On Tuesday, Facebook announced in a blog post that it would begin forcing ads to appear for all users of its desktop site even if they use ad-blockers. Facebook said it will change the way advertising is loaded onto its desktop site, with the goal of making its ads harder for ad blockers to detect.
In making this move, Facebook is taking a stand for ad-supported business models, including its own.
In addition, the social giant introduced new features to enable consumers to control the types of ads they see by making ad preference controls easier to use. The move is designed to make advertising on Facebook’s desktop site more relevant, so that a consumer who’s more into food and restaurants won’t have to see ads for fashion and beauty products. To do this, consumers can remove “interests” from their ad preferences.
What took you so long, Facebook?
Even more importantly, why did the company do this for its desktop site, responsible for less than 20% of its revenue?
Facebook for Q2 reported that 84% of its revenue is now coming from its mobile site and affiliated mobile properties. Facebook must be losing some revenue to ad-blocking software, right? But ad-blocking software is much harder to use on mobile devices, for now.
“We’re putting control in people’s hands with our updated ad preferences and our other advertising controls. We believe that these expanded controls give people a better experience with advertising on and off Facebook. We also know there’s more work to do, and we’re continually listening to your feedback to make advertising better for everyone,” Andrew Bosworth, vice president of Facebook’s ads and business platform, said in the post.
According to the Interactive Advertising Bureau (IAB), 26% of U.S. internet users now use ad blockers for desktop. Facebook didn’t say what percentage of its own desktop users have ad blockers installed.
Real-Time Daily asked ad-tech executives and observers to weigh in on Facebook’s moves:
“Since the majority of Facebook’s revenue comes from mobile, it’s interesting that they’re doing this. Facebook must think the incremental revenue from desktop usage is important,” said John Koetsier, mobile economist, Tune, a Seattle-based mobile marketing firm.
However, Koetsier said Facebook’s move isn’t terribly surprising, since much smaller publishers like Forbes have already made this type of move.
“Ad blocking is becoming a phenomenon, with estimates that more than a quarter of U.S. Internet users will be using ad blockers in 2016. Facebook’s mobile application has been immune to this trend, but since it doesn’t own or control browsers, it’s been slow to adapt to the threat on desktop. But as Facebook's mobile advertising business is now the lion’s share of its revenue, ad blocking hasn’t had a material impact,” said Mike Caprio, GM of programmatic at Sizmek.
“The biggest opportunity that this brings to bear for Facebook is that publishers that view it with skepticism and concern, now face the risk of ads being openly blocked in-market, or be protected inside Facebook’s walled garden. Facebook isn’t the only one looking to solve for this, as multiple brands are considering first-party tags, and manipulating third-party ad-serving tags to ‘fool’ the ad blockers,” Caprio went on to say.
Regarding consumers’ ad preferences: “Facebook is in a particularly powerful position to assist the industry in determining the types of brands and creative that consumers personally want to see. This will help Facebook with audience targeting and look-alike modeling. The most important thing is that these preferences can be expanded off-network to third-party publishers through Facebook Audience Network and Atlas,” Caprio said. “The crux of this issue around ad-blockers is that consumers are pushing to remove clutter from their devices, but if they want Instagram, and Facebook, they are ad-supported properties, even if the content comes from a third-party publisher. The rest of the publishing industry doesn’t have that leverage or power.”
“It’s clear that Facebook is responding to consumers who are frustrated with irrelevant ads that provide little utility. What’s interesting is that Google is working to improve the user experience for consumers through initiatives like AMP. Facebook, on the other hand, is forcing consumers' hands by allowing a consequence of ad-blocking to be a negative user experience,” said Yael Aviden, head of product at Adelphic. “Ultimately, for marketers, these are pointed reminders that marketing mixes require far more precision than their existing efforts and controls that are available today. If marketers give up that control, it forces media companies and consumers to respond.”
Greg Stuart, CEO of the Mobile Marketing Association, shared a bit of history on ad blocking. More than a decade ago, when he was with the Interactive Advertising Bureau, he was part of a group that helped convince Symantec to stop installing ad-blocking technology in Norton Utilities. “This [ad-blocking] is not a marketer issue. It doesn’t affect ad counts. It’s a publisher issue, but not overly significant. The industry doesn’t suffer from too little inventory,” Stuart said.
“The issue is a lack of balance," he added. "Advertising has long existed with a quid pro quo of free content in exchange for being exposed to advertising. It wouldn’t be such an issue if efforts were respectful. This is a universal problem, but as an industry we have a history of addressing it. This is similar to when the industry stopped/limited pop-up ads back in 2002.”
Undertone Co-Founder Eric Franchi said he’d been wondering when the industry would see one of the large platforms go on the offensive when it comes to ad-blocking. “It’s appropriate that Facebook’s giving users more control over the types of ads they see. One of the chief complaints about ads is related to retargeting -- ‘those sneakers that follow me around the Web’ -- so it’ll be interesting to see how many users do something about it,” Franchi said. “Overall, we’re seeing more movement by Facebook into better and higher-value ads -- such as video and Canvas -- so this move is timely on its part.”
Mark Bauman, CEO of ReviveAds concluded that social networks like Facebook are no different than other digital publishers: They all rely on ad revenues. “And the reality is that ad blockers jeopardize ad revenues. Based on our calculation, publishers, on average, are losing 23% to 28% of their ad revenues due to ad-blocking. For one of our clients for which we circumvent ad blockers, this means about $500,000 a month. But for Facebook, that means about $50 million per month in lost revenue that it can revive,” Bauman explained.
“Publishers realize the threat ad blockers pose and are ready to take action; they’re just concerned about how consumers will react if they make viewing ads mandatory -- and they can’t afford to lose viewers. Facebook, which has over 1.7 billion active monthly users, will help create awareness of the dangers of ad blocking. It will help consumers realize that online ads, if done responsibly, are an integral component to the free media landscape,” Bauman added.
“Facebook has an extremely loud voice in the digital community, and they’re using that voice to set an important precedent,” said Ted Dhanik, CEO and Founder of engage:BDR, a cross-device ad tech firm. “Many consumers don't consider the costs associated with creating high-quality content and publishing it online, for free. When these consumers use ad blockers, they’re hindering a publisher's ability to fund that content. It’s important that we find a happy medium where publishers can support their operations and create great content, consumers don't suffer from invasive experiences, and brands are able to connect with relevant users. But that balance depends upon an understanding of all the factors at play. I hope Facebook’s move will bring about constructive conversation.”