Ad blocking is a pretty sensitive topic and right now it looks like everyone is talking about it. The problem is almost all the press about ad blocking is negative and people are focused on the revenue and business loss. While blocking ads certainly have implications it is certainly not the end of the world. I think we are overlooking many smart strategies on how to address this issue. In this podcast Jeremy and I will focus on several key aspects of what we call as the “Ad Blocking Movement”. We will address and answer what is this movement and what are the types of ad blocking technologies available in market. Then we will dive into the actual business impact so you can make an educated decision. Finally, we want to leave you with a 3 step action plan so you can successfully prepare and overcome the challenges presented by ad blocking technology.
A Quick Preview of the Podcast:
- What is the ad blocking movement…is it new
- How does ad blocking technology works and how are you impacted
- What is the impact of adblocking technology for advertisers, analytics professionals and marketers
- 3 Step plan to overcome the challenges presented by the ad blocking movement and regain lost revenue
Listen to Mobile Ad Blocking: Understand, Prepare, and Overcome the Ad Blocking Movement
Read The Transcript:
Jeremy: (Music) Thank you, everybody for joining Analytics Today. We’re a podcast series that focuses on big data and analytics, digital marketing and business best practices, and the latest trends in digital world. I’m your co-host, Jeremy Roberts and with me always is my co-host, Sameer Khan.
Today’s topic is actually very, very exciting. It’s something that’s everybody’s really talking about today. It’s mobile ad and analytics blocking; understand, prepare and overcome the ad blocking movement. Sameer, just off the top of your head you know, what is, how relevant is this today i-, in 2015 moving in the 2016 and you know,how big of a deal is this?
Sameer: Hey, Jeremy. Yeah, the ad blocking movement is kinda picking up today. It’s a very hot topic with the launch of ah, Apple’s ah, iOS 9.0 and where Apple has provided capabilities to the app developers to include some of the blocking technology within the app so people are not gonna be able to push their ads in these app which um, ah, doesn’t have you know, the ecosystem, the free app works as they make money to ah, to the advertisement.
So, le-, let’s look at ah, the you, you know, some of the historical ah, aspects of the ad blocking. So if you look at it, what ad blocking is, it’s nothing new. You know, we have had this ah, scenario ah, multiple times. If, if you recall, this was in 2006 when the first ah-
Sameer: Literally, first desktop ad blocking technology was launched ah, in the form of Adblock Plus ah, you, this, this was the one of first line of ad blocking technology which later on incorporated, was incorporated in FireFox. And very quickly, this product, Adblock ah, Plus, ah, the initial was 0., 0.5 and then 0.6 became the top 100 products of 2007 because it was massively accepted by the audience, it definitely improved their experience. Ah, you know those ah, the shining ads, the popping ads that used-
Sameer: To show up in 2, 2006, 2000-
Sameer: They all stopped. So it dramatically improved the user experience. So overall, the ad blocking technology, is not new. It’s just the psychology of you know, if we are … today, we’re programmed in a way that we love news. You know, we love new information and 99% of all news you see is negative. But in marketing world, you know, we don’t get negative news pretty often. So when something comes up like ad blocking technology for mobile you know (laughs).
Jeremy: Yeah, yeah, yeah.
Sameer: So it just changes the dynamic of the conversation. And everybody’s talking about it like few, a few years ago, I remember it was like SCO was dead you know, things like that. And so, but, but I definitely-
Jeremy: Which is not true [crosstalk [00:02:50]].
Sameer: What you’re talking about.
Jeremy: Yeah, I, I, I think yeah, it’s, it’s, it’s definitely not new. I, I think it’s just transformed. I think it’s evolved over the, over the past decade you know. I, you know, back then, it was, it was all about spam. You know, I, I think that’s actually around the same time just a few years before that, I believe in 2001, 2002 is when you know, the s-, CAN-SPAM Compliance actually was released with email. And with that, I think that spurred the whole movement of people just starting to spam and throw out just flashy and, and to be frank, annoying ads that were out there.
Jeremy: And this movement really launched you know ah, a, a change in the way advertisers you know, market and, and seek out their customers. But you know what, i-, i-, it, like I said, it hasn’t changed. It just, it’s had its cycles. It had, it has its ups and downs, and now, with mobile, I mean, mobile has really changed the face ah, of ads.
