Ad Blocking Is a Growing Problem. What's the Fix?

Publishers Including CBS Interactive, Forbes, DailyMail Weigh Their Options

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Browsing the web without ads is actually kind of nice. No popups stealing your screen. No autoplaying video ads making the page load as slowly as if it were being dialed up through America Online circa 1999.

And millions of people seem to agree. They've installed extensions to their web browsers that delete the ads from most, if not all, of of the sites they visit. One popular ad blocker, AdBlock Plus, claims that it's been installed on people's browsers more than 400 million times and that it counts "close to 50 to 60 million active users," said Ben Williams, communications and operations director at Eyeo, the company that makes AdBlock Plus.

Ad blocking isn't a new issue. People have been installing these extensions for years. But those people were considered a fringe group. But that group is getting closer to the mainstream as kids who grew up browsing the web on their parents' computers are getting their own laptops that they can customize all the way.

"It didn't really exist in any significant usage... I never heard about it until this year. I thought it was some very fringe-type thing, and it's becoming less fringe usage and more early-adopter usage," said DailyMail CEO Jon Steinberg.

Twenty-eight percent of people in the U.S. who use the internet browse the web with ad blocking enabled, according to a survey of 1,621 people conducted last year by Adobe and PageFair, a company that sells publishers technology to fight ad blockers.

And advertisers' target audience du jour -- millennials -- appear to be more likely to use ad blockers than any other age group. Of the survey respondents who were between the ages of 18 and 29 years old, 41% said they use ad blockers. As further evidence ad blocking isn't abating, Mr. Williams said AdBlock Plus has averaged 2.3 million downloads a week since 2013.

Ad blocking hasn't become a massive problem for publishers on the level of fraudulent traffic or advertisers' ad viewability demands that require more urgent attention because of the growing notion that marketers will pull their money over those two issues. But it's getting there.

"That's exactly how I think about it, which is if we start seeing it creep up and break out, we will devote the mental energy and fiscal time to evaluating these vendors… It's not a big enough problem yet -- we've got bigger problems right now," said Mr. Steinberg, who noted that he was planning to meet with a company this week that helps publishers fight ad blockers.

CBS Interactive's chief revenue officer David Morris, who also serves as chairman of the Interactive Advertising Bureau, agreed that there are bigger issues facing publishers, though ad blocking isn't far behind. "Viewability is number one. I would say preventing fraudulent traffic on your sites is number two, and that's from an industry standpoint, not a CBS standpoint. And then after that in terms of issues, I would say ad blocking is going to come up pretty fast," said Mr. Morris, noting that CBS Interactive has been examining the ad-blocking issue for two years and worked with companies including PageFair to address it.

For CBS Interactive's portfolio of 20 sites, "we see ad blocking range from as low 5% to as high as 40%," Mr. Morris said. A few months ago Forbes looked into what share of the people visiting its desktop site use ad blockers when they do. "We are seeing roughly 20% of desktop visitors visiting with some form of ad blocking on," said Forbes CTO Mike Dugan. And DailyMail recently ran a test to gauge its video ad blocking rates and found that 11% to 12% of its viewers had ad blockers turned on when viewing a video on its site, said Mr. Steinberg.

While ad blocking hasn't sent the ad-supported online publishing world into DEFCON 1 status, alarms blared earlier this month when Apple revealed plans to let ad block extensions work on the mobile version of its Safari browser that's packaged as the default web browser for iPhones and iPads. Apple didn't respond to requests for comment. But even before the announcement of Apple's new content blocking software, mobile ad-blocking was growing extensively overseas.

"A pretty noticeable thing that went fairly unreported on is that last August a web browser called UC browser, which is very popular in India and China, built in ad blocking into its mobile browser," Sean Blanchfield, PageFair CEO, said. "It has half a billion users and basically overnight all these users became ad blockers."

In addition to the 500 million users generated through UC Browser, a different browser, Maxthon, partnered with Ad Block Plus to create an ad-free mobile browsing platform. To date Maxthon has 120 million users, which brings mobile ad-blocking up to 620 million users, a growing population that now champions desktop ad-blocking. And with the launch of iOS9 on June 30, that number will continue to increase.

Mobile ad-blocking isn't a big problem yet "because mobile browsers don't make it super easy or possible [to install ad blockers] for mainstream browsers," Mr. Dugan said, noting that less than 4% of Forbes' mobile visitors have ad blockers enabled "but that's going to change based on [Apple's] announcement."

"Consumers want a faster web, significantly less tracking by unknown third parties and clean, well-lit media experiences. [Apple's mobile ad-blocking plan] just accelerates it, and opens up a significant share of the marketplace," said Jason Kint, CEO of online publisher trade group Digital Content Next.

That significant share would significantly cut into publishers' revenues. Take the biggest digital ad seller -- Google -- as a proxy. PageFair has estimated that Google, which made $59.1 billion from advertising in 2014, lost $6.6 billion that year because of ad blocking.

As Vice's chief digital officer Mike Germano said at an industry conference in New York earlier this month, "I love my audience, but fuck you, ad blockers -- 20% of my revenue is gone." (According to a Vice spokesman, Mr. Germano was referring to the publishing industry at large, not Vice specifically.)

So what's a publisher to do? There are a few fixes being bandied about. Whether any of them will work remains to be seen, but the status quo certainly isn't.

The IAB will be convening a task force later this summer to discuss ad blocking and come up with best practices and guidelines over how publishers should address the issue, Mr. Morris said. In the meantime publishers such as CBS Interactive, DailyMail and Forbes are meeting with ad-tech firms and weighing their options.

