Over half of the mobile browsing market (52%) will be at the mercy of ad blocking technology following the launch of Apple’s iOS 9 on Wednesday, 16th September. Ad blockers have been available to Android users for a number of years but only recently available on iOS through jailbreaking. By making ad blockers downloadable from the App Store, Apple aims to improve the browsing experience for its users and attenuate the drain on battery life and data used when ads are loaded in browser. While this may address headaches for iPhone users, what does this mean for the advertising industry, especially those who rely on ads to provide a free service?
Why are ad blockers bad for digital advertising?
Ad blocking is impeding revenues of any site using ads to monetize content. Worst affected are those with revenue models relying solely on advertising. These are often smaller publishers that don’t always have the means to adopt new forms of monetization. So should more established web presences with multiple sources of revenue feel less of an effect? Not necessarily. Despite a whitelisting policy that is presented around ad quality, claims that ad blocking is little better than an extortion racket are widespread, as big players like Google pay ad blocking companies for their ads to be let through.
Apple tech releases receive colossal amounts of media coverage, potentially generating masses of exposure for ad blocking technology. Ad blocker usage may escalate as a result, not just on mobile, but across a multitude of devices and operating systems. It will increase the percentage of digital content exposed to ad blocker by allowing it to be used on iOS mobile-web, which accounts for 14% of total web traffic.
Why are ad blockers good for digital advertising?
The reaction to the iOS 9 updates and ad blocking in general signifies a transition in digital advertising. The industry is starting to wise up to invasive, extraneous ads and recognize the need for a better online experience. The question that needs to be addressed is: why do people choose to use ad block in the first place?
"The industry needs to do better at producing ads that are less annoying and that are quicker to load, I think we need to do a better job of that as an industry." Google co-founder and CEO Larry Page
When a problem presents itself, so does opportunity, and startups are innovating to tackle the web’s ad block problems. The Crystal iOS extension allows users to curate their own whitelists by hand-picking which, if any, banners, blocks, popovers and auto-play video they want to see during their browsing experience. Opportunity is also growing for app monetization. Unaffected by most ad blockers, in-app CPMs are likely to rise and more premium in-app inventory will enter the marketplace.
Apple’s advertising model will profit
This is where Apple’s iAds and other providers of in-app advertising will profit. As ad blocking prevents ad requests from being sent, the increase in mobile ad blocker users is relative to the decrease in total mobile-web inventory available to advertisers. A decrease in available mobile-web inventory will drive up the value of in-app inventory for brands and encourage publishers to migrate content to app platforms for higher CPMs.
Short term, the growing popularity of ad blocking is not good for digital advertising revenues. Long term, this could be the catalyst the ad industry needs to rethink current digital formats, improve measurability and design creative with user experience in mind.