Publishers and adblockers are in a battle for online advertising
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Electronic warfare has broken out between internet users and the $120bn online advertising industry.
On one side are the ad blockers. More than 140m people, or 5 per cent of the world’s online population, are estimated to use software such as Adblock Edge and Adblock Plus to prevent advertising from appearing on web pages. A study by Adobe and PageFair found that the number of people using blocking software rose 70 per cent last year.
On the other side are media groups including Google and Germany’s RTL that depend on advertising. They are fighting back against the blockers using various weapons, including cash and the courts. With billions of dollars at stake, some websites are deploying technology to sneak round adblocking software, prompting an online arms race.
“Ad blocking is beginning to have a material impact on publisher revenues,” says Mike Zaneis, general counsel at the Interactive Advertising Bureau, a US industry body whose members account for four-fifths of the country’s online advertising market.
“The free internet that consumers demand cannot coexist with the continued proliferation of ad blockers,” he says, adding that publishers are increasingly looking for “aggressive solutions”.
Andy Hart, head of Microsoft’s advertising business in Europe, says that the consumer backlash against online advertising stems from “really interruptive” ad formats such as pop-ups. The problem, he argues, is that ad-blockers are “a very blunt tool” as they tend to block all forms of advertising, including ads that “enhance the consumer experience”.
Young people were first to adopt adblocking software. So online publishers catering for this demographic — which is highly coveted by advertisers — have been hit hardest.
Steven Williamson, general manager at PlayStation Universe, a UK-based website that covers video games, says that as many as 40 per cent of its readers use ad blockers.
“We’ve made our own pleas to our community” to disable their adblockers, he says. But it did not work. “If it were to carry on the way it is I think you’d see a lot of sites struggle to survive.”
Internet users of all ages, genders and nationalities are increasingly learning that it is easy to block advertising on the web, including everything from pop-ups to pre-roll video ads. Tools such as Disconnect also make it possible to block advertising in mobile apps.
Yet there is no consensus within the online advertising industry about how best to tackle the phenomenon.
As the Financial Times reported last month, Google, Amazon and Microsoft have quietly paid Eyeo, the German start-up that makes Adblock Plus, the world’s most popular adblocking software, to stop blocking ads on their sites. Eyeo compiles a whitelist of “acceptable ads” that can pass through its filters without being blocked.
While Till Faida, Eyeo’s chief executive, has argued that it is working to bring the advertising industry and internet users together, “benefiting everyone in the long run”, some media groups have accused the company of running a business model that is akin to a protection racket. German media groups including ProSiebenSat.1 and RTL are suing the company, alleging that, among other things, it is guilty of anti-competitive behaviour.
Other publishers are attempting to tackle ad blockers using technology.
ITV and Channel 4, the UK broadcasters, refuse to load videos on their websites whenever they detect that a visitor is using an ad blocker. This is a relatively straightforward process. If you want to watch their shows, you also need to watch their ads.
However, blocking the blockers is not a foolproof strategy. While some users are willing to turn off their blocking software to access highly-prized content, most refuse to do so and simply leave the site.
Recognising this, some publishers are playing a cat-and-mouse game with the blocking community, attempting to sneak ads around blocking software using innovative technology.
To do so, publishers are turning to the start-up community. Secret Media, a New York-based company founded last year, has started deploying a tool that allows publishers to send certain types of video advertising through blocking software without detection.
Frédéric Montagnon, co-founder of Secret Media, says that five big European media groups, which he declined to name, are already using the technology to deliver 10m ads per day through blockers.
“Of course ads are intrusive,” he acknowledges. “Advertisers pay for visibility and attention. But this is the reason why the internet has grown and continues to grow so fast. We want to help this ecosystem to sustain its growth.”
Defeating blockers when it comes to video ads is one thing. The trouble is that the majority of the online ad market is comprised of other formats such as display and search ads, which are easily detected by blocking software. Few people expect the status quo to change any time soon.
But even so, a growing number of publishers are trying. Yahoo last year bought Clarity Ray, an Israeli start-up developing tools to bypass adblocking software, while a number of other start-ups are working “in stealth mode” to develop new blocker-busting technologies.
The blockers may have won their initial skirmishes, but for many publishers, the battle has only just begun.