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The State of Ad Blocking in Seven Charts
There’s been a shift in tone in the debate around ad blocking. The short history: it began as an ethical debate between publishers (allied with brand advertisers), who argued that a free content, no ads model wasn’t sustainable, and ad blocking software providers, who advocated for better, less interruptive ads and a cleaner user experience. The debate has since shifted to a more cool-headed, rational discussion: publishers and brands seem to have accepted that ad blocking is here to stay, and it’s on them to rethink how they reach their audiences, whether that’s through alternative business models on the publishers’ side, or new ad formats and branded content on the brand side.
Echoing this sentiment were top-tier publishers like the Guardian and The Washington Post at Digiday’s WTF Ad Blocking. Instead of bemoaning ad blockers and those who use them, the discussions largely centered around strategies to rethink how they approach their audience. Our position on ad blocking — one that should resonate with brands and agencies — is that it raises the standards for creativity in advertising. By giving consumers the choice to regulate their online interactions with brands, ad blockers dictate the consumer-brand relationship. These charts break through the fear-mongering rhetoric and capture the data-based realities of ad blocking.
1. Ad blocking is costing brands and publishers potential revenue…
In 2015, ad blocking resulted in an estimated $21.8 billion in “blocked” revenue . The revenue that is “blocked” is twofold: the dollars that would have accrued to brands from consumers going from ad-click to purchase, and the revenue to publishers from CPC (cost-per-click) and CPM (ad impressions).
Between the media buys and the creative production costs that go into never-to-be-seen ads, ad blocking is expected to cost the industry $41.4 billion globally, this year alone. The onus is on both publishers and advertisers to unlock greater value for consumers in their respective domains: for publishers, in the kinds of ads they serve consumers and overall website user experience, and for advertisers, in the creative they produce to begin with.
2. …but for publishers, ad revenue is still on the rise
In spite of all the threatening rhetoric around ad blocking, publishers like Slate and Huffington Post don’t see ad blocking as a significant threat to their business. For the New York Times, the share of digital revenue from advertising has continued to increase. Ad revenue remains high as digital subscriptions grow, pointing to the success of a dual revenue model: it doesn’t have to be either ads or subscriptions that drive revenue, but a healthy mix of both. And subscriptions don’t have to suffer as a result of ads, either. But that hasn’t stopped published from finding new revenue streams in the the new world of branded content. Many are now offering their research and writing capabilities as creative resources to brands. These figures reinforce the general sentiment of publishers’ around ad blocking: they don’t see ad blocking hurting their business as badly as it’s being made out to seem.
3. Content blocking and subscription models are publishers’ top weapons of combat
For the majority of online publishers, ad revenue funds journalistic content. Entirely free content is an unsustainable business model. To discourage readers from blocking their ads, publishers have deployed workarounds ranging from the costly (subscription models) to the aggressive (content blocking, wherein readers can’t access articles unless their ad blocker is disabled) to the more creative (branded or sponsored content written by marketers on behalf of brands). Huffington Post is cutting down on ads and increasing its sponsored content, signalling the increasing openness of traditional journalism outlets to branded content. Brands are building out in-house editorial functions to combat ad blocking with branded content, and there’s a strong business case for doing so.
4. Surprisingly, poor quality ads aren’t the top reason for downloading an ad blocker
Looking at the demand side of ad blocking, why are consumers investing in ad blockers? The most common factor prompting people to download an ad blocker isn’t annoying ads, but the realization that ad blockers exist, according to Interactive Advertising Bureau research. It sounds almost too simple, but the noise around ad blocking probably isn’t helping publishers, as users get more attuned to the options out there.
5. Ads on mobile browsers eat into data plans
On mobile homepages, ads are more data-heavy than editorial content. Since news sites are often media-rich in an effort to stand out, the load times for these pages are undoubtedly already high. With ads in media-rich formats like video added into the mix, pages take more time and mobile data to load. The New York Times conducted tests to see how the load times and data usage for the top 50 news websites’ homepages varied, finding that almost half of the data on these pages comes from ads and the content that ad blockers filter. Given this data, it’s no surprise that ad blockers are appealing to consumers of mobile news. CNN’s homepage used 4.3 MB of mobile data to load ads, compared to 2.7 MB to load editorial content. On a typical data plan, that amounts to $0.09 a page to load ads.
6. Male millennials are most likely to block ads
Websites that cater to younger audiences – like gaming, social media, and tech — see significantly more ad blocking by visitors. (Note that gaming and tech sites will also be more data-heavy to begin with by virtue of the media formats they host, making ads even less desirable to consumers craving quick load times.) Within that subset, younger male audiences are more likely to block ads. This trend will force brands to think harder about the types of ads they create for different audience segments, as well as refine their targeting strategies to ensure they’re not bombarding the most enthusiastic ad blockers during their social media sessions.
7. User experience is becoming a bigger marketing priority
For marketers, it’s no longer simply about quality creative — ensuring an overall quality user experience is paramount. Marketing teams are absorbing design and engineering functions to ensure they keep user preferences top of mind when designing online experiences for customers. Especially as ad blocking finds its way to mobile browsers, there is an increased expectation of a cleaner, less interruptive browsing experience on the smaller, more private screen.
So what’s next?
Ad blocking isn’t the end of advertising as we know it — it’s a fork in the road that will determine which advertisers rise to the creative challenge and diversify their messaging channels, and which continue to try plowing through the ad blocking battlefield. New media formats and the rise of native advertising are two avenues that hold rich advertising opportunities for brands. Whichever path advertisers choose, one thing is clear: the consumer has taken the reins, and the brands that succeed will be those that have a complex understanding of consumer needs.