In an Ad Blocking Battle, Whose Side Is Google On?

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Ad blocking looks increasingly like the marketing industry's forever war, with plenty of damage done but little resolved.

Publishers are experimenting with keeping out visitors who run ad blocking software, for example, only to see their tech inadvertently turn away "innocent" people. The makers of Adblock Plus initially fought Facebook's countermeasures by wiping out not just ads, but other posts too. And now even Adblock Plus wants to sell ads, news that only deepened the cynicism among its users.

But along with the intrusive pop-ups and tracking cookies that drive people to block ads, the web is marked by an unusual concentration of power at just two companies: Google and Facebook. Many participants in the internet economy are nervous about the duopoly's ability to set the terms online. Now what they—especially Google—do next could potentially steer the outcome of this conflict for better or for worse.

Adblock Plus has actually had a good thing going with Google until now, charging it and other major players to participate in its Acceptable Ads program. Adblock Plus, a for-profit enterprise, says it takes a 30% cut for letting those ads through. (Smaller publishers take part for free.) Although it's unclear how much money Google is kicking in, it's bound to be covering a big chunk of the bills for Eyeo, the maker of Adblock Plus.

Then earlier this month, Adblock Plus bungled the announcement of its plan to create its own ad exchange through a partnership with a company called ComboTag. Dubbed the Acceptable Ads Platform, initial reports said Google and AppNexus would supply ads to it, news that left marketers with their mouths open.

"This launch was riddled with hyperbole," said Brian Kane, co-founder and chief operating officer at Sourcepoint, a company that helps publishers figure out how to counter ad blockers. "It was surprising that they would name AppNexus and Google as partners, but the truth is AppNexus and Google did have a relationship with ComboTag. If they hadn't gone public with it, my guess is AppNexus and Google would have continued to do business with ComboTag."

As it happened, AppNexus cut ties with both ComboTag and Adblock Plus, adding that it holds the existing Acceptable Ads toll booths "in low regard." Google distanced itself too, saying it was parting ways with ComboTag and wouldn't have anything to do with an Adblock Plus ad exchange.

"It's an uncomfortable development for us," Sridhar Ramaswamy, senior VP of ads and commerce at Google, told a gaggle of reporters at the Dmexco conference in Cologne, Germany. "We have no involvement in their program and this is not a business we want to be part of."

But the debacle drew attention to the involvement Google does have with Adblock Plus. In fact, Google is likely Adblock Plus' largest, most lucrative customer. Paying Eyeo allows Google's keyword search ads to survive the filters of Adblock Plus, one of the most popular ad blocking systems available. The sums involved are not small. EMarketer estimates Google will capture $47.57 billion in search ad revenue in 2016, representing 55% of the search ad market worldwide.

The web's other great power, Facebook, has been less amenable to ad blockers' agenda. The social media powerhouse has lately been trying to foil Adblock Plus by making it hard for the software to tell ads apart from the rest of its content.

It took the opportunity to call out the pay-for-passage system that keeps Eyeo running. "Some ad blocking companies accept money in exchange for showing ads that they previously blocked—a practice that is at best confusing to people and that reduces the funding needed to support the journalism and other free services we enjoy on the web," Andrew Bosworth, VP of ads and business platforms at Facebook, wrote in a blog post.

"Rather than paying ad blocking companies to unblock the ads we show—as some of these companies have invited us to do in the past—we're putting control in people's hands with our updated ad preferences and our other advertising controls," he added.

The fight soon became half arms race, half PR battle, with Adblock Plus quickly announcing a workaround and Facebook retorting that the "fix" erased users' content along with ads. Facebook seems to have gotten the better of the ad blockers for now, but that's not likely to be the end of it.

"This is not the way we think is the most constructive because Facebook's approach critically leaves out one group and that's the user," said Adblock Plus spokesman Ben Williams.

Meanwhile, just days after Adblock Plus kicked the hornet's nest anew with its ad-selling scheme, Google came out to say it had teamed with Procter & Gamble, Unilever, The Washington Post, the 4A's agency association and others to form the Coalition for Better Ads.

Its collective goal is to monitor the quality of ads with a system now in development at the Interactive Advertising Bureau's Tech Lab. Only ads that make it through the coalition's filter will appear on the websites of participating companies.

If Google and others decide that they've cleaned up web advertising enough, will the temptation grow to quit paying into Adblock Plus and its Acceptable Ads? With neither Facebook's nor Google's financial support, funding for Adblock Plus would look very different, to say the least.

Eyeo's business model has separately come under increased legal scrutiny in the company's homeland of Germany. In June, Cologne's higher court sided with Axel Springer, saying that Adblock Plus can obstruct ads, but can't charge the publishing giant to let its ads appear.

Mr. Williams said potential pressure on Acceptable Ads revenue was not a main motivation for the plan to sell ads, and that losing one paying partner, even Google, wouldn't be devastating.

"I would not classify this as a 'let's prepare' type of thing," he said. "That wasn't part of the decision-making process at all."

"I want to be really clear," Mr. Williams added. "We are a company. We're not a nonprofit and we're not trying to be. So of course profit is one of our motivations. And I think that gets lost in the discussion. We have to pay our employees and I'm not sorry about that. But at the end of the day, I do think it is possible to do something that is beneficial and can serve a greater good, but that also makes money."

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