there were 14,700.
• In 1946, America had 12 broadcasting TV stations. In 2011, there were over 1,700.
• In 1998, the average consumer saw or heard 1 million marketing messages – almost 3,000 per day.

How  many ads are people exposed to today? This has been an ongoing debate and last I read, the average individual is bombarded with an average of 5,000 marketing messages daily.

Interruption advertising has seen its day. It’s no wonder why the average click-through rate is only .06%. We are drowning in information and ads and consumers are creating their own filtering systems to find the information.

Advertising makes the world go ’round

This is Google’s bread and butter. As well as Facebook. Google’s recent earnings revealed ad revenue growth of 11% year over year to 16.02 billion. At the same time, the number of ads have risen 18%. It’s no wonder why Google reacted and made the move to bypass ad blockers on the Chrome browser, with users seeing the full video…

Users say that preroll ads on YouTube are now playing in full and that even the Skip Now option, allowing them to dispense with the ads after only a few seconds, has been disabled.

When I worked at Yahoo! Ad revenue drove the business. This funded development of top content, and site experience that kept customers coming back. Ad revenue has given rise to the monetization of blogs and has built viable businesses that were not possible over a decade ago.

Advertising has also been a necessary evil that has countered the efforts to keep customers loyal:

Media has always compromised user experience for advertising: that’s why magazine stories are abruptly continued on page 96, and why 30-minute sitcoms are really just 22 minutes long.

Advertisers have declared the rules for content consumption. They can willingly obtain information from us, track our behaviour on and off the site all for the purpose of “providing relevant content and ensuring we get the the best experience possible”… or so they said.

I know. That was our excuse. In reality, we bowed down to the whims of the advertisers who were lining our pockets.

The user was an afterthought. Until now.

The vicious cycle of ad performance

As consumers become overwhelmed with ads, they will respond less overtime. Digital advertising has now become a commodity and with the increase in available inventory, publishers have been incentivized to improve clickthrough performance to improve revenue opportunities.

This has adversely given rise to an increase in bots and click-fraud. Once advertisers were made aware of this reality, they put increased accountability on publishers and media agencies to reconcile click volume with site traffic. Suddenly awareness and impressions were no longer enough.

Ad blocking? Click baiting? What are the advertiser’s options?

Apple is attempting to take down Google on mobile

When Apple launched its latest iOS 9, ad blocker applications became the top downloads. This extreme move by Apple shocked publishers. It also put a wrench in Google’s ad revenue opportunities.

The current fight between Google and Apple has moved from web to mobile.

If you take into consideration time spent on devices (via eMarketer April 2015) mobile usage has now passed desktop:

Where Google has had control because it has fairly equal browser market share to Safari  on the web, the tables are turning quickly on mobile where Apple has clear dominance. According to StatCounter:

Apple’s Safari browser accounts for over half of the country’s mobile Web traffic.

With iPhone controlling a strong chunk of the mobile market, Apple has now power over Google’s main revenue platform.

Last accounts, Peace (the top ad blocking app) pulled its app from iTunes citing “conscience” reasons. While there are dollars to be made, in the near-term it short-changes the advertisers and they will eventually need to find other avenues to get to the intended audience without being obstructed.

Where this all leads

This may be a clash of the titans. After all, Apple doesn’t really need advertising as long as it continues to hold share dominance on the smart phone market. For Google, on the other hand, the “full-play ads” on Youtube will be just one counter-measure to respond to ad blockers. It’s just the beginning.

Big advertisers have always relied on publishing platforms to scale traffic quickly. They have the dollars to spend to continue to do this but there is one player they need to consider. The user.

For better or worse, the user has spoken. Current ad performance, and strong adoption of applications like Peace and Ghostery will allow the user to dictate – to a large extent– how they want to receive messages. That, in turn, will impede publishing revenues, which, in turn, will impact the quality of content they receive and how they receive it.

I doubt that email marketing or increased RSS tactics will be strong enough to compete with what currently exists for advertisers. Advertising is this necessary engine that makes this abundance of content possible.

Google, for the billions it receives in ad revenue, will not let this one go. Responding to the whims of the consumer cannot be the focus – at least, not this time.

Consumers are sending a message to the industry. They don’t want the current web experience, interrupted with annoying ads and messaging. They have been running away from it for sometime. The adoption of Ad blockers are just the beginning.

If Google and all other web publishers are inclined to draw audience and most importantly, ad revenue, they MUST figure out how this experience needs to change.

An entire industry will suffer otherwise.

Hessie Jones

Founder at ArCompany, and Director, International Council on Global Privacy and Security by Design Hessie is a  seasoned digital strategist, and intelligence analyst having held senior positions for top ad agencies including Ogilvy, Rapp Collins, ONE and Isobar Digital. She also has extensive start-up experience in AI technologies, social tech, online publishing and artificial intelligence like Yahoo! Answers, Overlay.TV, Jugnoo and Cerebri AI. Hessie is the co-author of EVOLVE: Marketing (as we know it) is Doomed! She is also  an active writer for Forbes, Cognitive World, Towards Data Science and Marketing Insider Group.