But the primary problem is online advertising, the major source of revenue for Web publishers. A growing number of people want nothing to do with it and they're taking steps to block online ads. In a report published last month, PageFair, a marketing consultancy, found that the average ad-blocking rate at 220 websites was 22.7%. The rate was higher at websites with technically sophisticated audiences, like online gaming and technology websites, and lower at general interest websites. In March, PageFair (then known as Block Metrics) put the average rate at around 10%.
PageFair's report said one client sees a quarter of its ads blocked, at an estimated annual cost of $500,000. It also notes rather ominously that the websites of several former clients are no longer online. It projects that the number of people blocking online ads will grow by nearly 50% over the next five years.
Things may not be quite that bad. Such statistical projections (from a company that sells services to websites suffering from ad blocking) assume a continuation of current trends, without any response from publishers or the advertising industry. And we've been here before: In 2006, Forrester Research raised the alarm about the rising appeal of ad blocking among broadband users, in a report titled "Consumers Love to Hate Advertising." Advertising adapted and the Internet survived, though it's worth noting that the technology warned about, popup blocking software, has been integrated into every major browser as a default setting.
[ For more on the next frontier in online advertising, read Facebook Test Hints At Video Ads. ]
Even if publishers and advertisers have shown they can reinvent themselves, there's still cause for concern. Things are bad enough that Google decided to ban AdBlock Plus from Google Play, the company's store for Android devices, for violating its terms of service. It has not done so in its Chrome Web Store, however.
Google is also limiting ad blocking in its new Web application format, Chrome Web Apps. Whether or not this was a deliberate design goal, Chrome Web Apps run outside the browser and thus cannot be altered by browser scripts or extensions. Ad-blocking alterations could be made directly to Web app files, but to do so would be far more complicated than simply installing an ad blocking browser extension.
Perhaps coincidentally, there appears to be growing interest in blocking ads at a network level, through ad blocking hardware. A French ISP tried blocking ads for its subscribers at the beginning of the year, only to be shot down by the country's digital economy minister. Now that option is opening up to individuals.
Adafruit, an online technology learning website, just posted a tutorial on how to turn a Raspberry Pi computer into an ad-blocking Wi-Fi access point. And for those disinclined to take a DIY approach, Chad Russell, founder and CTO of BluePoint Security, has run a successful Kickstarter campaign to fund the creation of AdTrap, a $139 box that sits between an Internet connection and a home router with the express purpose of blocking ads, particularly on mobile devices.
"We've hit an inflection point with ad blocking," said Sean Blanchfield, executive chairman at PageFair, in a phone interview. "The number one reason is ads have gotten to this point where they're so intrusive that people are driven to seek a solution."
The growing aversion to ads is inextricably bound to Google, its major platform competitors Apple and Microsoft, its dependent rival, Mozilla, and the shifting regulatory requirements related to online privacy. Google's challengers have taken to ad blocking on an acquisitions level as individuals do on a personal level.
Google's rivals have sought to halt its ad-related acquisitions, like AdMob, as a way to contain Google, even as they've waded into the advertising business themselves. Both Apple and Microsoft have invested in online advertising companies to compete with Google, though neither has done particularly well with ad revenue.
Apple came close to blocking Google's AdMob mobile ads on iOS devices back in 2010, but never did so, likely due to the complaint AdMob filed with the Federal Trade Commission. Microsoft and its FairSearch allies continue to skirmish with Google on the regulatory front.