Apple’s decision in fall 2015 to allow third-party ad blocking software on its ubiquitous iPhone may have sounded the final death knell for some forms of online and mobile advertising.
Ad blocking software works by preventing display ads (banners, videos and pop-ups) from opening. Consumers dislike ads that intrude on their browsing, slow processing times and capture their private data. But many websites depend on ad revenue to fund their sites, so blocking software decreases their profits – and cuts off advertisers from consumers.
Close to 70 percent of American adults own a smartphone, and about one third own a computer, tablet and mobile phone, according to the Pew Research Center. Roughly 45 million Americans use ad blocking software on at least one of them, a double-digit increase over last year. In Europe, ad blocking grew by 35 percent, increasing to 77 million monthly active users, according to PageFair’s third annual ad blocking report. In the U.K., use of ad blocking software grew by an astounding 82 percent. The number of Greeks using ad blockers is approaching 40 percent, according to Pagefair.
Globally, the use of ad blockers grew 41 percent in 2015, with about 200 million people use ad blocking software on their devices.
Globally, the use of ad blockers grew 41 percent in 2015, with about 200 million people use ad blocking software on their devices. With more than 300 million downloads, AdBlock Plus is the most-used add-on for Mozilla’s Firefox and Google’s Chrome browsers. A full 16 percent of Firefox mobile users deploy ad blocking, according to PageFair.
Overall, ad blocking software resulted in nearly $22 billion in lost revenue globally in 2015. Pagefair estimated the number will grow to $41.4 billion in 2016. In the U.S., PageFair reported that $10.7 billion of the total U.S. ad spend of $58.6 billion (18 percent) was lost to ad blockers. It’s a worrisome trend for companies that rely on advertising to pay the bills, not to mention the advertisers trying to reach consumers.
Even without ad blocking, online advertising is already a brutally competitive world. About a quarter of online advertising revenue goes directly to Facebook, with AOL, Google, Twitter and Yahoo splitting another fourth, according to Pew. That means five companies cream off 50 percent of the total online advertising budget. Facebook alone takes in an ever greater portion – about a third – of all mobile advertising dollars. The social media company said in its most recent earnings report that mobile display ads accounted for nearly 75 percent of its total ad revenue in Q1 for 2015.
Some sites are beginning to fight back against ad blocking. A host of sites refuse to allow access to content unless users disable ad blockers. Yahoo joined that group last month, when it began denying some users access to their Yahoo email if they employed ad blockers. Users with blocking software were asked to disable it before they could continue on to their inboxes. Many other sites use less drastic measures, requesting that users disable the software to help fund their favorite sites.
Ultimately, advertisers must find a way to deal with ad blocking software. That means more native advertising, which gets embedded on sites as regular content, rendering it invisible to ad blockers. It means more social media campaigns. Finally, it probably means doing away with auto-play videos, popovers/overlays (ironically designed to beat ad blockers) and other formats that have been shown to lead consumers to ad blocking. The alternative is dwindling ROI for digital ads and more lost consumers.