In part 5 of AAM's Guide to Media Transparency, we explore the rising concern of ad blocking in digital media.
For AAM’s Guide to Media Transparency, we talked to leaders from all sides of the industry to answer one key question:
How does the media industry build more accountability and transparency between marketers, media agencies, technology vendors and publishers for the long-term success of the media industry?
Parts 1 through 4 of the series have examined how to build more accountability throughout the industry, the complexity of programmatic advertising, the industry’s game plan for fighting back against fraud, and the challenges facing ad viewability.
Now, in part 5, we’ll explore a rising concern in digital media: ad blocking.
Scene 1: This is Ryan. Ryan is 29 years old and lives in Seattle. After he gets off work, Ryan likes to relax by reading super hero fan fiction sites on his laptop. One day, Ryan’s favorite fan fiction sites launched a takeover ad. Ryan tries to click out of it but instead is directed to another website.
This frustrates Ryan.
He installs an ad blocker.
Now he can read the latest Spiderman story without any intrusive ads.
Ryan is happy again.
Scene 2: This is Caitlyn. She recently adopted a kitten and shared the news with friends and family over email and social media. Now all the ads she sees on Facebook and other websites are about cat food, litter, toys and weird costumes for cats.
Caitlyn is annoyed. She already has everything she needs for her kitten and she doesn’t want to dress him up as Yoda.
Caitlyn installs an ad blocker.
No more targeted ads.
Caitlyn is happy again. And her kitten is happy he doesn’t have to wear that costume.
Scene 3: This is Seth. Seth is 17 and has vertigo. One of his triggers is sudden, bright movements and flashing lights. Seth was reading the latest news on a local site when a loud, aggressive video ad started to play without warning.
The ad triggered Seth’s vertigo and made him ill.
Seth installs an ad blocker.
No more unexpected ads. No more vertigo episodes.
Seth feels better and can go back to reading his local news without getting sick.
Each of these three scenarios outlines very real, yet very different reasons why readers choose to install ad blocking software. A report from eMarketer anticipates more than 86.6 million Americans will use an ad blocker in 2017, up 24 percent from 2016.
And according to the IAB study, Ad Blocking: Who Blocks Ads, Why and How to Win Them Back, 26 percent of users block ads on a computer, while 15 percent of respondents block ads on their mobile phones. In both cases these users are typically males between the ages of 18 and 34. The majority of respondents said they used ad blockers because they wanted an uninterrupted, quick browsing and streamlined user experience.
“The industry needs to acknowledge that we have ad blocking and think about why readers are using it,” emphasized Nicolas Sennegon, global managing director and chief revenue officer for The Economist. “They’re using it because the advertising experience has become disruptive. As publishers, we need to find out what kind of content they want and deliver it. It’s taking the bold decision to respect and understand the message that they’re sending which is: ‘I just want the content that I’m looking for.’”
The actions of these consumers may have a long-term effect on the publishers and advertisers in digital media. According to PricewaterhouseCoopers, digital ad spending continues to rise with revenues forecasted to reach nearly $240 billion by 2019. But Jupiter Research suggests ad blocking could curtail these gains and cost publishers $27 billion in revenue by 2020.
Dominik Majka, senior vice president of digital strategy at MediaCom Canada, summarizes the appeal and challenge of ad blockers, “I can’t blame the people for feeling inundated with advertising. We’ve followed them around with the same shoes instead of saying, okay, they looked at shoes, maybe we should serve them advertising for socks that go nicely with these shoes. At some point in time, you reach that point of no return where your audience says, ‘enough, I’m installing ad blocking.’
“At the same time, I think there's a lack of education that advertising drives revenue for the websites, which drives employment for the people that produce meaningful content, which is read by the audiences. It's kind of an evil cycle we're in and it is a concern for us because it limits our means of getting in front of that individual with a meaningful message.”
A solution to ad blocking might not be easy, but the industry coming together to stand for quality and transparency are key parts to any progress. In this white paper, we’ll explore the progress made so far with new proposed ad standards and quality content. We’ll also suggest ways publishers can continue to monetize their websites even as ad blocking grows more popular.
Ad Blocking 101
The function of ad blocking software is simple: remove ads from a page so the reader doesn’t see them. To do so, the software must first recognize the ad request in the website’s code and block the communication, preventing the ad from being delivered. Then it hides the spots on the web page where the ad is supposed to be displayed leaving the reader with an ad free experience.
The concept of ad blocking is simple but the industry itself is complicated and constantly evolving.
Adblock Plus recently came under fire for an expanded service that allows publishers to choose from a library of preapproved Adblock Plus ads and display those ads on their sites.
And Facebook caused a stir when it reworked its HTML ads to be indistinguishable from organic content so it could bypass ad blockers, a move that contributed to year-over-year desktop ad revenue growth of 18 percent. Facebook claims that its move is warranted because ads pay for its operating expenses. Adblock Plus and its users say the ads are distracting and the ad tracking raises privacy concerns.
“We got ourselves into this problem by designing ads that were increasingly intrusive,” explained Ted Boyd, CEO Brandworks International. “We need to align around standards that allow for an ad to be appreciated while not ruining the consumer experience. Ad blocking actually offers the industry an opportunity to get its act together.”
