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The End of the Road for Digital Advertising?

David Murphy

Murphy's Law Crystal ad blockWill 2015 go down in history as the start of the end for online - and mobile - advertising? It will certainly go down as the year when ad blocking entered the public consciousness, on mobile at least, nine years after AdBlock Plus made its debut as a Firefox browser extension in 2006.

Two things have put ad blocking firmly on the radar in 2015. The first was the announcement from Israeli developer Shine that a number of mobile operators were looking at deploying its technology at source, so that anyone looking at online content via the operator’s cellular network would have the ability to block ads, both in-browser and in-app.

This was a significant departure from ad-blocking’s traditional browser-only domain, particularly when you consider that most people’s time on mobile is spent in-app as opposed to browsing the mobile web – around 90 per cent in fact, according to the last stats I saw, from comScore and Nielsen.

But for all Shine’s bravado, there has been no word, to date at least, of any operator deploying its tech. Despite that, ad blocking has risen further up the agenda, thanks to Apple’s decision to add ad-blocking capabilities to the latest version of its Safari mobile browser, which came as part of the iOS 9 upgrade for anyone who managed to install it without crashing their phone.

Alarm bells
The iOS 9 deployment, of course, only affects browser use – a cynic might say Apple makes too much money from its cut of in-app ad revenues to throw out the baby with the bathwater. But nonetheless, Apple’s decision to support ad blocking to any degree is naturally ringing alarm bells in many quarters, and unleashed a raft of ad-blockers including Crystal, Blockr and others in to the App Store

The response from the ad industry has been reasonably consistent. Writing in our latest print edition, Jon Mundy, UK MD of Zapp 360, says it’s symptomatic of the unnecessary complexity and clumsiness of the mobile ad industry, with multiple tags being used to collect audience data and so slowing down the serving of the ad and the page on which it appears. What the industry needs to do, he argues, is to declutter, simplify and standardise, while at the same time becoming less intrusive and more appealing to the viewer.

In a Guest Column published on this site in June, Geoff Gower, executive creative director at AIS London, also argued that digital advertising needs to become more engaging in order to reduce the desire among consumers to deploy ad-blocking software.

Gower also noted that, according to a 2014 report from PageFair and Adobe, less than five per cent of the internet population had installed ad-blocking software. That said, with the Crystal ad-blocker for iOS currently sitting top of the paid-app Utility charts in the App Store, that figure is likely to have risen significantly in recent days.
Indeed, in the 24 hours immediately following the launch of iOS 9, ad blockers occupied three of the top five places in the paid apps chart in the App Store overall. Interestingly, the app that had occupied top spot, Peace, was subsequently pulled by its developer, Marco Arment, who said its approach to what to block was not nuanced enough.

In Germany meanwhile, earlier today, a court in Cologne ruled in favour of Adblock Plus, the most popular browser extension for blocking online ads, with over 400m downloads to date. The firm was defending a lawsuit brought against it by publisher Axel Springer, which had claimed that journalism is merely a vehicle for delivering ads, and that no product should be allowed to block those ads.

And in this weekend’s Observer, John Naughton, who writes a weekly column on tech and its implications, was in no doubt that ad blocking will effectively kill off the online ad industry. “The rise of ad blocking will force us to confront the fact that the free lunch provided by advertising is not long for this world” he wrote.

Micropayments
One solution to the problem, Naughton argues, could be micropayments, enabled by cryptocurrencies (such as Bitcoin), that will make it possible and easy for web users to pay tiny amounts of money for content they want to consume online, whether it’s an article they want to read or a video they want to watch.

Certainly, some publishers, such as the FT, are enjoying success with content locked behind a paywall and accessed via micropayments. Dutch start-up Blendle is also attracting a significant user base, aggregating content from the major publishers in the Netherlands, with Germany soon to follow, and making that available to its subscribers on a per-article basis.

Personally though, I feel the death of online and mobile advertising may be being greatly exaggerated, notwithstanding this morning’s news from Nielsen that consumer trust in advertising overall is on a downward trend. Most of us old enough to swipe an iPad are accustomed to the value exchange of looking at ads in exchange for content (even if those iPad users still in nappies don’t quite appreciate what’s happening yet). My suspicion is that a lot of people running ad-blocking software, or tempted to run it, may have second thoughts when it gets to the point where they learn that the ad-funded content they want to see will disappear unless they are prepared to start paying for it, to make up for the ad revenues that are no longer subsidising their enjoyment of the free content.

Exactly how that plays out across millions of small, niche, much-loved, and most-importantly ad-funded sites over the coming years remains to be seen. But if the ad industry really is going to be defeated by ad-blocking, then it’s obviously not half as creative as it’s had us believe all these years.

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