I clicked around the Internet, smugly appreciating the commercial-free space I’d created for myself. But it wasn’t long before I landed on the website for my own employer, the tiny independent magazine Sustainable Industries. When I did, I felt a guilty, sinking feeling. I wasn’t seeing ads there, either, and I knew quite well those ads helped pay my salary.
I uninstalled the plug-in.
For years, publishers argued the same message that convinced me to turn off my ad blocker: Free content isn’t free; it’s subsidized by advertisers, who want to get their messages in front of users. But increasingly, users say, they’re the ones paying for the ads: with their privacy, their patience, and their mobile bandwidth. What they’re not paying with is the currency advertisers would most like them to spend: their attention. Instead, they’re tuning out ads or turning them off entirely.
In June 2015, an estimated 198 million Internet users around the world were blocking ads, up from 39 million in January 2012. Those data points come from the most recent annual trend report produced by anti-ad blocking software maker PageFair. The report estimates that 6 percent of global Internet users, and 16 percent of those in the U.S., were actively using ad blocking by June 2015.
These aren’t big numbers—yet. But PageFair estimates that global ad blocking grew 41 percent in the past year, and even faster in the U.S. and U.K. Apple’s recent approval of the sale of ad blockers for Safari on iOS 9 opened the door for mobile ad blocking and boosted the visibility of ad blockers, generally. It’s likely to accelerate the trend.
The growth of ad blocking is a risk for digital media, because it threatens to slash revenues publishers can ill afford to lose. Shrinking revenues and tighter margins are pervasive across the industry, pinched in part by the failure of growth in digital income to offset loses among traditional channels. “This is not the time to take money away from a publisher, not a single dollar,” says Adam Singolda, founder of content-marketing ad network Taboola. “This is not a good time to say, ‘Oh, it’s just 5 percent of your revenue.’”
Publishers’ response to ad-blocking users has been almost entirely punitive. Some try to block ad-blocking users from seeing the content on their sites, while others encourage ad-blocking users to whitelist their sites with ad-blocking tools, or to contribute funds directly, through subscriptions, donations, or one-time payments. However, some publishers are saying “mea culpa.”
“Ad blocking is, in a way, our fault as publishers,” says Joy Robins, senior vice president of global revenue and strategy at Quartz. “As opposed to coming up with solutions to innovate around advertising, we sacrificed user experience for a couple of bucks on a CPM [cost per thousand]. When our users moved to mobile, we tried to do the same thing, where it’s even more intrusive. [Whether] it’s the ad format or the data being captured or the data use, it’s hard to love online advertising.”
Many across the industry echo Robins’ comments, including John Patteson, vice president of business operations at Fusion. “The tough thing is that we’ve brought this on ourselves,” he says. For a growth-stage company like Fusion, the implications are serious. “The monetization tactic that we intend to rely on—advertising—is certainly under siege, and we have the audience base most likely to be using ad blockers. This is something we really have to address.”
How to address it, however, is still up for debate, in part because there are two, very different problems to solve: “problem ads” and “the problem of ads.”
A large part of the media industry has treated ad blocking as a technical problem. In discussing their response to ad blocking, sources at several publishers and trade groups focused on the need for publishers to address the “root cause” of the ad-blocking phenomenon: their on-site user experience.
In an effort to embrace new interactive formats, capture growing user interest in video and visual media, or to increase revenue with more advertising per page or more precisely targeted advertising tech, publishers have stuffed their sites full of new, bandwidth-intensive components, no matter what device you’re on. For other companies, such as the Chicago Sun-Times, the integration of new technologies with legacy systems has also impeded site performance.
The problem is worse for mobile users. In October The New York Times reviewed loading times on publishers’ mobile websites and estimated the cost of those pages on typical mobile data plans. The results showed that many mobile websites load very slowly, and ad technology was the biggest, heaviest, slowest-loading content on many of those pages. In the case of Boston.com—the worst of the sites tested by the Times—loading the advertising on the homepage cost users 32 cents and took 30.8 seconds, about four times more than the editorial content on the page.
