Ad blocking remains a controversial topic. Based on a variety of data, one company attempts to estimate the financial loss to Google. Of the estimated $41 billion in revenue Google reported in 2014, PageFair estimates that $17.6 billion came from the U.S. Some $1.9 billion represents the estimated U.S. revenue available to Google on google.com that the company did not generate as a result of the 10% of visitors having ad-blocking technology installed in their browser.
Google recovered about $942 million -- a portion of the $1.9 billion in the U.S -- by being white listed, estimates Sean Blanchfield, technology entrepreneur and CEO at PageFair, which wants to "save the free Web" by allowing publishers to serve ads blocked by browser plug-ins like Adblock Plus from Eyeo. Adblock allows people to block annoying ads, while some "acceptable ads" from Google and Microsoft filter through. The industry calls being "white listed," a hush-hush practice that insiders say requires the engines to pay a fee. The German media estimates the fee at $25 million, he said.
Ad blocking also costs brands billions in lost revenue because they lose opportunities to connect with consumers. Blanchfield believes that Google cofounder Larry Page glossed over a critical question during the company's shareholder meeting last week when an investor asked how ad-blocking technology will influence the company's main revenue stream. Page chocked it up to the industry's need to make more "useful" ads.
"It's a bit of a murky world with pirates battling pirates," Blanchfield told Search Marketing Daily (SMD). He said the browser-based plug-ins block search and display ads, hurting potential revenue earned by search engines as well as publishers.
Blanchfield and team broke down Google's businesses by ad format, extracting U.S.-only revenue and "conservatively" estimating that 10% was blocked, and tallied up the revenue recovered through the Adblock Plus deal versus revenue that is still being lost. The calculations estimate Google recovered roughly $1 billion in U.S. revenue by being white listed, almost twice that amount is still lost due to Adblock Plus and competing extensions.
If 57% of Google revenue is international, and Europe's ad-blocking rates are higher, estimates put the global numbers at roughly $3.5 billion saved, and roughly $6.6 billion lost. Blanchfield even provides the data source to double check his numbers.
If the practice of blocking ads continues, PageFair estimates it will increase by at least 50% this year -- which will cost publishers, along with Google, Microsoft, Amazon and others even more. The practice will extend into mobile advertising, with 90% of the media's revenue derived from advertising. While this is one company's perspective, the details are in the data.
One source tells SMD that content and ads created in XML, a markup language to encode documents, are less likely to be blocked, but Blanchfield said that's not true. Ad blockers can.
Not all data points to consumers using ad blocking plug-ins. It turns out Genesis Media recently surveyed more than 3,000 Internet users and found that 50.3% are aware of ad blocking software but choose not to use it.
SMD reached out to Google and Microsoft for comment, but have not heard back.