Setting the Standards for Quality Ads and Creating Quality Content
In 2016, the industry came together to make some progress in the ad blocking challenge. The IAB recently released a new version of the IAB Standard Ad Unit Portfolio for public comment, updating the digital ad formats to accommodate different screen sizes and incorporating the LEAN principles of lightweight, encrypted, AdChoice supported, and non-invasive advertising.
“I think the tenants of LEAN are exactly the things we should be addressing,” said Joe Barone, managing partner, digital operations, GroupM. “There is a lot of behavior we have to look at in the industry, and that gets into the area of self-regulation. We have to agree as an industry that we won’t use the types of ads that annoy consumers—flashy music, auto-play ads—and be responsible with data usage."
Many in the industry agree that a combination of well designed, non-intrusive ads and valued, premium content create a safe place for both readers and advertisers that help mitigate the adoption of ad blocking software.
“If an ad is properly structured and built, there should be a social contract between the visitor and the publisher,” said Boyd. “Content is exchanged in return for looking at these ads. It's been a very long-term social contract and right now the social contract has been broken—not by the consumer but by the industry, by the publishing side of the business, by ad tech. We now have to take full responsibility and fix it.”
Cynthia Young, head of audience for The Globe and Mail, explained how strict standards make them a safe place for readers and brands, “As a publisher there's integrity in practicing what you preach that promotes you as a safe and premium place to advertise. And we have quite a stringent protocol on our homepage advertising specs. Again, all of this is to maintain as high a quality site for our audiences as much as it is for our advertisers.”
Sennegon agreed, “To have a conversation around ad blocking is to have a conversation around quality content and how we deliver that content to platforms. Ad blocking is reinforcing the need for quality content."
What are the LEAN Principles?
L: Light. Limited file size with strict data call guidelines.
E: Encrypted. Assure user security with https/SSL compliant ads.
A: Ad Choices Support. All ads should support DAA’s consumer privacy programs.
N: Non-invasive/non-disruptive. Ads that supplement the user experience and don’t disrupt it. This includes covering content and sound enabled by default.
4 Ways to Monetize Websites in the Face of Ad Blocking
Ad blockers are already costing digital publishers millions of dollars, and with increased adoption by mobile users, the amount is likely to increase. Remember Ryan, Caitlyn and Seth? They used ad blockers and publishers missed the chance to generate revenue from their traffic.
“After seeing how ad-blocking has evolved over the last year, especially within the millennial age group, we, as an advertiser, need to rethink how we are communicating with our consumers,” said Khoi Truong, director of media and data optimization, L’Oréal Canada. “Ad blocking simply helps consumers convey a message that they’ve been trying to tell us for many years. Now it’s up to advertisers to understand the message and find new communication channels.”
Websites are already testing a variety of creative solutions to mitigate the impact of ad blocking software on their revenues. Here are four ideas worth considering:
1. Ask Users to Turn Off Ad Blockers
Earlier this year, Forbes took the tactic of asking users to disable their ad blocking software to access their content. The early numbers were favorable: 42 percent of those asked either disabled their ad blockers or whitelisted Forbes.com, giving them access to content and the ad-light experience. Other sites have since followed the trend such as the New York Times, Washington Post and Wired.
Websites employing this tactic may gain advertising traffic but run the risk of losing loyal readers.
How to Persuade Readers to Turn Off Ad Blockers
Explain the financial importance of advertising to readers and the consequence of losing that revenue.
Show, Don’t Tell
After asking readers to turn off the ad blocker, provide them with a quick demo or step-by-step instructions on how to do just that.
Many publishers promise limited or noninvasive advertising to readers who turn off ad blockers. Publishers must hold themselves accountable and fulfill that promise to remain trustworthy.
2. Introduce a Subscription Model
Instead of asking readers to turn off ad blockers, publishers may consider taking a stronger stand and requiring a subscription to access content. This tips the revenue scale from one focused on advertising to one on recurring subscriptions. Some sites using this tactic have better success with a “leaky” paywall that allows readers access to a predetermined number of articles each month for free before requiring a subscription.
3. Focus on Native and Sponsored Content
Instead of a traditional display ad model, switch tactics and look for revenue from paid content that aligns with the site’s editorial content. According to Business Insider, native in-feed ads on publisher properties and social media platforms will make up 74 percent of U.S. display ad revenue by 2021.
Both native advertising and sponsored content fit this model. Native advertising has stronger controls and is often viewed as an objective editorial while sponsored content contains direct messages and calls to action. Both native advertising and sponsored content should be clearly labeled so the reader understands it is not pure editorial.
4. Consider Adding Affiliate Links
According to a study by Forrester Research, affiliate marketing grew to a nearly $4.5 billion industry between 2011 and 2016. Affiliate links, or affiliate marketing, is when publishers use a specific link with an affiliate ID in their content. Advertisers record the traffic sent by each link ID to the advertiser’s website and pay according to the terms of the contract. Affiliate marketing is typically successful on smaller niche sites.
For most digital publishers and advertisers, the solution to the ad blocking problem is a multi-faceted approach focusing on less invasive ads, quality content and a revenue mix that goes beyond display advertising. Before deciding on a strategy, websites first need to determine how ad blocking is impacting their sites with tools like AAM’s Ad Block Gauge, the industry’s first independent ad blocking detection technology that helps publishers better understand ad blocking trends on their websites.