Throughout 2015, there has been a steady increase in the level of debate surrounding the impact of ad blocking on the ad industry. Some of this debate appears to be exaggerated scare mongering, similar to the more provocative views expressed on the use of cookies and the potential impact of the “EU Privacy Directive” a couple of years ago. In fact, 15% of UK adults are now using ad blocking tool. That said, I don’t envisage an apocalyptic future (short, medium or long term) where online display advertising is wiped out.

A more balanced view would be that, as with any industry evolution, advertisers and agencies need to be aware of changes in technology platforms and refine their digital tactics accordingly. The display ad revenue model is simply too effective to disappear and it will continue to be a prevalent method for content providers and website owners to fund their existence for a while to come. For this to be true, the targeting and placement of online display will need to evolve.

What is ad blocking?

The methods of ad blocking vary as users and technology providers find different ways of improving the online experience and removing ads that are seen to clutter websites and apps.

Browser extensions such as Adblock Plus and Crystal have built up 100’s of millions of active users worldwide.

Browsers The main Browser providers are continually seeking ways to improve the experience their browser provides and introducing elements of ad blocking - Chrome’s recent decision to automatically pause Flash banners is a good example.

Mobile Apps When Apple released iOS 9 in September 2015, they allowed ad blocking apps within the app store and many of them immediately jumped into the top 10 downloads.

Does this mean more people are blocking ads?

There is a growing number of people online in the UK using ad blocking services. According to a recent study ad blocking in the UK grew by 82% between 2014 and 2015 to a high of 12 million - which this study equates to 21% of the UK online population.

This is particularly visible in a younger audience, with 34% of 18-24 year olds choosing to block ads according to the IAB.

With this rate of growth, it’s understandable that some people are concerned.

The IAB are shouting about the growth of advertising spend in online display as proof that ad blocking isn’t a concern - with digital display ad spend up 27.5% in the first half of 2015.

But their message is tainted. With stories like this one, where the IAB themselves are considering legal action against ad blocking tools, this suggests they might be more concerned than they are letting on. They even refer to ad blockers as highway robbers...

Why do people use ad blockers?

In order to understand the growth of their use, we need to consider the demand for them.

  • Targeting/Relevance: Many people choose to use ad blockers because they feel they are being targeted with irrelevant ads that simply devalue their online experience
  • Creative: Old, clunky formats (e.g. Flash banners) with a lack of creative flair can cause too much disruption and force people to seek a way to avoid them
  • Performance: Slow loading, large banners can affect not only the speed in which the web page loads for the user, but (potentially) drain the battery of mobile devices
  • Lack of understanding: Many web users don’t appreciate that the ads they see are generating revenue for the website provider and therefore allowing them to exist for free (or at very low cost)

What do we think will happen?

As we mentioned with the EU cookie directive furore a few years ago, many were screaming about the impending end of ecommerce in the UK. But, website owners and advertisers responded and made changes to the way cookies were being used and how they communicated this to their visitors.

As they did then, advertisers and agencies need to consider the reasons for the change in user behaviour and respond accordingly. We need to make more effort to ensure our targeting is better. We need to continue to invest in more innovative, higher performing creative. Plus, we need to educate the online audience that the advertising revenue allows many online services and platforms to remain free of charge.

What else do we think might happen? Well...

  • Poor quality sites may be wiped out. Websites that are designed purely to generate page impressions and regurgitate content from elsewhere (echo chambers) should diminish as advertisers and ad platforms try to avoid running inventory on these low quality sites
  • High quality sites will continue to run ads. These sites will retain the appetite for content from their valuable audiences and will need to make an effort to educate this audience about the need for ads and ad revenue. They might offer alternatives to seeing ads, e.g. pay to remove them but this will give the audience a choice
  • Other ways to improve online experiences will evolve. For example, Google is seeking to roll out a new mobile framework that will help website owners produce websites that are much faster loading and provide a better experience. Further to this, Facebook and Apple are trying to take ownership of the delivery of key content, so web users don’t need to visitor poor websites themselves, but instead can digest news from within them. Subsequently they can retain greater control of the user experience and also the delivery of and revenue from ads
  • Browsers and ad blocking platforms may create whitelists. In some cases good advertisers and good websites might be identified and allowed to run ads. These platforms need to generate revenue too, so this would provide them with an alternative income stream whilst retaining a less restrictive product for their users
  • The availability of display impressions may reduce, but quality will rise. Advertisers may have to fight a little harder to ensure their ads appear on high quality, highly relevant websites as the pool of impressions is potentially reduced by the ad blockers. So the cost of these impressions may increase, but the higher quality placements should mean they perform even better
  • Native and paid social will continue to grow. These areas will grow to supplement online display, but will face their own challenges too as the online audience becomes more aware of their commercialisation

In essence, we think that labelling ad blockers as highway robbers and threatening to sue them isn't particularly helpful. Instead, we like think to that (as with cookies) a form of industry and technology wide consensus will be reached that will improve the user experience, but allow advertisers and website owners to pursue their commercial goals. The senior team at Google put it well when they said recently

“We need to recognize, as an industry, that this is something we need to deal with. We need to work together to come up with a definition of what an acceptable ad is and what an acceptable ads program can be.”