Why Adblockers Should Scare the Shit Out of the Media World

By Dillon Baker July 10th, 2015

Browsing the web on your phone sucks. Pop-overs are impossible to close, autoplay pre-roll ads blare out at the most inopportune times, and, worst of all, ads suck your data plan dry. Now, adblockers are here to save the day—or ruin the media world, depending on who you ask.

Adblock Plus, which has a user base of over 50 million, released its own browser for Android in May, citing the increasing amount of annoying and potentially dangerous malware-infested ads on mobile. Meanwhile, Apple announced the iOS 9 version of its extremely popular mobile web browser, Safari, is coming with a built-in adblocker. Adblock Plus is also working on a browser of its own for iOS 9, according to Ben Williams, communications manager at Eyeo GmbH, the company behind Adblock Plus.

That’s a big deal because according to Mary Meeker’s 2015 “Internet Trends” report, U.S. adults are now spending the majority of their time with digital media—51 percent—on mobile. This spells bad news for an already delicate digital advertising ecosystem.

In general, adblocking has exploded during the past couple of years, thanks in large part to browsers like Google Chrome (which allow for a hassle-free installation of adblockers) and increased awareness surrounding the product. According to adblocker monitoring company PageFair, the total monthly user base will top almost 250 million worldwide this year.

Source: Digiday

“I think for quite a long time ads began to get more and more intrusive, and that led to more adblocking,” Williams said. “And I think that your ‘normal user’ is aware of adblockers now, whereas before it was more of a fringe thing.”

Despite the doom and gloom this news has brought, mobile adblocking won’t bring on the apocalypse for mobile ad spend, which is expected to increase from 2013 to 2016 by 430 percent, according to a study by eMarketer. Still, adblocking is a serious consideration for everyone in the media world, and its spread to mobile isn’t something to simply shrug off.

The media industry is split on how to address the issue. Some claim that the effect on the bottom line is negligible, or, at the very least, that adblockers are a problem advertisers and media companies simply have to accept. Others, like Google’s Larry Page, lay most of the blame at the feet of publishers and advertisers unwilling to change the disruptive ad formats that cause most users to download adblockers in the first place. A few, such as Jay Friedman, the COO of programmatic ad tech agency Goodway Group, look at it is a technology problem—tech teams on the media side simply have to fight back with their own anti-adblocking software. And a fourth faction looks at it as a legal issue where adblockers are blatantly extorting companies through “whitelist” programs, and therefore should be attacked through legal channels.

The truth probably lies in a grey area between all four. But until there’s a solution—and I’m not holding my breath waiting for one—there are a few key publishing trends that adblockers are going to continue to accelerate.

Web display ads and native ads in peril

At the center of adblockers’ crosshairs are display ads. Whether they’re interruptive or not, adblockers block display ads without prejudice—pop-ups, display ads, and pre-rolls all get the same treatment. For many on the advertising side, this shotgun-style approach to adblocking is problematic, to say the least.

“Publishers who have fixed, user-friendly banner ads and banner positions are not the problem,” says Friedman. “I firmly believe users don’t have a problem with those ads.”

He may be right—static image and text display ads had the lowest amount of people who found them completely intolerable, at 33 percent, according to Adobe’s 2014 study—but that doesn’t discount the fact that display ads, as a whole, are almost entirely ineffective. A 2014 study from eMarketer and Adform found that banner ads of all kinds have less than a .50 percent click-through rate, with traditional web banner ads bringing up the rear with a downright pathetic .12 percent CTR.

Adblockers have only multiplied banner ads’ tiny impact, driving down the continuously falling rates that media companies can charge for display. For advertisers grasping at straws with an ad format that by all accounts has little to no impact, adblockers have only served to sink the knife deeper into the side of display ads.

Native ads, often extolled as the savior of digital publishing, aren’t immune to adblockers either.

“We block all native advertising unless they’ve applied to our whitelist,” said Williams. “It’s not that difficult to block native ads.”

Even when native ads aren’t served through traditional ad units, Adblock Plus manages to hide them. For advertisers paying a premium for native ads, this is a problem—fewer pageviews and impressions will make it harder for publishers to charge a premium for the in-vogue ad format.

The outlook is particularly dire for tech, gaming, and other sites with young male audiences (adblockers’ biggest users, according to Adobe’s report), which need all the revenue they can get from native and display. This chart from another adblocker solution, Secret Media, puts adblock use at over 50 percent for gaming sites and at 35 percent for tech sites.

(As Digiday notes, it’s worth keeping in mind that both Secret Media and PageFair have an incentive to make the adblocking situation seem more dire.)

So, if adblockers are undercutting an already less than effective digital ad model, what are publishers are advertisers to do? For many, migrating away from the web might be the only answer.

In-app publishing: A potential safe haven

Since the media industry is full of obscure terms and concepts, it’s important for me to start by briefly unpacking some of the terminology I’m going to use here. When I say “web,” I’m primarily referring to Internet browsers, both on desktop or mobile. Think Google Chrome, Mozilla Firefox, Apple Safari, and so on. By apps and platforms, I’m talking almost exclusively about social media: Facebook, Snapchat, Twitter.

As more and more people spend time on their mobiles on apps and platforms rather than the web (software company Flurry’s research puts the breakdown at 86 percent to 14 percent in total, respectively), social media companies have been reaping the benefits. Facebook, for example, claims 17 percent of the total time spent on mobile, according to the same Flurry study, as well as an astonishing 75 percent of the global social ad spend.

