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Ad blockers: A solution or a problem?

Robert L. Mitchell | Jan. 16, 2014
It's a cause. It's a curse. It's just business. Ad blockers take a bite out of the $20 billion digital advertising pie.

On the other hand, there are publishers who agree that users of ad blockers have a point about obnoxious ads. "We are all frustrated and upset when we go to a quality publication and see ads for flat belly diets or pop-under ads," says Erik Martin, general manager at Reddit, which uses a limited amount of display advertising.

He thinks that people are being pushed into wanting to use ad-blockers. "There's a whole generation that doesn't even see most of the ads on the Internet, and the industry has put its head in the sand about dealing with it."

In fact, Till Faida and other distributors of ad-blocking software see their mission as a cause. Faida, president of Adblock Plus, the best-known ad blocking software — the business claims to have 60 million users worldwide — says ad blockers empower users to combat a rising tide of intrusive and annoying ads. "People should have the freedom to block what they don't like," he says.

But ad blocking is more than just a cause. It's a business, a rapidly growing one that's taking a bite out of the multi-billion dollar market for online search and display advertising.

Billion-dollar blockers

The stakes for publishers (including the publisher of this site, IDG) and advertisers are high. In the first half of 2013, advertisers spent $20.1 billion on Internet advertising in the U.S., including $6.1 billion on display advertising, according to the IAB's Internet Advertising Revenue Report (PDF). Adblock Plus claims that about 6% of all Web surfers in the U.S. run its open-source software, mostly in the form of Google Chrome and Firefox browser add-ons and extensions.

Currently, publishers that cater to a technically savvy audience, such as gaming sites, seem to be getting hit the hardest. Niero Gonzalez, CEO of gaming community Destructoid, is seeing a block rate between 36% and 42%. "Ad blocking hurts the small enthusiast sites the most," he says, and adds that he's not sure the old revenue model based on display ads will ever recover.

Gonzales has conducted an ongoing dialog with his customers since discovering the problem last March, and says that, in general, visitors to his site tend to fall into one of three camps: "One says advertising is evil, another says I don't want to do [ad blocking] so give me an option, and the others just don't care." When he presented an option for an ad-free experience, less than 1% of his 4 million unique monthly visitors signed up for the $2.99/month subscription.

And as the number of ad-blocking software downloads continues to climb, even sites that serve a less technical audience are starting to feel the effects. Most publishers don't want to speak on the record for fear of alienating their customers, but a recently departed executive with one publisher in Alexa Internet Inc.'s ranking of the top 100 listing of global websites says that between 4% and 8% of the business' traffic — its sites generate over one billion page views per month — is being blocked. "It's a ton of money," with lost revenues in the millions of dollars, he says.

 

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