Jeremy: You know, i-, it’s, eh, eh, as we all know, wh-, when you get in and out on your desktop, it’s, it’s ok. You know, it’s personal, you don’t take it too personally you know. I-, it’s something that you know, you think is somewhat relevant and whether it’s relevant to you or not. But then, when you look at ah, an ad or you receive an ad on your mobile phone; if it’s not something that means something specifically to you and it’s not personalized, you get upset you know. Pe-, people, people are mad when they receive ah, an ad or some type of communication to their phone. And it’s not exactly what they want. And so, I, I really think it’s, it’s evolved, and I think it’s evolved over the decade um, because of mobile.
Sameer: Yeah. And, and I think you bring up a great point there, well because mobile is so personal. It’s your device like you know, most of the time, when you have a computer ah, other than the computer that you have at work, it’s probably shared by multiple people right? You know, you may have your family members-
Jeremy: Yup, yup.
Sameer: Access it, so it’s not as much personal as it is where mobile devices are so personal that you know, it feel like somebody is like intruding your ah, and like you know, it, getting into your personal life. And plus, they’re not delivering the experience that you are looking for. It’s pretty annoying.
Jeremy: Exactly, exactly. So yeah, le-, let’s, le-, let’s go into really how it works ‘cause I think some people might be thinking you know, I, I basically understand how it works, it’s all cookie-based um you know, eh, and maybe you can touch quickly on you know, how does that blocking technology work back in the day with cookies, and maybe, how it’s evolved with ah, retargeting today.
Sameer: Yeah, terrific. Ah, ad blocking technology if, is you know, most people think that ad blocking and originally before iOS chained the game as 9.0 ah, was limited to browser. But that’s not the case you know, there are multiple types of ad blocking technologies available. The most common one that we have seen with all these different plugins such as Adblock Plus, ah, it’s designated to the browser. You know, we feel that if it, it, it can prevent the content, of the ad content, the inlaying ad content being downloaded on the browser, and these are the plugins that protect it, and these plugins can be incorporated into your existing browser if it’s a FireFox and Safari and Chrome, ah, and also your mobile devices.
But, there are a lot of different mechanism that had ad blocking [inaudible [00:06:03]]. So, the browser is definitely one of them. There’s then, there is external programs, ah, proxy servers. You know, proxy servers are also one of the-
Sameer: Common ways ah, to prevent ah, some of these ad block ah, ad technologies to show up, and you know, some of the proxy servers that you may have seen. And, and you can define it like the, the limit of this proxy servers. So some proxy servers are HTTP Proxy which can just block specific ads and specific IP addresses versus some can block everything like all the content and if you can control it like Net Nanny ah, or-
Sameer: Private Eyes you know, these are the type of the one that you wanna use for your kids, on your devices so you can control the content. And they work in a completely different way than the generalized ah, cookie-based or you know, plugin-based ah, browser technology.
And then, there’s hardware technology as well. So if you wanna get really sophisticated, probably organizational wide ah, a blocking of content or controlling the Internet access to your employees and things like that and AdTrap you know, hardware technology that allows you to block ah, a, a large chunk of ah, organizational data and you know, do all sorts of ah, control of content.
In some of the country like you know, China or ah, some other countries; they block Facebook or other social media mechanism. They control that. And so, they use really powerful combination of hardware and software ah, to prevent content access.
And then finally, ah, DNS filtering and host file edits. So, and so, this is more of a legacy type of ad blocking where you can go and do a bunch of DNS filtering. And you can edit your host files ah, so there’s a lot of redirect that happens in the backend and it protects you from um, seeing ah, content and ads. So, you’ll, so those are the types of ad blocking technology and it varies. Ah, again, the most common one, and the most popular one, the most that ah, the technology that’s getting most attention is the browser-based or app-based technology.
Jeremy: Ad pop-up blocker, yeah.
Sameer: Yeah, exactly.
Jeremy: And that I re-, I even remember on some of our or our business travels, you and I you know, go into some, even the countries in the Middle East where you know, you, you’re just trying to access something simple as you know, men’s health you know-
Jeremy: To be able to go look at ah, latest you know, exercise you know, and head into the gym, and you know, those sites are blocked.
Jeremy: And, and I believe it’s a very similar technology that they use as you just mentioned from that ad blocking technology to really block out ah, whole domains.
