Media companies will lose an estimated $22 billion in revenue by the end of 2015 due to the growing adoption of ad blockers, but this is just the beginning. Originating in Europe, and once reserved for tech-savvy users, ad blockers are becoming more global and mainstream since their availability on iPhone.
Users are sending a very clear message to the media and advertising industry: They do not stand for interruptive advertising anymore. The main reason why people are installing ad blockers is their determination to avoid interstitials and unskippable pre-roll, which are preventing them from accessing the content they want to see. These interruptive formats, which were already unpleasant on desktop, are simply unacceptable on a smartphone, where you can't even open another window to escape.
Considering that smartphone users represent up to 70% of all traffic to major media sites, and that the average mobile CPM is half the desktop CPM, mobile monetization is the second big challenge that the media is facing. The solution is not to increase the advertising pressure, as that would ruin the user experience and accelerate ad blocker adoption.
It would be best for publishers to listen to user frustration and prioritize native advertising, which includes native video formats that are built for mobile devices and are more respectful of the user experience. This transition may not be easy, but the potential is there, as such opt-in formats generate more user engagement and thus a better return on investment for brands.
The third challenge is the competition between apps and the mobile Web for user attention. The reality is that the user experience is largely better on apps compared to the mobile Web, where navigation is often slow and clumsy.
Facebook is taking advantage of this gap. Leveraging its considerable distribution power, it has convinced many leading publishers to provide content to its Instant Articles integration service. Facebook's argument for Instant Articles is not just about improving user experience, as it allows users to read articles without leaving the platform, and is damned fast. Rather, the social network suggests an even stronger incentive: its ability to prioritize its partners, giving them more visibility in news feeds. Major publishers, such as The New York Times, Washington Post and BuzzFeed, have begun providing their content to Instant Articles. If Facebook and other platforms, including Apple, grow even further, why should publishers care to run their own websites? But how will they react if the social network changes its policy, as Facebook previously did with fan pages?
The publishers participating in Instant Articles have recently registered a big drop in their mobile Web traffic and are now struggling to monetize Facebook traffic. What is at stake here is publishers' long-term loss of control over audience and revenue generation.
This shift has the potential to reframe users' perception of publishers, relegating them to the status of pure content producers competing for attention against all kinds of posts in a user's news feed. Keep in mind that Facebook is also a content producer—it has 1.5 billion users doing the job for them, for free.
The media as we know it is at risk of disappearing, especially when it pertains to the younger generation, who may grow to no longer think about publishers as destination websites for premium content. The strength of publishers comes from their quality brand, content, staff of professional journalists and the relationship they have built with their loyal audience. In a platform world, they will struggle to defend these assets.
Whatever their strategy, media owners should not underestimate the critical importance of investing in their own mobile websites or apps. For example, Google's recent Accelerated Mobile Pages initiative will provide the necessary tools to raise the mobile Web's user experience to a level where it can compete with apps.
Publishers can only overcome the challenges at bay if they focus enough of their attention and resources to radically improving the user experience. They must provide user-friendly services that are accessible at the speed of light, without being blocked by primitive forms of advertising.
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About the Author
Pierre Chappaz is one of the Europe's premier entrepreneurs, having led many major global brands and technology companies, as well as briefly serving as president of Yahoo Europe. Today, Mr. Chappaz serves as executive chairman and co-founder of video advertising technology company Teads, driving the company's efficiency and success on a global scale.
About the Sponsor
The global leader of native video advertising, Teads' formats place video campaigns within content that's outside the traditional video stream. Designed with the user experience in mind, Teads' formats are view-to-play, skippable, contextually targeted and include a bill you pay only once the ad has been fully viewed and completed. Teads' partners include the world's most respected publishers, including Reuters, The Washington Post, Forbes, Slate and many more. This guarantees advertisers that their video content will be placed within premium, relevant and brand-safe environments.