For many websites that rely heavily on advertising as a source of revenue, such as news sites, blogs, information sites and other content publishers, last week turned out to be an upsetting one. These sites and others are now bracing for a potentially major reduction in advertising revenue, which may occur as a result of the spread of ad blocking technology. To better appreciate why these sites are concerned, it is important first to understand how most online advertising works.
In the world of online advertising, nearly all advertisements displayed on websites (and on mobile apps) are delivered by specialized ad networks that manage all aspects of finding advertisers, managing payments and delivering ads. There are hundreds of ad networks, with the largest being owned by well-known tech companies Google, Yahoo and Microsoft. Making money from advertising simply requires a website to submit a request to be part of an ad network. If approved (some ad networks have higher requirements than others), the website places a small amount of computer code on their site, and the ad network will begin displaying ads.
Once ads begin to appear, the website is in a position to receive a portion of what the advertiser paid for ad placement. However, ad blocking technology is intended to prevent advertisements from displaying when someone visits a website, thus affecting website ad revenue. It works by identifying and then blocking messages (i.e., ads) sent by ad networks. While this is especially an issue with people accessing sites via mobile phones and tablets, ad blocking is also growing on computer and laptop browsers.
The technology to block ads has been available for some time, but it was not until last week when Apple updated its operating system that it became a critical issue. Apple?s release of iOS 9, for iPhones and iPads, permits the installation of ad-blocking apps, something Apple did not previously allow. As expected, within a few hours of the iOS 9 release, third-party ad-blocking apps climbed to the top of the iTunes download list.
So is this a sign that soon nearly everyone will adopt ad-blocking technology leading to the end of online advertising? Well, assuming ad-blocking apps are going to be adopted by everyone is probably unrealistic for a few reasons. First, many people are not tuned into what is happening to know ad-blocking apps are available. Second, and much more important, operating systems for mobile devices and tablets are not all Apple products. In fact, the majority of mobile phones and tablets run on the Android operating system, which is developed by Google. While, at one point, Google did allow ad-blocking apps to be easily installed from their Google Play Store, in 2013 they put a stop to this. It would seem Google will be extremely hard-pressed to allow ad-blocking apps again since the majority of Google?s revenue comes from its ad network service, which appears on thousands of websites.
But let?s say ad blocking continues to grow, then what can a content publisher do to continue to generate revenue and stay in business? Below are a few ideas, however, before considering any changes a site should first make sure there really is an ad blocking problem. The best way to do this is to install an ad blocking tracker to see what percentage of visitors are not being exposed to ads. While backend access to the server hosting the site is needed to do this, the information could indicate whether a response is needed. If it is determined the problem is worth attention, then here are a few ideas:
Wait and Do Nothing
Even if a site is seeing a high percentage of ad blocking visitors, some sites may have a tendency not to make any changes. The rationale here is that, with tech giants like Google running ad networks, it seems that it is only a matter of time before they figure out a way to prevent ads from being blocked. This is certainly something that may happen, but many companies that produce ad blockers are also pretty bright, and it may not take them very long to come up with a solution that will renew ad blocking. This cat-and-mouse game is likely not going to end. So while relief may come for short periods, it does not seem likely ad blockers will ever be totally eliminated.
Block Anyone With Ad Blocker Installed
If waiting and doing nothing is at one extreme, restricting content to visitors who have ad blocking installed is at the other extreme. Some content sites, including the Washington Post, have moved in this direction. If you visit their site with ad blocking turned on, you may receive a message saying you are blocked from accessing content. But to move in this direction poses two problems. First, if a site generates revenue from other sources, such as selling books, t-shirts or other e-commerce items, they are also preventing visitors from learning about these products. Second, blocking a visitor may affect word-of-mouth promotion, as visitors may not be inclined to suggest the site to someone else. And that may be a problem if that someone else does not have ad blocking installed.
Take Control of Managing Ads
Ad blockers are most effective because these can identify ads coming from ad networks. One way around this is for a site to take control of ad delivery by operating its own direct ad-serving system. That is, the website solicits advertisers and then handles the technical side of placing the ad. In many ways, this is similar to a site placing an image in a news story. Of course, there are some problems with this, such as the time and energy needed to recruit advertisers, and controlling what size ads appear on a specific device. Also, ad types may be limited to static image ads or basic text ads, rather than multimedia-type ads. However, there is one other big downside to this. Ads cannot be easily targeted to the user the way it is done by ad networks. So if a visitor previously visited Amazon searching for art supplies, a site controlling its own ads cannot easily identify where the visitor has been and cannot ?retarget? them by serving an ad for art supplies. However, this may not be a big issue for specialized content sites, where ads related to the content of a page can be more effective than ads for something a visitor experienced on another site.
Move to ?Native? Advertising
If a site decides to take control of its own ads, then another option to consider are so-called ?native? advertisements, which appear to be content but are, in fact, supported or produced by an advertiser. For instance, an advertiser may sponsor a section of a website or create blog posts on a specific topic. While ad-blocking technology can identify some forms of native advertising, if done correctly, these types of ads could be an effective option.
Adjust the Revenue Model
Possibly to most dramatic change is for the site to adjust its revenue model and not rely so heavily on advertising. This can be done in several ways, such as offering only small amounts of content for free but charging for access to a full resource (e.g., blog post, article, video, etc.). Or packaging related materials together in an eBook format and then charging for the download. Additionally, these downloads can even contain advertisements, though again this requires soliciting advertisers. But, as with the management of ads, changing the revenue model requires a significant time commitment and also some insight (i.e., research) into what visitors will be willing to purchase. So, at this point, given the effort involved in making the change, it seems a bit premature for most sites to make drastic changes to its revenue model. However, given where things seem to be heading, it is certainly an internal discussion that needs to happen.