"What we are planning to do is just try a number of strategies that might range from simple appeals -- Forbes earns revenue from the display ads that you are blocking, kindly remove or whitelist our site so we can realize that potential -- and then all the way up to anything from frequency caps on the amount of content they might be able to consume and an extreme case would be actually restricting access to the site entirely," said Mr. Dugan, who emphasized that "these are all just things we're discussing."

Pay the Ad Blockers

Yes, ad blockers prevent publishers from making money. Yes, the idea of publishers giving up their money to ad blockers to make some of that money back is weird. But it's already happening. Companies including Google, Amazon and Microsoft have paid AdBlock Plus to not block ads on their sites, according to the Financial Times.

Pro: This is like paying hush money to the mob. In exchange for handing over some cash, publishers don't have to worry about ad blocking on their site.

Con: This is like paying hush money to the mob. What's to stop the ad blockers from jacking up their rates? Or what's to stop them from using these publisher deals to open up a new revenue stream that lets people pay the ad blocker to block ads on these sanctioned sites? "I don't like it, but I have concerns about it from a policy perspective. Whether the utilities and policies are in the spirit of net neutrality. The model makes me uncomfortable," said Scott Cunningham, the Interactive Advertising Bureau's senior VP-technology and GM of its Technology Lab.

Go Native

Just like people do, ad blockers can have a hard time recognizing that a piece of content has been paid for by a brand and is therefore an ad. This doesn't apply to all so-called "native" ads, such as search ads or paid listings in those content recommendation boxes that companies like Outbrain, Taboola and Yahoo place next to articles. But it's possible to pull up an advertorial on BuzzFeed or Forbes with an ad blocker enabled.

Pro: Native advertising is already helping brands and publishers deal with "banner blindness," or people's ability to immediately recognize and ignore standard display ad formats. Advertisers are spending more money on these types of ads; eMarketer estimated that brands in the U.S. will spend $4.3 billion on native ads this year, up 34% from what they spent last year.

Con: Ad blockers can't erase the advertorials, but they are able to block the paid placements that point people to these pieces of branded content. For example, the listings on BuzzFeed's and Forbes' home pages that link to their advertorials don't appear when visiting either site with an ad blocker enabled. But native adds blur the line between ethical journalism. Are publishers choosing companies that organically fit within their brand model or are the companies become too money hungry?

Ask Audiences for Sympathy

One of more the popular solutions would have publishers running pop-ups when people visit their sites with ad blockers enabled that would explain to those visitors how ad blocking endangers the publishers' businesses and their ability to employ people to make the content that those visitors enjoy. After appealing to the visitors' sense of duty, people would be presented with the option to disable their ad blockers and re-enable ads.

"Right now there's only an implicit agreement that I consume content and in exchange I consume ads. Publishers need to make it explicit," said Ben Barokas, an ad tech vet whose new company Sourcepoint aims to help publishers fight ad blockers by running prompts for people to turn off their ad blockers and turn the ads back on or pay to subscribe to an ad-free version of the site.

"The consumer has been overly trained as seeing adverts as being a disruption, but they need to see it as a necessary component online," said Dax Hamman, senior VP-business development and product, Rubicon Project.

Pro: This approach tackles one part of the problem head on. People may hate ads, but they may hate even more the idea of not being able to visit their favorite sites for free.

Con: It might not work.

"We ran messages on 140 websites in total and unfortunately it turns out that it's just not very effective," Mr. Blanchfield said. "We ran these ads asking ad blockers to please stop, and we gave them very easy options to disable adblockers on that website or to make a one-time donation. The numbers were not very encouraging in all of our experience. The average conversion rate was less than 1 percent and in terms of donations it was way, way lower."

Block Content From People Who Use Ad Blockers

If publishers' good-cop appeals don't work, they could play bad cop and not let people check out any of their content while they have an ad blocker enabled. Consider this the nuclear option.

Pro: No more freeloaders.

Con: Content-blocking is "the most draconian thing you can do" because it creates an adversarial relationship between the publisher and a segment of its audience, said Mr. Morris. It's also not guaranteed to work for publishers whose content isn't original enough that it can't be found on others' sites that don't penalize ad blockers. CBS Interactive has adopted this strategy for CBS.com, which hosts the full episodes from the broadcast network's shows, but not for any of its other sites. "From my perch as chairman of the IAB, that's not a solution for the top 1000 sites out there and certainly not a solution for bloggers and the entire ecosystem that depends on advertising to run their businesses," Mr. Morris said.

The Freemium Model

If people are so anti-ads, maybe they'll be willing to pay to access sites without any ads in sight. This so-called "freemium" model that offers a free, ad-supported version and a paid, ad-free version of a site has been adopted by companies like music streaming services Spotify and Pandora and YouTube's looking to roll out an ad-free subscription tier. Sourcepoint's product would let publishers offer a way for people to pay a site to turn off ads, Mr. Barokas said.

Pro: Give the people what they want. If they think sites without ads are better, maybe they'll be willing to pay for that option. What's the matter with more options? Plus corralling ad-block converts into their own subscriber segment could give publishers a better look at the types of people in their audience that use ad blockers.

Con: Spotify and Pandora are able to attract subscribers because they're big services that offer people a lot of content in exchange for their money and content that doesn't lose value and interest over time like news articles do. Even still, both of those companies rely on their ad-supported services for the majority of their users and the bulk of their revenue. And publishers like The New York Times and The Wall Street Journal that already host paywalls to push people to subscribe would need to decide whether to remove ads from the subscription tiers and sacrifice that supplementary revenue or introduce a secondary subscription tier sans ads.