Commentary

Adblocking: Internet Right Or Racket?

If the Internet has proven one thing, it's that the Web shrinks your industry if you're lucky.  If you're unlucky, it kills it outright.  A recent report and somearticles beg the question: Given that the Web has annihilated  the traditional business model for many sectors, is the death of advertising as we know it inevitable, if not a fait accompli?

While the promise of an ad-free Web seems impossible given the free, ad-supported nature of most content and a majority of services, the specter of adblocking technology is haunting far beyond the walls of Madison Avenue, causing ripple effects across a wide array of industries that sought to capitalize on the shift of consumers to the Web.

I'm the quintessential eristic, arguing both sides of a debate and actually understanding both positions, but it's hard to take either too seriously.

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In its report (linked above), PageFair, a company that scares the bejesus out of some (and helps companies get around ad blocking) that adblocking is growing at a rate that "suggestsalmost all sites will appear without ads by 2018."  Not sure how empirical something is when "suggests" and "almost" are juxtaposed, but you get the idea.  Either way, Pagefair reports that 22.7% of visitors to 220 Web sites -- a big enough sample size - use ad-blocking software, with gaming and technology websites' early adopter users leading the way.

If Pagefair's scare tactics raise eyebrows, Eyeo -- which produces Adblock software -- makes ad execs and publishers cringe.

Till Faida, a co-founder of Eyeo, claims over 200 million downloads since 2011 -- and 170,000 times a day in fact, growing “faster than ever,” he tells the New York Times Quentin Hardy.’ “I think we have come to a point where we have so many users, that blocking all ads would be destructive to the Internet,”  Faida tells Salon’s Andrew Leonard. Dr. Evil would be proud, if it weren't for his follow-up admission that Google and Apple's crackdown on the app in their respective stores has had “a significant impact on user growth.” 

While it's easy for the company to argue that it's defending users' rights, their arguments are reminiscent of Gator or WhenU, companies that ultimately crashed and burned under the weight of their own hubris.  Don't get me wrong, as a fellow entrepreneur, I appreciate the void Eyeo is filling and need it is serving.  But when you consider the facts, there's little altruism:  Large companies are essentially asked to pay a fee to cover for the costs required to maintain the Adblock system, which is basically a paid “Acceptable Ads” program. If the company pays the fee, their "non-obtrusive, community-acceptable ads" go through, writes Leonard. Now if a company doesn’t pay Eyeo, then all their ads are blocked by default, even if Adblock users have approved/whitelisted those ads. 

While the anarchist in me appreciates some of Eyeo's raison d'etre, I understand why some view their modus operandi as a racket.

Critics call it a “pay-to-play” scheme.  While Adblock's PR rep Mark Addison and AdBlock's Faida dislike that label, Faida has himself admitted that if a company doesn’t pay, then all their ads are blocked by default.  This explains why a company like Google is among the 20 companies that pays the fee. 

Ultimately, I personally think the solution to all of this is better content, a respectful user interface and ads with common sense.  That's the theory, though.  The reality is, a confluence of factors has created a downward spiral for most advertisers and publishers and things will get worse before they get better; and that includes for AdBlock.

The Interactive Advertising Bureau's CEO Randall Rothenberg has waged war, penning ”Has Mozilla Lost Its Values?” where he complained about Mozilla’s role as “the world’s largest distributor of Adblock Plus,” arguing that the browser's “civic positioning and public character are heavily freighted with antipathy toward advertising and the commercial Internet.”  He held Adblock Plus responsible for blocking 50% of publishers’ ads.

Declining CPMs are a result of the massive supply of ad inventory fueled by user-generated content. So for what it's worth, if 20% to 25% of Web users block ads, this curtails ad inventory, which reduces the trend of falling ad rates at a macro, industry-wide level.  Of course, it also reduces ad inventory, which reduces ad revenues at a publisher-specific, micro level.

In video, considering that YouTube is leading the charge with skippable ads, users have less of an incentive to download Adblock to begin with. But as long as publishers and advertisers are behaving badly, then AdBlock won't go away. 

Of course, with audiences already changing their habits and using mobile devices -- where advertising has yet to take over the surfing experience -- you have to wonder if any of this matters. Meaning the IAB and Adblock may have more in common than meets the eye.

3 comments about "Adblocking: Internet Right Or Racket?".
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  1. Rick Monihan from None, September 4, 2013 at 11:08 a.m.

    If blocking is to occur, the user is the one who should be paying for it, not the publisher. After all, the ads are what keep content 'free'. If a user doesn't wish to see an ad, then they should pony up some cash, a portion of which should be paid to the publisher in recompense of lost advertising, and the blocking provider might keep a cut. Either way, the desire for 'free content' is based on the publisher's ability to earn revenue to provide that content through ads, or a direct payment system from the user.

  2. Douglas Ferguson from College of Charleston, September 4, 2013 at 12:18 p.m.

    But here's the catch: The "someone must pay" theory ignores all the competition from brand-new content providers seeking a toe-hold. That is, we will always have at least one new supplier of free, quality content to compete with old suppliers of paid or ad-supported, quality content. Users will simply migrate to newer sources, as older sources erect paywalls (to cash in on their market share gained by giving away content). The old model worked because of barriers to entry, which are pretty much gone now. Yes, advertising will survive, but only where it cannot be avoided: billboards, indoor displays, etc. And roll-in videos seem safe for the time being, until some Dutch teenager figures a disruptive way around them.

  3. Ashkan Karbasfrooshan from watchmojo.com, September 4, 2013 at 12:52 p.m.

    Douglas, unless I am mistaken, doesn't adblock also block prerolls? Or do you mean something else by "roll-in videos?"

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