The current scenario in the field of marketing and advertising is something never witnessed before, ever. New landscapes for advertising content and the style of advertising concepts are emerging daily, all thanks to the internet. Internet, and Google, more specifically, have transcended the entire outlook towards marketing commodities online, from journalistic articles, to music videos to personal photos on social interaction platforms, anything is now compatible for promoting a brand or a tag line or a vision and mission. This has also expanded the revenue cap that organisations consider for their brand through advertising. It’s a win-win situation for all parties, organizations, advertising agencies and outlets for advertisements, or is it something different?
The manner of advertising goods online started with a simple and standard structure of side bar ads and maybe a cross-over ad, which could be closed at the viewers discretion by clicking a small cross (x) on the top of the advertisement. The ads changed, from simple photo and texts, to a presentation of a collage of photos with text running in front to videos which started out to be intriguing but ended up being annoying, what also changed was availability of choice to the audience, not in terms of variety of ads or products, but the choice of simply watching the ad or not, which started with the option to close an advertisement and concentrate on the task in hand and has shifted to the forced 10 second previews of a 3 day holiday trip in Bali, which you cannot close or skip, and have to bear with simply to continue reading an article for your literature review. This led to the cry for help within the community which gave birth to the ingenuous, Ad-Blockers and the chain reaction that led to financial nightmares for organizations.
How Does It Work?
Before understanding how does an Ad-Blocker work, having a quick glance on how advertisement are displayed is a precursor. A majority of the advertisements that are visible today are majorly managed by one program called AdSense by Google. It simply allows bloggers and proprietor of websites to acquire monetary benefits, by running advertisements on their blogs/websites, which are sanctioned by Google. There are two manners of collecting revenue from such ads. (Whitmer, 2012)
Impressions – derived from the number of views a page or post with an ad gets.
Clicks – derived from the number of times an ad gets clicked.
Now that an initial framework has been established as to how ad-revenue is generated, it is time to observe the mechanism of an Ad-Blocker and its impact on the Ad-revenue.
Ad Blockers work on the mechanism of filter rules which decide the content that has to be allowed or blocked. Within the program is basically a list of sites and scripts which it is programmed to block, hence if it finds any of them, the next step is to block the script, which leads to ad-free pages or blank spaces where advertisements are supposed to be. (Kolowich, 2015) Ad-Blockers can be downloaded from The Google Store and even iOS Store and are free of cost.
By rational reasoning is pretty simple to understand how beneficial this software is for the user and how immensely harmful it is, for the website and its proprietor. Yet, the growth of Ad-Blockers has never been higher, with a daily download rate of 50,000 to 100,000 downloads for Chrome and Firefox and costing Google nearly 887$ million in 2012. (Wamsley, 2015)
How Did This Happen
An average user majorly visits sites that earn Ad-revenue on a pay-per-view basis. Hence when an Ad-Blocker is an extension to the browser, not only are resources like bandwidth being consumed by the user, but the sites aren’t being compensated by it because of the blocked Ads (Fisher, 2010), hence due to such restraints, U.S. publishers are to lose at least 10% of the total revenue generated from Ads, simply due to these blockers and can go as high as 50%. The total cost generated from ad blocking is projected to cost publishers nearly 22$ billion in 2015. This is a substantial loss which is pervasive to the publishers. (Zajechowski, 2015)
While many internet user prefer to browse through content without ads, the content can be provided freely only with the help of advertising. On a global scale, 200 million people are using Ad-Blockers on a regular scale, which, when calculated counts up to 40% growth globally over the past 12 months and increasing. (Wamsley, 2015)
Percentage using Ad-Blockers
13 – 17
18 – 29
30 – 44
45 – 60
There are a variety of reasons why individuals choose to use Ad-Blockers such as:
– To prevent third party cookie tracking.
– To improve internet bandwidth speed
– To remove Ads from particular websites.
– To remove Ads, found “annoying”
– To remove Ads that track metadata of the sites that users visit.
Dealing with the Crisis
Estimates predict that if maintained, the current scenario of Ad-Blocking could lead up to a loss of 35$ billion by the year 2020. (Davies, 2017) Corporations like Google especially, are dedicating resources towards counteracting this problem. At the 2015, Google Annual Stockholders meeting, Larry Page had addressed the problem with a statement “the industry needs to get better at producing ads that are less annoying”, (Fair, 2015) which quite openly states an alarming picture to websites and publishers since what the statement infers to is that, there isn’t any open ended solution to prevent Ad-Blocking on their web pages, except by changing the model of presentation of Ads.
Yet, for Mega-Corporations like Google and Apple, there is a way out of this, Ad-Blocking software like Ad-Block Plus, operate on a mechanism known as “AA” or Acceptable Advertising, under which corporate entities pay for acquiring permissible ad formats whitelisted from the entire list of scripts that are blocked under the software’s directory. (Fair, 2015) Now, this surely can be a way around for some, but for others this can be a delusional approach simply because of the lack of funds to dedicate for eradicating this problem. While Google is rumoured to be paying 25$ Billion, it has a global revenue of 60$ billion to counter this expense. (Fair, 2015)
Other methods have been used by various publishers, for example, users visiting the page of Financial Times through a browser having an Ad-Block extension found words being censored by the site until the Ad-Blocker was to be turned off. Many other sites have also made their content inaccessible for users with Ad-Blockers visiting their sites. (Smith, 2016)
The resistance is visible, but doesn’t seem to be effective, another speculation states a slash of 12$ Billion by 2020 due to Ad-Blocking, in the United States alone. (Hof, 2016). If major corporations are turning the other cheek when it comes to dealing with Ad-Blocking, by trying to either change their approach of advertising products or paying “extortion” to Ad-Blocking companies to whitelist their ads (Fair, 2015), what is the small entrepreneur supposed to do?
There is an entire grey area present in this field of research, and it is specifically related to the effect that Ad-Blockers have left on small/medium scale entrepreneurs, who along with their business, run blogs on their website as a secondary and at times a tertiary source of income, which is relatively minor to the primary income of their business, which could be sales or service, yet makes a difference in context to their scale of business. It is a self-sufficient statement that these organizations don’t solely rely on online advertising for revenue generation, like supermarkets or clothing outlets which can be classified as individual entrepreneurs (small and medium scale, in some cases even big ones), but do earn a part of their income via allowing advertisement on their sites for subsidiary revenue.
Since these organization cannot afford alternatives/ solutions to the Ad-Blockers, do they simply suffer the consequences, if yes then to which extent or do they end up withdrawing themselves from running blogs, websites due to their maintenance costs which have now become an extra expense as Ad-Blockers have started being a hindrance? There are such many questions left in the grey which are aimed to be answered by this research.