Sameer: Yeah. Eh, eh, and it’s all about control, right? How much information-
Sameer: You wanna control ah, that’s gonna be ah, disseminated to your audience and you know, how much information-
Sameer: That you want them to have access to. So yeah, it’s, it’s fun stuff.
Jeremy: It is, it is. So, eh, and let me, let’s get into this now. So, you know, with, with this you know, talking about the movement, talking about how it’s been around for ah, you know, almost since 2000, and but almost a decade. Um, and then talking about the different types of technology, ah really, what’s the impact? You know, what’s, what is the impact of ad blocking technology for you know, different types of people within an org? I mean you have advertisers, you have marketers, um, you have your analytics professionals, but you also have yo-, your, your finance teams and, and your management teams. I mean there’s a definitely an impact.
Sameer: Yeah, there is definitely an impact. And the impact is increasing as more ah, ad blocking technologies available to the consumers on their personal devices, and where everybody wants to now use multiple devices and as [inaudible [00:09:31]] as keep a device for their own where they can control the content they can access. So, there’s definitely an impact; although, i-, it’s not as significant as growing, as significant as growing. So I have some statistics here that I wanna share.
Jeremy: Ok, great.
Sameer: Ah, yeah. So, ad blocking ah, if you are a pure advertiser, if your revenue relies on advertising and marketing your content and collecting that ad revenue, then it’s gonna have a pretty good impact on that you know, because you’re relying on one means of generating revenue. So, the estimate is ah, approximately between 22 to $25 billion ah, impact. The total cost on ah, advertising publishers in 2015, which is pretty significant.
Jeremy: Yup, it is.
Sameer: Now ah, yeah, if you look at the growth in the users, ah, so we have seen the ad blocking technology has significantly picked up because there are some new tools, new types of ah, ap, ap, software and apps are available to block technologies. So in the last 12 months, we have seen a significant growth. In US, it has grown by 48% ah-
Sameer: Which, which is and if you put in the raw numbers, so we’re seeing approximately 45, 46 million active user. What it means at any, any given time, you have 45 million users ah, that are using this technology in the last 12 month. Ah, and, and worldwide, if you look at the worldwide scenario, again, UK, we’re seeing it grew by 82% again. And if you look at the raw numbers, it’s not as big as US has 12 million active users up, up, up to the month of June. Ah, but I think, so, so the net of it is if you are purely relying on the advertising as a means of generating revenue, then you’re definitely gonna see impact because less and less people will be seeing those ad.
Jeremy: Absolutely, absolutely.
Sameer: Ah yeah. And then content sites, again, same here with the content sites who are purely uh, generating content and they’re saying hey, if you wanna see our content, you have to see these weird ads, then they’re gonna be impacted the most.
Now, sites with ah, paper subscription or paper read model and we’re gonna talk a little bit more about this like how are the different avenues that you can or come even though you [feer [00:11:44]] on this pure content business ah, with ah, you know, with this ad blocking movement, but those are some of the statistics. And I think ah, it’s gonna grow. You know, more people are gonna have access to these technologies. Ah, more people will feel like um, the ads that they’re seeing are not relevant and they’re just annoying. You know, sometime, I go to these sites and you may experience the same-
Sameer: Thing and you know, you have to literally wait on the home page for this ad to load, and then you-
Sameer: Press a button to continue to read what you wanna read and which is really annoying.
Jeremy: Yeah, I, I know. I, I completely agree. And you know, the, i-, it slows down you know, for SCO purposes, it slows down load time, um, the experience is terrible, people start to abandon sites, and it just kind of makes you not wanna go back to that site. Because as you know, ay, from your and my experience, advertisers over the past years have gotten very creative on how they push these ads. I mean, you, you remember back in the day when it was just a simple square you know, 250 by 250 ad that, that popped up.
Jeremy: Right? Now, they have these ads that really grown, expand, and, and take over your whole screen. Or these ones that when you scroll down, it scrolls down with you, you know, for at least half the page and you keep on trying to click out of it.
Jeremy: And you know what I mean? Eh, you keep on trying to click out of it, and then eventually, you know, it eventually goes away. But you know, it’s, it’s almost like they’re just … they’re baiting you and baiting you and following you. Because when you think about it, I mean the le-, last ah, statistic that I read, what is the average click-through rate for an ad? Wha-, wha-, what would be average click-through rate?