How publishers should address the rising use of ad-blocking software is still up for debate, in part because there are two, very different problems to solve: “problem ads” and “the problem of ads”Many link these problems to the growth in ad blocking use. PageFair’s customers may be on the leading edge of the trend, but several publishers interviewed for this story said they’re already seeing double-digit ad blocking rates—some over 20 percent—and that they’ve seen substantial growth over the past year.
“The product experience has to be every bit as good as the content,” says Jed Hartman, chief revenue officer at The Washington Post. For the Post, that’s meant implementing a variety of tools and initiatives aimed at speeding up its websites for all users, including those with slow or limited mobile connections. Other digital publishers have also recently stepped up their efforts on this front. Slate has targeted a 75 percent improvement in page load times by the end of the year. Vox Media declared “performance bankruptcy” in May, announcing an effort to reduce its sites’ abysmally slow load times. Improving the technology used to deliver ads is one piece of that effort, but given data like that collected by The New York Times, it’s an important one. All of which raises the question: Why are the ads such a problem?
The online advertising ecosystem is vast and complicated. There are two primary ways in which publishers accept advertising: by making direct sales to a client or by adding third-party advertising tools to their websites. Direct sales are just that—direct. The publisher knows what ads will appear on their website, when, and under what conditions. They’ll know who made the ad and who to talk to if there are problems.
But when publishers don’t sell ads themselves, they use third-party services to fill those remaining spots. Third-party services use an automated bidding system to match ads with websites, based on whom advertisers want to reach, which audiences different publishers serve, and what rates both parties are willing to accept. Advertisers can target increasingly specific user profiles based on information collected through cookies placed on a user’s computer.
One of the most annoying—and simplest—examples of ad personalization is retargeting. Those creepy ads that promote products you’ve browsed or bought on sites like Amazon? That’s retargeting. When you visit a site, retargeting services load a cookie into your browser that remembers what you looked at. When you leave the site and visit another, the cookie tells ad networks to serve you up an ad for that same page.
This isn’t the only kind of tracking, only the most evident. Most sites use multiple ad networks, analytics tools, and social media plug-ins that keep tabs on users’ behavior on that site—and across the Web. This data lets the third-party services gather lots of data about an individual user, keeping track of the kinds of sites they visit, services they use, and more. That data gets used to deliver ads to those users and, in other cases, can be used to customize the creative of those ads.
The growth in third-party trackers inspired the Do Not Track movement. Most modern browsers have a “do not track” setting that users can enable; if turned on, websites and services are asked to disable cross-site tracking (and perhaps all kinds of tracking) of that user’s activity. In theory, it helps address many users’ concerns about data privacy. In reality, it is often ignored by websites. The Federal Trade Commission recommends that sites participate, but doing so is not mandatory.
Some industry watchers argue that the uptick in ad-blocking rates coincides neatly with the growth of ad personalization. That may not be just about data privacy, though. The tools that let advertisers target specific users also require more code in users’ browsers, bogging down page load times and opening the door for malicious ads that serve up viruses to unsuspecting website visitors.
Over the past decade, third-party advertising has grown dramatically, and it’s become increasingly sophisticated. There are now tens of thousands of ad networks, all targeting particular groups of sites with particular audience demographics. Ad exchanges emerged to help match ads from across multiple networks and agencies, executing complex bidding rules in real-time to serve up personally targeted ads within milliseconds of a user loading the page. In the interest of maximizing advertising revenue on their sites, publishers often have relationships with dozens of networks and exchanges. The system, in some ways, has been a victim of its own success.
The ease and speed with which ads can be added to a website has helped drive up the amount of advertising on the Web overall, driving down rates for individual publishers. Falling rates encouraged sites to add more ads, and advertisers got increasingly interested in reaching not just large audiences, but the right audiences. The PageFair report found that 41 percent of surveyed Internet users (and 57 percent of 18- to 34-year-olds) would consider using ad-blocking tools if the number of ads increased; a full 50 percent said they would be tempted to use ad blocking because of privacy concerns related to ad personalization. “Billions of dollars have poured into ad tech in the last few years,” says Jason Kint, chief executive officer of Digital Content Next, a trade group of digital publishers. “I would argue that none of it went to consumer value.”