This decline in web browser popularity is a shift the more perceptive media analysts have been anticipating for a while. Social media companies have been trying to consolidate “content consumption” through their platforms for years, promoting high-quality content so users keep coming back for more. And for the most part, they (mainly Facebook) have succeeded: 30 percent of adults now get their news on Facebook, per a 2014 Pew Research study.

Digital ad spending, not surprisingly, has followed user behavior. eMarketer predicts the share of global digital ad spend spent on ads on social media will increase from 9.4 percent to 16 percent in 2017, with North America leading the charge at 18.7 percent by 2017.

And social media apps aren’t satisfied with just being a hub for hyperlinks to other sites. Facebook’s new Instant Articles project is explicitly meant to compel publishers to publish their content within Facebook. In the past few months, we’ve also seen similar initiatives from tech giants to compel media companies to publish inside their own walled gardens, such as Snapchat Discover and Apple News.

So what does all this have to do with adblocking? It’s important to remember that adblockers can’t reach mobile apps—for now. As user behavior becomes increasingly mobile, these social media apps and their native content offerings should only increase in popularity. That’ll make those social media apps increasingly attractive to advertisers—and publishers, too. If publishing within social media apps delivers more ad money than publishing on the ad-blocked web, will media companies have any other choice than to publish within Facebook and Apple’s platforms?

In-app publishing could save native advertising as well. BuzzFeed has already suggested it will publish native ads through Facebook Instant Articles, and it’ll probably get better numbers than ever. And in-feed display ads, free from adblocking, should also get higher viewability and CTRs than on publisher’s sites.

Ideally, this is a win–win for publishers and advertisers. Publishers can reach larger audiences and therefore charger higher rates, while advertisers can take advantage of an adblock-free ecosystem to maximize their CPMs. Still, this could mean an incredibly dangerous transference of power to social platforms in the name of maximizing profits—a risky proposal for any media company hoping to maintain some semblance of control over their audience and brand. If publishers find themselves totally reliant on Facebook for revenue, then Facebook will hold all the cards.

But for those looking for an alternative, there’s a new business model that is gaining traction in the media world: publishers creating content agencies.

Publishers as content agencies

What’s the one thing adblockers don’t block on the web? Company publications like Amex’s OPEN Forum and Red Bull’s Red Bulletin. That’s important, because brands are starting to realize they don’t need traditional advertising to make an impact.

(Full disclosure: Amex is a Contently client.)

“Brands are asking, ‘Why should we buy media if we can create our own?'” Rebecca Lieb, VP of content marketing at analytics and integrated marketing company Teradata Applications, said in a recent article on The Content Strategist.

Of course, it’s difficult to draw a perfectly straight line between the rise of brand publishers and the rise of adblocking, but Lieb’s comment brings up a key point: If traditional web advertising is broken, as Williams and others believe it to be, why don’t brands create their own media divisions to promote themselves? Considering how cheap it is to distribute content through sponsored updates in social media apps, it’s more possible than ever for brands to build an audience for content they publish on their own.

Publishers seem to be recognizing this trend as well. A number of big-name new media companies are beginning to build divisions to create custom content for brands—much like a digital ad agency would. In other words, instead of creating native ads that only live only on the publisher’s site—and are thus susceptible to adblocking, among a sundry of other ethical issues—publishers are starting to help brands publish on their own.

Vice and The Onion, for example, recently partnered with Facebook to create video ads for clients as part of Facebook’s Anthology initiative. These ads won’t live on publisher’s sites; they’ll live on Facebook, and they’ll have the brand’s logo up front.

Vox Media, which is also a partner for Anthology, recently signed a deal with digital marketing firm DigitasLBi to license its talent and Chorus technology to brand partners creating content. Some of the work will live on Vox’s publications, but some will go directly on their company’s properties, according to Adam Schlachter, chief investment officer at DigitasLBi.

Meanwhile, BuzzFeed has been part of arguably the most famous partnership between a publisher and a brand: the “Dear Kitten” campaign for Purina. In this case, as one would expect from BuzzFeed, the distribution was shotgun style: The campaign ran under BuzzFeed’s name at times, Purina’s at others, and even had a spot during the Super Bowl.

All three of these examples demonstrate that brands are buying into the idea of creating “owned media” destinations—and publishers see the financial benefit of helping them do it well.

When I asked Williams if Adblock Plus would ever consider blocking a brand publisher’s website, he said it was unlikely since the user is voluntarily going to the site and thus is aware of the branding. For him, the lack of proper separation between editorial and advertisement is the main reason why Adblock Plus chooses to block native ads—that’s less of a worry with branded content, where the brand’s name comes first and is distributed through their own social media channels rather than the publisher’s.

Of course, creating branded content is no easy task. Smaller publishers without big budgets or piles of venture capitalist cash to build custom content studios probably won’t be able to replicate the early success of the other big media names I’ve referenced so far.

But it shouldn’t come as a surprise that brands are starting calling on publishers to create content for them, especially as publishers continue building their capabilities to do so. And for that, you can, at least in part, thank adblockers.

In a way, the potential results of these trends have always been the official goal of adblockers: fewer obnoxious ads (when content is part of a social stream without interruptive ad formats) and better separation between advertorial and editorial (when media company’s are creating content for brand’s channels rather than their own).

That’s a result anyone can get on board with—unless, of course, it brings down the media world along with it. Indeed, adblockers are pushing an already rapidly changing industry to a potential breaking point—and those who can’t adapt may not survive.

Image by JoLin
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