How Apples Ad-blocking Software Could Put Small Publishers Out Of Business

Author

STEVEN MELENDEZ

October 23, 2015

As the debate over online ad blocking heats up with the arrival of iOS 9, experts say the biggest casualties of the online ad war may be small publishers and bloggers with few alternative revenue streams to pursue.

Tools that filter out online ads have grown significantly in popularity over the past few years, as Web users have gotten fed up with ads that even industry insiders acknowledge have become more intrusive and bandwidth-intensive. And after Apple’s update last month to its mobile operating system, which supported apps that filter ads and other unwanted content on the mobile Web, publishers and advertising networks are increasingly concerned about the effect of ad-free browsing on their revenue. (Apple didn’t reply to an emailed request for comment.)

Advertising today is still the most viable form of micropayment for content.

“As an industry, we have created content that is too often not differentiated or valued; ads that are too often interruptive, slow, unaesthetic, or unsafe,” wrote Alia Lamborghini, the senior vice president of North American sales at mobile ad marketplace Millennial Media, in an email to Fast Company. “Consumers have increasingly adopted ad blockers to take control of their experience, and this is leading to a real threat to the entire publisher ecosystem.”

But the cost of ad blocking doesn’t fall equally on all digital creators and publishers, experts say. Larger publishers often see additional revenue from offline sources or product sales, and they’re more likely to distribute their content through ad-supported mobile apps, where ad-blocking software mostly doesn’t reach. But smaller websites and individual bloggers that rely on advertising to pay the bills often have few alternative ways to fund their sites.

“The big dilemma is for independent publishers who are not huge multibillion-dollar media companies such as Google, Facebook, and so on,” says Vlad Stesin, cofounder and vice president of product at ad tech firm AdGear.

While processing micropayments—small transactions of a few cents at a time, roughly equivalent to what advertisers might pay—has long been a dream of Web entrepreneurs, today’s infrastructure still doesn’t provide a way for small publishers to efficiently charge their readers in lieu of posting ads, says Stesin.

“Advertising today is still the most viable form of micropayment for content,” he says.

But with no way to charge readers by the article, and ad revenue in decline thanks to blocking software, some small publishers will have no choice but to cut back or even cease publication.

Payments And Performance

Peter Symmes, the publisher of a woodworking blog and YouTube channel called The Cedar Workshop, announced plans last month to remove ads from the site. A decline in ad revenue he attributed to ad-blocking software made them no longer worthwhile, he wrote.

“When the Cedar Workshop YouTube channel started, in 2013, the supporting Blog generated about $8.00 to $13.00/month,” Symmes wrote. “Now, I’m lucky to get 1 cent/month. For that measly amount, it’s not even worth it.”

But with site hosting still costing $10 per month, that loss of revenue will mean posting videos every two weeks, rather than every week, and a more restricted set of projects, he wrote on the blog.

Another blogger, Adam Roberts of cooking site The Amateur Gourmet, wrote in a March post that the ad network he relied on to fund the site had drastically cut its payout rate after their contract expired. Roberts says the network suggested he make up the difference with sponsored posts—a funding used by plenty of large publications—but he didn’t feel comfortable adding so many to the blog.

“The sponsored posts didn’t sit well with me because I’d built up my audience over eleven years by building trust with my readers; and the more that I tried to sell them things, using that same trust (and seemingly taking advantage of it), the more that I felt like I’d lost my blog’s integrity,” he wrote in an email to Fast Company. “At the end of the day I had to decide, ‘How many of these sponsored posts can I do before people start to think of me like a used car salesman?’”

He’s since taken a job as a television writer, and shifted his blogging to a personal, ad-free blog, he says.

“It’s actually getting me back to my blogging roots, where I would just do it so that I could connect with an audience,” he wrote. “It’s a nice feeling.”

For some sites, ad-blocking tools, which generally work by detecting and filtering out scripts and other files used to display ads and track users from site to site, can also interfere with browsers when false positives lead them to block necessary code, says Peter Imburg, the founder and CEO of Elfster, an online Secret Santa coordinating service.

“We would get contacted sometimes, by people like, ‘Hey, your site doesn’t work—I’m trying to do whatever I do on Elfster and it just doesn’t work,’” says Imburg, who also spoke about the issue last month at the Internet Advertising Bureau’s MIXX Conference. “When we’d do a screenshare session or something here, we’d say, ‘Oh, what’s this here,’ and they’d turn off the ad-blocking software and it would start working.”

Imburg says Elfster doesn’t deliberately track how many users visit the site with ads blocked, though he says the company has noticed that display ad revenue’s stayed roughly the same as visitor numbers have gone up. The company’s moving away from a traditional ad-driven model, thanks to additional revenue sources like e-commerce affiliate links. The recent iOS changes are unlikely to make a difference, since Elfster already banned ads from its mobile site to avoid performance slowdown, he says.

Those performance issues are a big part of what motivates users to install ad-blocking software in the first place. Online advertisers are willing to pay a premium for ads with higher “viewability,” meaning that publishers can guarantee that the ads are in a Web user’s field of vision for a given amount of time. That, in turn, has led to the growth of content like interstitial ads that block out the entire page, and auto-playing videos, says Harry Kargman, the founder and CEO of mobile ad platform Kargo.

“What we found is the unintended consequence of viewability for us today is that it encourages more interstitial types of inventory,” says Kargman. “Interstitial is not a great consumer experience—it’s something that pops up that interrupts you from viewing your content and that you have to ‘X’ out of to get out of.”

Advertising vendors have also set up increasingly sophisticated marketplace environments, where advertisers bid in real time for the right to show ads to users based on their perceived demographics, but that complexity can lead to longer page-load times. It also leads to ads that seem to follow users around the Web—a scenario that’s common enough to be the subject of a joke in The Onion this week, and is often seen as intrusive.

Opting Out

“There’s no opportunity for disclosure, negotiation, or reconsideration,” developer Marco Arment wrote in an August blog post in defense of ad blocking. “By following any link, you unwittingly opt into whatever the target site, and any number of embedded scripts from other sites and tracking networks, wants to collect, track, analyze, and sell about you.”

Not long after that post, Arment went on to release an iOS ad-blocking app called Peace, which became for a time the bestselling paid app in the App Store. But within a couple days of its release, Arment pulled the app, expressing concern about the potential harm done to publishers by ad-blocking tools.

“Achieving this much success with Peace just doesn’t feel good, which I didn’t anticipate, but probably should have,” he wrote. “Ad blockers come with an important asterisk: while they do benefit a ton of people in major ways, they also hurt some, including many who don’t deserve the hit.”

And that hurt could fall disproportionately on small entrepreneurs and independent publishers who rely on ads to make a living.

“The display ad revenue was really central to getting Elfster to where it is today,” says Imburg. “I think for new businesses and aspiring entrepreneurs, that ad-blocker [software] could make that a lot harder.”

 

This article was written by STEVEN MELENDEZ from Fast Company and was legally licensed through the NewsCred publisher network.


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