Ad blocking might derail the money train

Written by on September 22, 2015 in Guest Blog with 0 Comments
 business challenge elephant obstacleLove ’em or hate ’em online ads are a pretty much a given (and now worth about $100 billion). You know those ads that just popup or take a piece of your screen while you’re trying to read something interesting? The traditional online ad networks are run by the likes Google, Facebook, AOL and Yahoo. With the advent of Real-time bidding and the Ad exchange, coupled with a profusion of excess ad inventory, there has been an explosion in the number of ad networks and platforms marketers can choose from. New ad players have appeared on the scene: AdMob, InMobi, AppFlood, TubeMogul, BrightRoll, and YuMe to name a few.

Will the latest salvo in the ad blocking wars stop all this?

Apple’s recent iOS9 launch natively supports ad blocking on the built-in Safari browser. There has been a huge amount of uproar in the press about how this will affect the industry. The fact is that ad blocking is not a new thing, it’s been around for ages. If people really wanted a solution to “annoying ads” they could had one yonks ago. So why the big deal? Well, there are a lot of people (read: big companies with lots of money) that have a vested interest in the outcome of the debate. Namely, the online superpowers Apple and Google square off and everybody else picks a side – kind of like an online cold war heating up.  Apple will be seen to be championing users’ rights (as usual) and Google will be the big bad ad-loving boogey-man.

Google’s business model is based on advertising revenue, in many ways all of its other developments (from Android to YouTube) are to in some way support and directly improve ad revenue specifically. In May, 40% of mobile traffic came from Safari on iOS (source:www.netmarketshare.com). Each of these users is undoubtedly exposed to Google’s Adwords or DoubleClick platforms, which are its own vastly profitable advertising networks.

Check this out from Vox: Technological change doesn’t alter ad spending

Interestingly, evidence from past technological shifts suggests that whatever happens with ad blocking technology, it is unlikely to alter the total amount of money spent on advertising. The media industry has changed a great deal since the 1940s. Broadcast television became a thing. It went color. Cable TV was invented. It went digital. Terrestrial radio declined without vanishing. Newspapers boomed and then busted. The internet came around. And all this technological change was deeply intertwined with the advertising industry.

But as Eric Chemi showed in a fascinating Bloomberg article last year, aggregate advertising spending barely budged at all:

Ad Blocking may not alter the picture
Ad Blocking may have no bottom line impact

While many advertisers are beating the war drums, some are already taking steps to work around the problem. Check out this blog from Kissmetrics: How Marketers Can Survive in the War on Mobile Ad Blocking with advice for surviving the new ad blocking realities.

  • Respect Consumers
  • Think Creatively
  • Demonstrate Relevance
  • Address the Root of the Problem

Looks like ad blocking will shape up to be an hot topic into 2016. I assume that where there is a technical solution for ad blocking, there will be a technical workaround. The average Joe won’t care or notice much either way. It’s just the kind of issue some FCC Commissioner will chose to champion…Arghh…..

This article was first published here, and is reproduced with kind permission.

See related, ad blocking software pulled from Apple Store

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About the Author

About the Author: Jonathon has been lurking around the Telecoms and Internet space for the last 20 years. He is now a man on a mission – that being the reformation of the Industry Analyst business. He is working with his co-conspirators on transforming the Industry Analyst world forever as an Expert with EMI. .

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