New Report Finds Ad Blockers are Quickly Spreading and Costing $Billions in Lost Revenue

"Stop Sign", Image by Kt Ann

“Stop Sign”, Image by Kt Ann

The global usage of ad blocking software is rapidly rising and the cost in 2015 so far has been $21.8 billion in lost revenue. This amount is projected to nearly double in 2016. These are the key conclusions of a new 17-page report entitled The Cost of Ad Blocking, co-authored by Adobe and PageFirst (a startup working to analyze and counter ad blocking technology). The report assesses the technological, economic and geographic impacts of this phenomenon.

A concise summary and analysis of this was posted on BusinessInsider.com on August 10, 2015 entitled Ad Blocking Has Grown 41% in the Past Year and It’s Costing Publishers Tens of Billions of Dollars by Lara O’Reilly. I will sum up, annotate, and add a few unblocked questions of my own.

I highly recommend clicking through reading both the actual report and Ms. O’Reilly’s article together for a fuller perspective on this subject.

Other leading data points among the report’s findings include:

  • Ad blocking software usage has increased 41% in the last year, now totaling 198 million active users each month.
  • While this represents only 6% of web-wide activity, it is the dollar equivalent of 14% of the “global ad spend”.
  • In 2016, the revenue lost to ad blocking is expected to reach $41.4 billion.
  • The usage of ad blockers began to rise significantly in 2013 (as shown in the chart on Page 4 of the report).
  • Ad blocker users tend to be “young, technically savvy, and more likely to be male”.
  • The rates of ad blocking varies widely within specific countries (as shown in the graphic on Page 5 of the report), and likewise from country to country (as shown on Page 6 displaying the countries in Europe).

Dr. Johnny Ryan, an executive at PageFirst, views the growth of ad blocking as being “viral” in its characteristics and anticipated continuance. As stated in the 2014 report on ad blocking, this software spreads both by word of mouth and users’ online research.

Currently, most ad blocking activity is on desktops. Despite the 38% of total web browsing occurring on mobile devices, ad blocking is now only present in 1.6% of this traffic. (See Page 10 of the report for the indicators of potential increases turning it into a “mainstream phenomenon”.)

As well, Apple’s pending release of its IOS9 mobile operating system will permit developers to create ad blocking apps. Both Apple and PageFirst stated this could be a “game changer” insofar as Apple’s deep and wide global reach of its mobile products. (See the bottom of Page 11 of the report.)

Regarding users’ motivations for using ad blockers, a survey of 400 US users, displayed on Page 12, found the leading reason was their concern over the handling of their personal data.

In another survey of UK users by the Internet Advertising Bureau, a majority found that ad blockers increased the speed and performance of their browsers (although this was not listed as one of the reasons in the Adobe and PageFirst report). Nonetheless, Mr. Ryan does not consider this to be an important factor is motivating the use of ad blockers.

My own questions are as follows:

  • Are the people motivated enough to install an ad blocker more than likely to not be uninterested in the ads and thus not potential consumers to the degree that the claims of huge lost revenues are not really all that lost?
  • The report’s underlying assumption is that if these blocked ads were otherwise viewed more sales would have been generated. Where’s the actual harm and where’s the real foul if these “lost” users are more unlikely to become paying consumers in the first place?
  • If ad blocking is so pervasive and growing at such a steep rate, are online advertisers now seeing this phenomenon as a just a cost of doing business to be factored into their accounting and reporting systems?
  • How can truly savvy and inventive e-commerce marketers and content strategists possibly use ad blocking their advantage? That is, can they somehow recast their web advertising content and formats to be less intrusive, more informative, and better protective of personal data to incentivize users enough to not use ad blockers?

For additional informative coverage of Adobe’s and PageFirst’s report with further links to useful references, I also suggest clicking through to read a report posted on the Wall Street Journal’s Digits blog  on August 10. 2015 entitled Ad-Blocking Software Will Cost the Ad Industry $22 Billion This Year by Elizabeth Dwoskin.

One thought on “New Report Finds Ad Blockers are Quickly Spreading and Costing $Billions in Lost Revenue

  1. Pingback: Summary of the Media and Tech Preview 2016 Discussion Panel Held at Frankfurt Kurnit in NYC on December 2, 2015 |

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