Sameer: Say 0.5%, 0.05%.
Sameer: Oh, close, ok.
Jeremy: (Laughs), po-, 0.04%. That means not that many people click in these ads. So what they’re actually hoping for is a view-through. And a lot of these advertisers are making money because they’re charging people back on view-throughs. But you know, i-, it’s just interesting really how they’ve become very sneaky you know, with the technology. And one of the things I also wanted to add too is you know, look in the demographic. You know, ad blocking users, you’re talking about great information about the cost of publishers in the 20 billion you know, plus. But when you look at it, the ad blocking users really skew to younger males.
Jeremy: So, i-, it … from the last statistic I saw, um, it shows 65% male, 35% ah, female.
Jeremy: And you know, the 18 to 34 age group is really around 36% of the total users. And then ah, 35 to 54 is about 41%. Um, and then also, 55 and up, it’s about 23%. So, i-, it’s that age group of really saying that you know, that the, the, the, I guess more away from the baby boomers, more in the Generation X, you know.
Jeremy: It’s, it’s those males who are really using it. It’s the, it’s the teksavvy males. And a lot of what are seen in the population if you look at just US only. it’s really more towards the teksavvy people and they’re looking more towards the West Coast. So as you can see what the geographic and demographics push, it’s really more towards the West Coast and it’s really divided throughout the country. It’s pretty interesting stuff.
Sameer: That’s very interesting. Eh, and one point you brought up here, so, so it seems like because it’s im-, and the younger generation do not really want these annoying ads, it seems like because they are the one, they’re gonna be taking over ah, you know, pretty much this ad blocking movement will continue, right? It’s gonna accelerate-
Sameer: Ah because of the, the youth population. So one quick thing, you’ve talked about the view-through technology. And so, can you speak a little bit more so some of our listeners may not be aware of what-
Jeremy: Yeah, sure.
Sameer: View-through is.
Jeremy: Yes, so, wh-, when you look at different ads, um, whe-, when, when you do an advertising on websites, you know, there’s really 2 different measurements that you have ah, you know how people can measure how you um, you know, how you can gauge performance. There’s only 2 things they can do; they can view the ad and they can click through the ad. But as you know, you know, there’s not many people who actually click on that uh, 0.04%. So with that, the new measurement that they’ve had over the past few years, something called view-through. It means that within a given period of time, if somebody was on your website and had the impression to be able to see that ad, and then viewed it. And then, within I guess 5 to 7 days, depending on how their view-through is set up, then, if they finally went to your site within that period of time, they then credit themselves as a view-through and it’s all cookie-based.
Sameer: Mmhmm, fantastic.
Jeremy: Yup, so, yeah.
Sameer: Yeah, that’s great. So I think ah, I think ah, you know, this is great piece of information ah, so let’s continue the conversation. So, ah, so I think the question is now, you know, what needs to be done if like [3 [00:16:36]] marketers, analytics, professionals, and big data guys were all relying on data that are being collected about our customers and prospects in a-
Sameer: Or analytics blocking movement.
Jeremy: Sure. And I, I think the one, the one biggest point that I have i-, is relevancy, have very relevant targeted ads. And a lot of it comes with spending money on, on proper analytics and data software.
Jeremy: You know, you, you have to be able to target the right people, at the right place, at the right time. You know, the last thing you wanna do is just keep ah, pushing generic ads that nobody really cares about. Because all you’re doing is just you, you’re, you’re creating just numb you know, ah, ads that are just annoying you know. A-, ads that you see that you just kinda wanna push away, and you just feel like man, I, I … way too many ads coming in, I just need to start blocking them because nothing is relevant to you.
Jeremy: It’s just too general and too specific.
Sameer: Now, that’s fantastic. And you know, that’s a very good point. And, and I’m thinking the direction of like you know, the 3-step plan that I think our users and listeners ah, ah, can have. So first step ah, in order to overcome this ad blocking movement is don’t freak out. Ah, you know, while the ad blocking movement is going, eh, it’s not like the sky is falling out.
