Are ad blockers going to kill mobile advertising?

There has been much debate on ad blockers over the last few months. Apple’s announcement that its latest mobile operation system iOS 9 would let users install ad blockers, has sparked fear among marketers that they’re going to lose out on significant revenue from mobile campaigns. Meanwhile, usership of ad blocking software is growing.

But can ad blockers really kill the mobile advertising industry?

Ad blockers aren’t new.

Adblock Plus, one of the leading ad block software products currently available, was initially released in 2006 for desktop and for Android in 2012, though the app was initially banned from the Google Play Store. It is currently being used by 10m consumers on Chrome, 1% of the browser’s one billion users worldwide.

Despite the app being available for Android and later on iOS, only 2% of mobile users were employing ad blockers. That’s changed a little since iOS 9.

Revenue is being lost.

Ad-blocking, no doubt, is having an effect on revenues. According to research from PageFair and Adobe, the economic cost of blocking ads in the US will be almost $11bn this year and is projected to double in 2016.

Screen shot 2015-09-28 at 8.16.45 AM

Source: consumerist.com

Millennials are top users of ad blockers.

According to a study by GlobalWebIndex, millennials are top users of ad blockers. 34% of those aged 16-24 and 31% of 25 to 35-year olds are installing ad block software. When Moz and Fractl asked millennials of their perception of ad relevancy, surprisingly, not all ad types were being viewed as irrelevant. However, mobile and in-app advertising scored particularly badly with almost 30% agreeing that ads were ‘very irrelevant’. Marketers will have to work harder to ensure that younger audiences are changing their perception.

US Millennials rate digital ad relevancy

ad blocking

Source: emarketer.com

Another poll by CivicScience discovered that women are generally a little less inclined to install ad blockers. Mobile payment and mobile banking users are were also a lot “less likely” to install ad blockers.

iOS 9 has given ad blockers a boost.

Within a few days after iOS 9 was launched, content blockers Purify and Peace hit the top 20 paid apps in the UK, at number 11 and 12 respectively. In the US, Purify jumped to number five of the charts and Peace was the top paid app. Undeniably, consumers are tired of mobile adverts, whilst concern is growing that web content cannot remain free unless it is being paid for through advertising.

Marco Arment, Developer, Peace, says:

marco arment

“We shouldn’t feel guilty about this. The ‘implied contract’ theory that we’ve agreed to view ads in exchange for free content is void because we can’t review the terms first – as soon as we follow a link, our browsers load, execute, transfer, and track everything embedded by the publisher. Our data, battery life, time, and privacy are taken by a blank check with no recourse.”

Many ad-blocking apps were sampled in the first week of availability on iOS 9

Source: wsj.com

However, Safari is not a big player with only 22% of web traffic worldwide coming through the Apple browser. In addition, ad blocking requires iOS 9 which only works on newer Apple hardware.

Meanwhile, Google tries to improve the mobile advertising experience.

Whilst Google did reintroduce Adblock Plus to its Play Store in September 2015, most likely in a bid to compete with Apple launching iOS 9, the company makes the majority of its income from advertising and will be unlikely to support it as much as Apple has. In 2014, Google’s ad revenue amounted to around $59.1bn, $16bn of which came from mobile advertising. It is vital for Google to keep encouraging marketers to pump their ad dollars into mobile search campaigns. Hence, it has been working hard to improve the experience of mobile advertising. Mobilegeddon, earlier this year, forced website owners to adjust their designs to be more mobile friendly. And only a month ago, the company announced that it would penalise sites displaying app install interstitials that hide a significant amount of content on mobile devices.

The logic is simple: if it cannot stop ad blocking, at least Google can help ensure mobile ads are less intrusive, easier to view (and turn off), and in return, mobile users find it easier to put up with them.

Apps aren’t blocking ads.

Adblockers aren’t blocking ads within apps. Juniper Research projects that mobile in-app ad spending will grow from $3.5bn in 2013 to $16.9bn in 2018.

In-app ad spend worldwide

juniper

Source: emarketer.com

In addition, a Flurry report last year found that users spend 86% of their time on mobile devices in apps. Indeed, gaming apps presented the largest (32%) chunk of user time spent, followed by Facebook (17%). Since ad blockers aren’t yet affecting these apps, it may provide reassurance to mobile marketers.

Time spent on iOS and Android connected devices

Source: flurrymobile.tumblr.com

Ad blockers do have a conscience.

In an unexpected move, Marco Arment, maker of the Peace ad blocker (which we mentioned earlier in this article), decided to withdraw his app just two days following its launch due to moral conflict. He says:

“I’ve learned over the last few crazy days that I don’t feel good making one and being the arbiter of what’s blocked. Ad blockers come with an important asterisk: while they do benefit a ton of people in major ways, they also hurt some, including many who don’t deserve the hit.”

He added that one of his issues with Peace was that it blocked all ads, regardless of format or content. In his opinion, a more nuanced approach is required.

In addition, Adblock Plus maker Eyeo GmbH has plans to reach out to other ad-block developers to create filters that allow certain ads to pass. The company has not disclosed its white list of passable businesses, but a person familiar with it claimed that Google, Microsoft and Taboola were on the list.

The race to change the business models is on.

Not all websites are being affected by ad blockers. Those with paywalls such as the New York Times, Financial Times and Le Monde are less likely to be affected. In addition, major sites such as The Washington Post and CNET have installed ad-block detection software that denies users who are running an ad blocker on the site to pass. A statement from the Post read:

“Without income via subscriptions or advertising, we are unable to deliver the journalism that people coming to our site expect from us. We are currently running a test using a few different approaches to see what moves these readers to either enable ads on The Washington Post, or subscribe.”

There are ways around ad blockers. Sites offering premium content are possibly in the best position to secure their futures as they keep intrusive ads to a minimum whilst being funded by subscribers. For now, ad-block detection is restricted to larger sites with the funds to install such tools, but could be spreading fast if it proves valuable.

In the meantime, marketers should focus on targeting the right audiences, packaging mobile ads in more engaging formats and pushing the creative boundaries of their campaigns.