This article was originally published on the Dx3 Digest 01.13.15.
Consumers are online 24/7, relying on more and more devices, and consuming more information than ever before. The internet becomes engrained in everyday life, providing online advertising with a sustainable and growing source of valuable media impressions. Brands are eager to connect with consumers through digital advertising, as they shift their browsing and shopping habits, making decisions on the fly, and moving their attention from offline to online.
The problem is, however, some users have grown tired of the constant broadcast messaging, opting to install ad blocking software on desktop and/or mobile devices to eliminate their chances of seeing advertising altogether. A recent study has found that millennials are the most sensitive consumer generation, most likely to feel irritated by marketing messaging that they find too generic or spammy. It’s no wonder then that millennials feel most compelled to employ ad blocking software.
Understandably, the ad tech industry is up in arms, feeling the pressure to eliminate ad blocking which prevents us all from doing what we aim to do. The doomsday view on ad blocking is only adding to the hype, making it one of 2015’s (and likely 2016) biggest concerns. We hear that ad blocking adoption is growing fast and we fear that it will take away our livelihood — and with good reason. Some of the myths circulating do sound intimidating; however, the situation may not yet be as dire as some believe it to be:
Fear #1: Billions of advertising dollars have gone to waste!
A recent report from PageFair cites that ad blocking has cost our industry 21.8 billion in losses [or roughly equal to 3.5% of all worldwide global revenue] It sounds ominous in itself, however, the methodology for this calculation has actually been found to be incorrect: basing lost revenue on a projected model of revenue x ad blocking, when in fact, ad blocking doesn’t take dollars spent away from any buyers. While we have a natural fear that we are being robbed, buyers are not charged for ad blocked impressions, because the ads do not get served at all. Therefore, advertising dollars were not lost, because they were never spent.
Fear #2: Everyone is ad blocking, therefore, no one will see ads again
While some countries have higher adoption rates of ad blocking than others, the latest report from Sourcepoint and comScore reveal fairly low numbers of ad-blocking adoption, showing that users in North America are by far the least threatening when it comes to ad blocking versus the APAC region with a surveyed rate of 10% on desktop and 0.1% adoption rates in the US, and 16% on desktop/0.2% adoption rate in Canada. Secondly, ad blocking software is also not 100% perfect, firstly, it will allow ads through by companies who have paid to be on a ‘safe’ list, and/or miss other sites due to the way the ads are being served, so ads are indeed still getting shown to ‘blocked’ users.
Fear #3: We’re losing desktop impressions because of ad blocking
Users are changing their browsing habits. While in the last few years, we have seen a slow decline in desktop impressions, mobile impressions have leaped tremendously, increasing overall available impressions. Due to the growing adoption of smartphones, tablets, and phablets, users are increasingly reaching for their portable devices to access the internet, rather than using their desktop computer. Internet advertising is set to grow exponentially, and with a growing population increasingly connected online across devices, impressions availability overall, is actually much higher than it was two years ago. We would argue that the growth of available impressions would compensate for any lost or unused impressions due to ad blocking.
On the other side of the coin: if ad blocking was to grow to a sizeable amount where it would significantly impact our ecosystem, are we assuming that a large percentage of the billions and billions of advertising slots will disappear? If ad blocking legitimately reduced availability, CPMs would increase due to higher demand and less inventory. We suspect that users who feel inundated with a poor ad experience may be on less-desired inventory to begin with, i.e. sites with ad stuffing/stacking, higher ad-t-content ratio, and are not properties that brands would actually want to advertise on, anyway.
While ad blocking is definitely a concern, some of the myths being flown around are just creating industry fear, causing panic instead of action. It is not the final apocalypse for advertising, but it is healthy for us to re-evaluate our business practices and how we can move forward to mitigate the issue before it grows significantly. So where do we go from here?
Our top fears may be holding us back from creating an immediate solution. Let’s take this as a wakeup call and actually coming together to find a cure. Perhaps it’s time to refresh our ad specifications and as publishers, tighten up the guidelines or what gets served and where. As brands, maybe take a fresh new approach to advertising and the digital canvas – to ultimately create a pleasant user experience. Wouldn’t you agree that this should have always been our #1 priority? Let’s set a new resolution for 2016, start anew, and treat users in a new and better way.