Sameer: Ah, it is not the end of the world. Things like these happen. And you know, there is dramatic shift in the advertising. If you look at the early days and there was no Google, no Yahoo ah, search engine; it was a completely different type of Internet. And then, even search came, it revolutionized the entire web sphere. But at the same time you know, search has involve, evolved. So there is search available in different formats so you cannot just go to Google, you can also go to Amazon to shop for a product.
So there’s all this revolution coming in to marketing. And ad revolution is also ad blocking revolution I would say is another revolution that’s gonna come and there’s gonna be ways on how to ah, overcome this challenge. So I would say not to panic, ah, not to just look at the statistics and you know, beat yourself to death and say, hey, you know, I can do anything and I probably might wanna change the career and go away from advertising-
Sameer: [Crosstalk [00:19:07]] with something else. So it, it is-
Sameer: It is you know, it is definitely ah, an alarming state, but it’s not like ah, the world’s gonna end. So that’s the first step. You know, don’t freak out, just-
Sameer: Just do what you’re doing and do it better.
Sameer: The second step I would say is as you were talking about the relevance which is focused on customer experience, ah you know, a lot of these analyst ah, Gartner’s and of the world, they had done some research, and their research shows in about few years, 2016, ah, ops, 8, 80% of the companies will compete on customer experience and why? Because customer experience is the ultimate thing that you wanna drive. It is not what ad looks good. It nots, you know, what is the most popular Super Bowl ad that you’re gonna play. It’s what’s gonna be relevant to your customer. And ah, eh, eh, do you remember any of those Super Bowl ads from last 2015?
Jeremy: Oh, oh yeah, yeah.
Jeremy: I mean, I, I, I remember a few of them, but some of them were just (snickers) do you know what I mean?
Sameer: It, yeah. They’re completely-
Jeremy: Yeah, it-
Sameer: They’re for, they’re fun. You know, you can ignore [crosstalk [00:20:15]].
Sameer: They, they’re fun, but I, I don’t I could, I don’t think I could give you a list of what they were. I mean they’re, they’re enjoyable at the time you know. Having pizza and wings and stuff like that and watching the game, but outside of that, I don’t remember. I, I remember Doritos is always there.
Jeremy: Ah, where Coca Cola and Pepsi are always competing. I remember [inaudible [00:20:32]] is usually there and that’s it.
Sameer: Yeah. So we hardly remember those companies and-
Jeremy: (Snickers) yeah.
Sameer: Did it like, they did motivated to, well, you to go do business with those companies?
Jeremy: I think at the time.
Jeremy: At the time-
Jeremy: But you know, we-, right now, they, they did at the time. But I think right now, you know, it’s, it’s inconsistent. I mean-
Jeremy: We were also talking about a return on investment of 2 to $10 million for a 30-second spot.
Jeremy: You know, there hopefully has a life span, but in a way, you, you missed great point you know.
Sameer: Yeah. So, and, and speaking of that and I like the way Apple with again, with what Apple did with the iOS 9.0. They have given, they developed personal capabilities to install a codes it would have with these ad blocking technologies, so it just advances the ad blocking movement further.
Sameer: So I think what Apple is doing is anti-Google. So Google you know, still Google’s, a large portion of Google’s revenue comes from the ads, right? The PPC ads-
Jeremy: Yup, yup.
Sameer: Ah, and Google is all about ads. If you look at YouTube, like most of the YouTube videos, if you see million views, definitely, there’s gonna be a, a video ad before the actual video begins. Ah, so they’re all revenue, all of their revenues coming from ads, but Apple is taking a different dimension. Apple is saying hey Google, you wanna go after you know, you wanna continue building that momentum and drive more revenue and ads. We’re gonna take a different stand here. We’re gonna go for customer experience and user experience. And we’re gonna provide these technologies to the end users that’s gonna make their experience better. You know, we definitely make revenue from ads. You know, there’s Apple-
Jeremy: Oh yeah.
Sameer: Ads, so, but they’re not necessarily focusing on just ad as the revenue. So I think it’s a very important and speaks to the customer experience and how do you think about your customer, like what kind I’ve been telling, like you were saying having the right piece of analytics and data so you can provide the context and content to that customer that they can connect with you in variety of different ways and variety of different devices.
