Ad Blockers Pose Big Threat To Google, Facebook And Twitter.
When ~90% of your revenues comes from advertising, adblocking can be devastating to your business model. This is Google’s situation. Its success depends on the delivery of ads to its users and when those ads get blocked…. well, they have a huge problem. This problem is not only localized on Search but rather extends through its other products such as YouTube and to other companies such as Amazon and Facebook.
How did we get there?
People began to get pissed about all the advertising that gets forced fed to us. Then, we were dismayed how all the companies took advantage all the information we volunteered in exchange to use their services about their unwarranted invasion of our privacy. What about those ugly, irritating, and intrusive popups? Back then, the only way to fight back was your ability to click on those “X” faster than they popped in order to close the new window.
What about the loss of your privacy? Remember when you searched on Amazon for a coffee mug, and then on every page ads of mugs were popping up? This actually reminds me of one of the best pranks (worth reading) I’ve read related to targeted advertising. Another positive side benefit with ad blockers is that users can save up to 20% on battery life by blocking ad downloads, and that the software will also spare you from malvertising, malicious ads that try to steal information.
I’m not writing this post to express my opinions on how advertisers should behave. Advertisers don’t have a fiduciary responsibility to their viewer. Their behavior will always trend towards the transactional side. The only thing holding back this end-of-world thinking is reputation and trust-building. However, this only works when having you as a client in the long-run is NPV positive.
At some point, people just got tired of the abuse. Some talented individuals came together to develop these ad blocking apps (like any startup). As they grew more successful, the big guys started to feel the impact on the bottom line. We are now at a point of inflection. If most internet users adopt this technology, most of the revenues from Google and Facebook are at stake. There is a risk that the current business models will eventually have to change.
Similar to Frédéric Filloux (great article on Ad Blockers from 2014), I use AdBlock Plus on a daily basis. As many people who care about media publishers getting paid for their job, I’m not proud of this. I use the ad-blocker for a practical reason. It helps a website load faster. Also with a battery that doesn’t allow for more than 120 minutes of autonomy, blocking ads extends my computer’s ability to function. Every minute makes a difference. Adobe’s Shockwave is the biggest power sucker, rendering animated ads. There is a reason why Apple banned them on the iPhone. My web-surfing is now faster, crash-free, and web pages looks better.
What are the unintended consequences?
The real problem is that ad blockers limit all ads and not only the evil manipulative ones. As a result, they make monetization impossible for a whole slew of people, including large publications such as Gawker, forcing them further into native advertising. It also forces small startups which use advertising as an early method of monetization before they figure out something more useful. Limiting a potential source of advertising will undoubtedly limit innovation, both good and bad.
What are their potential solutions?
Currently, Google, Microsoft, and I believe Amazon are paying these adblockers a fee to be on their “whitelist.” Another solution is for Google and Microsoft to include in Chrome / Microsoft Edge (new browser) language that disables ad blockers for their own network. The option for the publishers is to limit the content until the ad blocker is disabled. Some websites have started to do this.
I think the industry will move towards all of the above solutions but increasingly focused on advertorials (native advertising) and subscriptions. This technology is here to stay and as the technology continues to develop in scope and depth we might just see new solutions that let the consumers decide how they balance the desire to consume media and how we decide to pay for it. Nothing is free in this world. We pay for “free content” in exchange for our privacy and exposure to advertising.