The Battle Over Ad Blocking

advertise hereIt’s easy to forget that most forms of media are still paid for by advertising. While there are a few exceptions these days for services like Netflix and Amazon Prime that are paid for by subscription fees, most media still relies heavily on advertising to stay financially afloat. Even the most expensive cable networks, like ESPN, that earn huge revenues from subscription fees still also get significant revenues from advertising.

But advertising is changing rapidly as the way people use media is changing. Newspapers have lost the bulk of their advertising and magazines are similarly struggling. Radio seems to be holding its own, but other forms of media are starting to struggle as well. Numerous analysts have their eye on cable and TV advertising as it’s becoming obvious that people are cutting back on watching the big screen. And even many of those who watch TV are avoiding all of the commercials by watching TV on a time-delayed basis.

The hope of the advertising world was that they could shift dollars from traditional media to the web and still get people to see their ads. In fact, in some ways it’s easier to target ads to specific audiences on the web than it is on television. But now we are seeing a huge growth in the use of ad blocking software and one has to wonder what that is going to do to web advertising.

Advertising on the web has been growing quickly. For instance, Kantar Media reports that advertising spending on the Internet grew over 15% last year while advertising for network TV dropped 3.4%. But one can foresee a big gray cloud hanging over that growth due to ad blocking.

Several surveys show that 25% or more of US Internet users now say they are using some sort of ad blocking software. It’s been estimated that ad blocking cost Google about 10% of their advertising revenues, or $6 billion last year. So this is quickly becoming a huge problem for web sites and services that rely on advertising revenues.

It’s not hard to understand why people use ad blockers. Last week I was looking at fish aquariums, something I hadn’t looked at in years. Afterwards I think six of the next ten sites I looked at had ads for aquariums with a few showing the exact same one I had last looked at on Amazon. This whole process feels too targeted and a bit creepy to me.

We will probably be seeing a lot more ad blocking soon. For example, Apple has said that they are going to build ad blocking into the next version of Safari for the iPhone. That is clearly going to make web browsing on the smartphone a lot faster, but it’s going to remove a whole lot of users from advertisers.

There is also now a movement for web pages to fight back against ad blocking. For example, PageFair, a Dublin-based startup, has developed software that will defeat ad blockers and still allow the ads to pass to users. This presages a war between ad blocking software and the software to defeat it, much like the ongoing fight between virus purveyors and anti-virus software. Ad companies will find ways to get their ads viewed and then the blocking companies will find ways to block again.

It’s obvious that a lot of people don’t like ads. How many of you have looked at the web sites that show top ten lists for a wide variety of topics? These sites are so loaded with ads that they seem to take forever to load, and in some cases they simply freeze during the process of loading ads. I avoid these kinds of sites, but even just reading tech news pages every day gives me an average of 50 new adware tracking cookies, almost all of which are passed to me through ads.

I understand why advertising is needed on the web. There are many news sites and other interesting web services that are 100% funded through banner ads and other advertisements. As somebody who likes a lot of these sites I would hate to see them disappear, but I also hate the ads. I think this has always been the case and it’s the rare person who loved the ads on broadcast television. Even if you like a new ad the first few times, it gets very old by the fiftieth viewing.

This is going to be an interesting battle to watch and a lot of what we think of as the best stuff on the web is going to depend upon who wins between the advertisers and the ad blockers.