Online Ad Blocking Spreads

Taking a stand against ads lets online companies push back against Google. And users continue to vote with their clicks for ad blocking.

Thomas Claburn, Editor at Large, Enterprise Mobility

September 16, 2013

7 Min Read

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The future of Web publishing looks bleak. There are a variety of reasons, including an oversupply of insufficiently differentiated content, incessant competition driven by low barriers to entry, and the cost efficiencies of aggregation and user-generated chatter over original content creation.

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. Google, by the way, provides AdSense publishers with a Competitive Ad Filter, a way to prevent contextually targeted and placement-targeted ads from appearing on their websites by URL. It's ad blocking by another name.

Apple and Microsoft have pointed to the presence of ads in Google's Gmail as a reason to choose their software, and they have taken steps to limit online ad data collection in their browsers, data that Google values. Mozilla, which still relies on revenue from its search deal with Google, planned earlier this year to implement third-party cookie blocking by default in Firefox 23, but subsequently postponed the plan following objections from ad industry representatives.

While taking a stand against ads offers online companies an opportunity to push back against Google, doing so also resonates with users. Of course it's anathema in the TV industry, which is why Apple and Microsoft seek to straddle both sides of the divide.

In an effort to build a bridge between ad avoiders and ad purveyors, Apple is said to be trying to drum up support for a new television service that would allow viewers to skip ads in television shows while also bringing revenue to the media companies presenting shunned ads. It's trying to strike a balance similar to what Google is trying to do with its tools for muting and managing ads.

AdBlock Plus, the company behind the popular ad blocking software of the same name, is also trying to strike a compromise. Its Acceptable Advertising initiative offers advertisers the opportunity to have their ads whitelisted for a fee, though savvy users can override this block exemption with a manually created filter. Google in June began participating in the program to prevent its search ads from being nixed.

Blanchfield said that while some people feel Acceptable Advertising is a protection racket, he's inclined to see the effort as a noble one.

"I think there should be a better solution," Blanchfield said. "The concept of Acceptable Advertising is a good one. They're doing it because of the practicalities. Some sites are running ads that so bad they're driving people away. It's a 'tragedy of the commons' situation. A few bad actors can ruin it for everyone."

The solution no one seems to accept is paying for content. "If you're the New York Times, maybe you can get away with it," said Blanchfield. "Paywalls still make the majority of the audience bounce."

Jonathan Hochman, principal at Hochman Consultants, an Internet marketing firm, said he doesn't see ad blocking as a problem for search advertising (it matters more for display advertising). "Search advertising isn't about forcing something on the unwilling," he said in a phone interview. He said that he's never advised a client that rising ad blocking is making search advertising less effective. Rather, he said, the issue tends to be excessive competition. Some industries, he said, are over-saturated and the cost of ads is bid up so that only the strongest can afford to play.

A more salient long-term threat to Google, Hochman argued, is the tendency of people to perform searches at specialized websites rather than at a general search engine. Google, he said, is where people go when they don't know where to go. But for specific types of searches, like travel, he said, they tend to go websites like Expedia, Kayak or Hipmunk.

Nevertheless, Hochman is upbeat, despite the apparent increase in people tuning out ads. "The industry wants to know more about the consumer," he said. "They've found search ads work well, branded ads work the best, retargeting works just about as well. If I'm looking for a Dell computer and Dell puts up an ad, that's like a slam dunk."

Although the advertising industry might be keen to know as much about Internet users as possible, more Internet users than ever are choosing to expose as little about themselves as possible. Something has got to give, or someone has got to pay.

About the Author(s)

Thomas Claburn

Editor at Large, Enterprise Mobility

Thomas Claburn has been writing about business and technology since 1996, for publications such as New Architect, PC Computing, InformationWeek, Salon, Wired, and Ziff Davis Smart Business. Before that, he worked in film and television, having earned a not particularly useful master's degree in film production. He wrote the original treatment for 3DO's Killing Time, a short story that appeared in On Spec, and the screenplay for an independent film called The Hanged Man, which he would later direct. He's the author of a science fiction novel, Reflecting Fires, and a sadly neglected blog, Lot 49. His iPhone game, Blocfall, is available through the iTunes App Store. His wife is a talented jazz singer; he does not sing, which is for the best.

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