Jeremy: Oh, I, I completely agree. But I, I think the most important thing also as, as a takeaway from all this is l-, let’s briefly talk about the other side of the, the other side of the fence. So, from a marketer’s standpoint and advertiser’s standpoint, ad blocking you know, i-, it, it, it’s hurting the industry, it’s hurting the revenue, their bottom line and so on. But let’s look at a, a completely different community, you know, the disability’s community. We, we’re talking you know, people who are blind, people who have learning disabilities, people with epsle-, epilepsy. And you know, they all love the ad block movement.
You know, i-, i-, if you, if you think about what’s going on, I mean imagine autoplaying ads. How, how difficult is it for somebody with a learning disability to have autoplaying ads constantly you know, coming on or constantly distracting them from being able to learn? I-, it’s very difficult for somebody with a disability-
Sameer: You know, to be able to, to read um, or concentrate on an article or anything on the mobile phone or even a tablet or desktop because of these autoplay ads. So think of also about photosensitivity with epilepsy. You know, you have these frequent flashing, flickering images and you know, they’re constantly popping up. And these could actually, you know, there’s a risk of a seizure. They could trigger a seizure within people with epilepsy. And you know, automatic ah, advertising can be you know, distressing for some people with learning disabilities because it, i-, it just takes away all their opportunities, so-
Jeremy: That is pretty serious.
Sameer: People that ah, yeah, very serious. Um, here’s another one, eh, you know, a lot of these ads all of a sudden start playing, and you know, ah, you know, with Apple’s new release with their um, within their operating system, their new OS, you’re allowed to turn off the sound on these random videos at play. Imagine if you’re blind.
Jeremy: Imagine if you’re visually impaired and all of a sudden; you’re trying to use things like Dragon Dictation to go through and read, eh, and, and to dictate and all these um, other tools and software and all of a sudden; these music or these videos start autoplaying on your device.
Jeremy: O-, or these things start popping up, there’s animations coming and you’re visually inflare, impaired you know. It makes it very impossible for people with disabilities to be able to access your websites. And that really is the, the biggest part of user experience, it completely takes their, their chance away from ever engaging with technology in the future.
Sameer: Now, that’s, that’s a pretty serious issue and I, I would definitely encourage people who are listening and you know, people who are gonna listen to this later, to be mindful and be respectful of people with di-, disabilities. Now, so one last thing-
Sameer: I was gonna, as continuing my ah, 3-step plan. So first is don’t freak out, and second is focus on customer experience. The third step which is the most important one is plan for the future. So, for content publishers who are currently just using advertisement as a core revenue model should think about other options. And you think about what New York Time does, think about all these different publications that have understood that ad is not the only one mechanism how you’re gonna generate revenue. How are you gonna change the publishing model? I really wanna give an example-
Sameer: Of one specific ah, ah, publisher who is using the micro revenue model. So what they do is instead of just going flat out like New York, and charging New York Times, and charging you for the monthly subscription for accessing content; they’re charging you of cents, ah, for accessing the article. So let’s say you know, if you go to a blog or content of their site, the, ah, they’re gonna give you the first 2 pieces of content free, then for the third piece, they’re gonna say ah, pay us ah, 27 cents to continue to read this article, which is a pretty unique way and pretty different than what most people are thinking. So, they’re [inaudible [00:26:26]] and so, the sum of it is-
Sameer: You know, with, with retargeting and use, so, let’s have, use video ads you know, video ads, if you just upgrade-
Sameer: [Crosstalk [00:26:34]] block, right, now, there’s no technology that’s gonna literally block your video ads. So start using that, use micro revenue models, use content paper subscription models. So there are a variety of different ways how you can continue to improve the revenue. So plan for the future and understand what the future holds. Ah, it’s all about the experience and it will all be about the customer experience.
Jeremy: Completely agree. And I, I think this is a great topic um, and ah, you know, thank you, Sameer. This has been good stuff. I, I hope everybody enjoys it and um, you know, we, we look forward to the next ah, topic next week. And ah, you know, any, any final thoughts on that Sameer or you know?
Sameer: No, I, I, yeah, I think you know, this is definitely a very important topic and I hope the listeners will have gotten information that they were looking for. Ah, and definitely be in touch with us and keep ah, accessing our blog, ninja-marketing/podcast to get more of these weekly podcast series. Ah, and I would say, thank you so much for listening to us.
Jeremy: Yeah. Thank you guys and um, we’ll see you on there (music).