Many in the industry agree, and there’s been a chorus of publishers, advertisers, and others who now argue that consumers don’t hate all ads; they just hate bad ads. “There’s definitely this tragedy of the commons issue where a few bad actors, a few really bad experiences at scale, cause people to install ad blockers,” says Kint.
But what are problem ads?
One survey of ad-blocking users yields a potential answer. According to Ben Williams, who heads up communication for Adblock Plus (ABP), 65 percent of ABP’s customers told the company in a survey that they would be willing to see advertising if it wasn’t intrusive, by which they meant: “It can’t pop up, pop under, or be deceptive,” says Williams. “It must be labeled correctly, and should not have attention grabbing images, should not disrupt your reading flow.”
It also can’t be malicious. While people who follow the industry agree that malicious ads are probably only a small part of the market, they have an oversized impact on the Internet as a whole because those few ads could appear anywhere among billions of pageviews, thanks to the ubiquity of real-time ad exchanges and third-party networks.
Addressing bad ads takes up an enormous amount of time for most publishers. Greg Franczyk, chief digital architect at The Washington Post, says his team has built dashboard and monitoring tools to track the performance of their sites, including the ads. They’re looking for ads that break their in-house style rules, as well as those that are slowing down the site for users. When they find ads that cause problems, they have to work with the advertising team to get the ads removed. The Post keeps track of which networks consistently deliver ads that cause problems and cuts ties with the worst offenders.
IGN, a digital media company covering video games and entertainment, is even more fed up. “We’re just about at the point to forego a few million dollars in revenue to turn [third-party ads] off completely,” says Todd Northcutt, IGN’s vice president of product. Third-party advertising makes up a relatively small share of the company’s total ad revenue, and Northcutt says eliminating it would be at least partially offset by the costs associated with managing bad ads.
Ad networks and exchanges are the gatekeepers when it comes to ad quality and security. Many sources say they’d like to see more action on the part of major ad networks, like Google, to address the issue.
Part of the reason the third-party ad system grew so quickly is that the actual ad delivery system is almost entirely automated. Advertisers and agencies can upload their creative to the various networks and exchanges, where computerized systems check the ads for compliance with various technical and creative guidelines. For the most part, those systems work well enough to catch ads that break the various standards set by the ad networks and publishers. But a small number of ads that don’t meet that criteria slip through, and publishers say there’s an even larger number of ads that meet only the letter, not the spirit, of the policies.
Craig Spiezle, executive director of the Online Trade Alliance, says improving that review process would be a huge step forward for the online ad industry. He’d like to see networks implement a system that he compares to the TSA’s expedited security screening program for passengers considered low-risk. Ads from new advertisers or agencies would be reviewed closely before being loaded onto the server; over time, companies could earn positive reputations and gain faster, automated-review access to the system. Companies with bad reputations would be automatically rejected or flagged for manual review.
Most sources said they think it is unlikely that ad networks will take action to address the issue. Systems with manual review processes would be vastly slower and more expensive, pinching ad networks’ profits and driving up ad rates. “To put these circuit breakers in place breaks their model,” Spiezle says.
“As an industry, I hope we can see this as, ‘Don’t waste a good crisis,’” says Quartz’s Joy Robins. She’s optimistic that the rise of ad blocking will push publishers to “focus on quality rather than continuing to commoditize”Publishers are finding some support in one unlikely place: the ad blockers themselves. Adblock Plus launched the Acceptable Ads Initiative, which allows some advertisers to bypass the ad-blocking filter with non-intrusive ads. AdBlock recently announced it would join the program as well.
To get added to the whitelist, a publisher or an advertiser can have their units reviewed for compliance with this Acceptable Ads policy. For sites that want to unblock fewer than 10 million monthly ad impressions, joining the whitelist is free. But for companies over that threshold, it comes with a price tag. None of the company’s customers wanted to share what percentage of the unblocked revenue they’re paying to Adblock Plus, but it likely doesn’t come cheap.
Whitelisting decisions are shared in the company’s online forum, with examples of the unblocked ads. Among the approved units are Google text ads and “recommended articles” widgets provided by content-marketing firm Taboola, along with hundreds of other, smaller ad units submitted by publishers around the world. PageFair, which has criticized the Acceptable Ads Initiative, is also among the company’s whitelisted customers. Its text-based ads were added in January 2014.
