You Shall Not Pass

​By Sean McCready, Managing Partner, MBM

​As ever larger portions of advertisers’ budgets move into digital media in New Zealand (up 31 per cent in 2015 year on year), some investments are landing in turbulent waters, with burgeoning adoption of ad blocking a key concern.

Ad blocking software is a downloadable browser extension on desktop or app on mobile. It eliminates display banner ads, pop-ups and many video pre-roll ads by detecting the source of the content, which is often a third party ad server. On mobile the software works in a web browser but, significantly, not within mobile apps.

Uptake of products such as Adblock and Adblock Plus has accelerated in the last 12 months, especially since Apple enabled ad blocking on its iPhone in late 2015. The Internet Advertising Bureau (IAB) UK reported in March this year that 22 per cent of UK adults use ad blocking software. Locally, Trade Me has stated that around five per cent of users are ad blocking, while ad exchange KPEX says blocking makes up a relatively small percentage of its traffic but is most prevalent with the hard to reach young male audience, who are early adopters. Clearly, usage here is likely to grow.

Unfortunately for publishers and ad buyers, ad blocking is compelling for consumers. It’s quick and easy to download and set up and promises less intrusive ads, more secure browsing and faster page loading.

Where things get unseemly is in the relationship between ad blocking companies and publishers. Adblock Plus offers the ‘Acceptable Ads’ functionality, purportedly allowing the serving of ads it has deemed ‘non-intrusive’. In reality, it is more a database of publishers who have paid for their ads to be served. It’s a classic shake-down and a way for ad block companies to grab an unearned piece of the online advertising pie. Google has admitted paying ad block companies, which have been reported as taking up to 30 per cent of the unblocked advertising revenues.

This all comes at a time when online publishers globally are struggling to find revenue models to fund quality content and journalism. So how can the industry react?

There’s a general call for marketers to give consumers better ad experiences, including more restrained application of re-targeting and frequency capping. The US IAB has published its LEAN initiative (Light, Encrypted, Ad-choice supported, Non-invasive ads), which is supported by IAB NZ. This is good, but the prospects of broad compliance are slim and on its own it is unlikely to sway ad blocking companies with their own agendas.

A more successful approach is publishers denying content access to those consumers using ad blocking software. For example, Forbes.com uses a pop-up to ask users to specifically whitelist [mark as approved] their site before they can access an ‘ad-light’ experience. This is an elegant way of bringing to the surface the relationship between freely accessible content and the advertising that supports it. It’s an approach more premium publishers could consider.

The big ad platforms are starting to fight back through tech. This week Facebook announced coding changes for its desktop site that thwart ad blocking software. Most of the social network’s traffic and ad revenue comes via its mobile app, which is already insulated from ad blockers.

Forbes Ad Blocker Notification
Forbes Ad Blocker Notification

Advertisers are also employing ‘native’ advertising and integrated content strategies that slip past ad blocking software because they appear as part of a website’s content. This is a rapidly growing area that can be very effective. The issue is the ability to execute with enough scale to make it cost efficient over the long-term.

Digital media issues like ad blocking, along with general media fragmentation, are also helping the oldest medium undergo a resurgence. Out-of-home advertising (billboards, bus shelters etc) is experiencing revenue growth and capital investment that looks set to continue. Advertisers should consider their wider media mix, particularly for brand and positioning communication, and not simply rely on online display ads to do most of the heavy lifting.