The Internet is a Harsh Mistress for Advertisers
Web users employing ad blockers have grown nine-fold in just five years. So what're you gonna do about it, marketers?
TANSTAAFL.com could be an alternative handle for Facebook or Google or any of the other free services the digital age provides to an addicted and adoring following. It stands for “There ain't no such thing as a free lunch,” an adage used as a book title by economist Milton Friedman and acronymed by sci-fi novelist Robert Heinlein in The Moon is a Harsh Mistress. We who cover digital marketing hear from practitioners all the time about how the power has shifted from marketers to retailers to consumers, how smartphones have begotten a new race of smart shoppers who don't visit a store or press the buy button before embarking on an odyssey of product research, reviews, and price comparisons. But one wonders if a generation of geniuses with iOS and Android brains in their hip pockets ever think about who pays for all that free access.
The answer is advertisers. Google and Facebook both derive upwards of 90% of their revenues from advertising. Free apps, too, it should be obvious, subsist on ad dollars. Yet one of the most downloaded apps of late is the ad blocker. A recent report from PageFair and Adobe features a line graph that resembles a silhouette of the first stage of an ascent of Everest. It begins charting 21 million global users of ad blockers in 2010 and rises to 181 million blockers in 2015. In Q2 there were 45 million Americans blocking ads, 48% more than were doing so in Q2 2014.
The Interactive Advertising Bureau is so worked up over ad blockers—which PageFair estimates cancelled out $22 billion in ad revenues in the past year—that its anti-blocking document reads like dissident group's manifesto. It calls ad blocking “robbery, plain and simple; an extortionist scheme that exploits consumer disaffection and risks distorting the economics of democratic capitalism.”
The IAB pointed a trembling finger at “walled gardens” like Facebook's Custom Audiences or Google's YouTube, though it didn't call them out by name. “Claiming to represent the interests of consumers and cloaking themselves in the ill-defined mantle of 'better advertising,' several of the largest and most prominent distributors of ad-blocking software are shaking down publishers for payments to circumvent their barriers,” the IAB document reads, adding that “without advertising, digital content and services either will vanish, or the cost for their production and distribution will come directly from consumers' wallets.”
Just this week German publisher Axel Springer announced it would charge a monthly fee of $3.40 to visitors who enter its popular Bild news site with blockers engaged. “Whoever does not switch off the ad blocker or does not pay cannot see any content on Bild.de as of now,” declared a statement released by the publisher.
There is another alternative, one that rests on the shoulders of marketers: Make your ads rewarding experiences that content consumers won't want to wall off. “There is a burden on advertisers to a certain extent to be more interesting. The ad blocker phenomenon could lead to a new age of consumer engagement with better metrics that won't leave advertisers relying on viewability to measure mobile behavior,” says John Busby, SVP of consumer insights and marketing at Marchex, which analyzes inbound phone calls spurred by digital advertising. He envisions a merging of Web, mobile, in-store, and phone data providing a more holistic view of engagement.
Busby also poses the notion that ad blockers might force publishers to pick up their games. “The rise of programmatic buying sort of threatens large publishers. It basically says, ‘Hey, you can reach the same people in a lot of cheaper websites,” he posits. “They should be investing more in analytics, because what marketers are going to do is demand better accountability.”
As a journalist I, of course, think people should accept advertising or pay for good content, because bad content makes smart smartphoners dumb. It's not always free to read an unedited blog or some native advertising selling a product or a notion. There's a good chance you'll pay for those in time wasted and questionable information ingested. I hate the word content, too. It sounds too much like a commodity. Maybe something could be done about that by the likes of The New York Times and Forbes. There's content and there's journalism, or there's content and there's art. One is a free lunch, the other costs a little.