City University of New York journalism professor Jeff Jarvis has suggested a related solution. But rather than allowing yet another third-party group to come in and skim revenues from the advertising system, Jarvis says, publishers ought to launch or support their own system, with a custom whitelist for ads and networks that meet strict standards.
In the absence of action from the advertising industry, many publishers are taking matters into their own hands, which brings us to the second issue that needs to be solved: the problem of ads.
Study after study returns dismal findings about the effectiveness of display advertising. There’s also a growing industry-wide concern about fraudulent ad practices, from bots that view and click ads to serving multiple overlapping ads in a single spot or counting impressions for ads that display on the page but not on the user’s screen.
Other changes have crimped digital display advertising even further. Today, many publishers’ own websites—and the display advertisements that appear there—account for a shrinking share of their total audience.
“If you put a banner ad on the site, you’re reaching 30 to 40 percent of the people who are reading the words we write,” says Seth Weintraub, founder of the Apple news site 9to5Mac. The vast majority of his audience follows the site using tools like Flipboard, Pulse, Google Newsstand, Instapaper, and Pocket, he says, “and we get zero revenue.”
Just as journalists are tuning their content strategies to reach users on social platforms, in mobile apps, and on mobile devices, their business-side counterparts have been trying to figure out how to reach users in these same venues. In most companies, the focus is on two strategies: developing native advertising and expanding distribution through social and mobile platforms.
Ad blocking is simply accelerating these trends. “As an industry, I hope we can see this as, ‘Don’t waste a good crisis,’” says Quartz’s Robins. She’s optimistic that the rise of ad blocking will push publishers to “focus on quality rather than continuing to commoditize.”
When Quartz launched in 2012, the team made the decision not to use any industry-standard ad units on its page, and it continues to sell 100 percent of its custom ads with an in-house team. The campaigns are rarely standard static images. For example, one recent campaign for GE offered users the opportunity to spin a globe and select colorful points from the map; each location pointed a different story about GE’s work. The Quartz ads are intended to be as compelling for users as the content produced by the editorial team. It’s been a successful model for Quartz, but even the best-designed display ads aren’t immune from ad blocking. If publishers use ad servers or analytics tools from third parties, they’re just as likely to have their ads blocked.
One better bulwark against ad blocking is native content. Different publishers have different definitions of native advertising, but many kinds of native ads are delivered not through an ad server, but through the same content management system or social platform as the publisher’s editorial content. By focusing on developing content that is in the same format as the editorial content and matches the tone and style of the publication, publishers are promising advertisers access to their audiences in new ways.
From a technical perspective, native content is harder—if not impossible—to distinguish from the articles, charts, and social media posts among which it appears. Developing this kind of ad creative means having a very clearly defined audience and a very clear brand identity and voice. Many premium publishers have launched major in-house efforts to provide those things as a service to advertisers.
“Media companies are morphing into digital agencies,” says Gordon Borrell, a media business analyst focused primarily on local news outlets. Many are launching new divisions entirely focused on creating branded content for customers. BuzzFeed, Vox Media (with its Vox Creative), Media General (with Advanced Digital Solutions), Hubbard (with 2060 Digital), Townsquare (with Townsquare Interactive), TEGNA (with G/O Digital), and even The Onion (with Onion Labs) are among the companies taking this route.
According to Borrell, this re-thinking of the relationship between brands and publishers in just beginning: “We are at the end of the golden age of advertising,” he says. “Marketing is becoming much more entwined with the medium.”
Distinguishing between editorial content, sponsored posts, and brand-affiliated content isn’t just a difficult technical problem, though. It’s also a difficult problem for many humans. Many publishers say they’re focused on making native advertising as transparent as possible. Most emphasized that they’re using clear labeling and branding signals to alert users to the fact that the content they’re seeing isn’t editorial.
Whether it’s clear that they’re ads or not, the question remains: Will consumers want to see those ads? John Patteson says Fusion is planning for a future in which some of its audience will continue to say, “These ads are not valuable.” When they do, he says, it’s best to assume they’ll have the tools to eliminate and ignore those ads. “We’re not interested in getting in an arms race,” he says. Instead, “How do we think about what can we give them that’s valuable?”