The digital marketing and media industry regularly confronts fresh adversaries eager to intercept the flow of ad dollars, often to the disadvantage of consumer choice. Ad blocking is the latest crisis du jour, a potentially existential threat to the industry. To combat it effectively, it's essential to distinguish ad blocking's two sources -- and their significance.
As abetted by for-profit technology companies, ad blocking is robbery, plain and simple -- an extortionist scheme that exploits consumer disaffection and risks distorting the economics of democratic capitalism. When implemented by consumers, ad blocking is a crucial wakeup call to brands and all that serve them about their abuse of consumers' good will.
Let's take these challenges in order. Advertising (as everyone reading these words knows well) pays for the ability for nearly anyone around the world to type in any URL and have content of unimaginable variety appear on a screen. Advertising also subsidizes the cost of apps, which can take hundreds of thousands of dollars to produce, but are often free or low-priced.
Without advertising, digital content and services either will vanish, or the cost for their production and distribution will come directly from consumers' wallets.
Of even greater importance is the impact on the economy itself. Advertising represents $350 billion of the U.S. gross national product, and consumers depend on it to help make $9 trillion of annual spending decisions. "Advertising helps the economy function smoothly," said Nobel Laureate economists Kenneth Arrow and George Stigler. "It keeps prices low and facilitates the entry of new products and new firms into the market."
Ad blocking disrupts this engine of competition. I wish I were crying wolf, but I'm not. Some websites, particularly those with millennial audiences, are already losing up to 40% of their ad revenue because of ad blocking. Our own IAB research found at least 34% of U.S. adults use ad blockers.
A primary culprit is unethical technology companies seeking to divert ad spending into their own pockets. Claiming to represent the interests of consumers and cloaking themselves in the ill-defined mantle of "better advertising," several of the largest and most prominent distributors of ad-blocking software are shaking down publishers for payments to circumvent their barriers. One such company says it has to charge publishers money to "whitelist" them because judging which ads are "non-intrusive" is a "manual process" and "requires significant effort on our side." It reminds me of Tony Soprano's complaint to his therapist about how exhausting it is to be in the Mafia: "It's too much to deal with almost. And in the end you're completely alone with it all."
Unfortunately, these rapacious businesses are also exploiting a real vulnerability: the erosion of stimulating consumer experiences online. For this, the marketing-media ecosystem bears real responsibility.
IAB research shows ad-block use is caused by a general disdain for advertising and concern about the safety of user information. In our nationally representative survey, 89% of respondents who have installed ad-blocking technology reported using ad blockers to improve their experience. The ads deemed most intrusive are video ads that play automatically, screen takeovers, and blinking ads -- all ad types that directly disrupt the consumption of content.
These findings should be an alarm to everyone in media and marketing: We are mistreating our most valuable asset -- our consumers. We can talk all we want about the ad-centered "value exchange" between consumers and media. We can (and should) contemplate suing unethical ad-blocking profiteers out of business. But until we commit to the cause of ever-improving user experiences, advertisers and media will be at risk.
It's important not to get caught up in endless debates about the "quality" of advertising content. TV advertising, most would agree, is immensely more entertaining than it was in decades past, and often directly relevant to the shows and vertical networks on which it runs. But that hasn't stopped DVR owners from zipping through more than 70% of the commercials on programs such as "Mad Men," according to research by digital video recorder maker TiVo.
Rather, our industry should focus on identifying and correcting business practices and their enabling technologies that objectively degrade users' experiences with digital media. Here are some places to start:
1. The rapid race for consumer data must stop slowing the internet down. Everyone wants to own "insights" about the user, the ad and the site. But each digital ad is lugging around so many companies' requests for data that the ads are physically, literally impeding the delivery of content. Data calls must be limited, ideally through a consensus-based standard-setting process or best practices. The industry needs to become better at using data -- and at using less of it.
2. Ads should only load when they're about to be viewable, not before. Pre-loading ads not in view slows sites down, prioritizing advertising over people's desire to get to the content quickly.
3. Advertisers and their agencies should voluntarily abandon the most upsetting forms of digital disruption. While autoplay video ads may work in some mobile in-stream environments where a consumer can swipe them off the screen quickly, it may be time to retire autoplay in other contexts. Flashing, blinking intrusive ads also should be considered grade-school creativity, not worthy of a profession that aspires to cultural significance -- and profits from making clients' brands admired and liked.
4. Finally, publishers must take control of their site experiences, and turn down advertising that doesn't meet their standards for user engagement. That might sound controversial, but it's not. TV networks, newspapers and magazines have had advertising acceptability departments for decades. And if we've learned anything from the rise of native advertising, it's that the "Vogue effect" -- in which great advertising enhances the value of the publisher's offering -- is applicable in digital media, too. Indeed, a study by the IAB and the Edelman Berland communications firm found that in-feed sponsored content on entertainment, business and general news sites that is site-relevant and provided by a brand that is authoritative and trustworthy can boost a site's favorability with consumers by more than 50%. The same research found that trustworthy and authoritative brands with relevant messages can boost their favorability by over 50% using in-feed sponsored content. Done right, advertising can be a win-win for publishers and brands that consistently keep the consumer first.
If the industry doesn't change its ways, rest assured, the cost of advertising will climb inexorably, for brands and all that support them. Scalable ads will have to be replaced by more handcrafted native ads. Extortion payments to blockers will become routine, as retail slotting fees have become routine in the consumer goods industry. Ad-block profiteers and publishers will engage in an endless technology arms race. The internet may survive as a mass communication tool, but it'll look much different, even perhaps post-apocalyptic.
Disruption is not uncommon in this disruptive business. But we have to disrupt the disruptors -- by identifying them as the profiteers they are, and by giving consumers the internet they deserve.
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