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Summary

Players in the digital publishing industry can't stop talking about ad blocking. And they shouldn’t – according to Ovum's new Ad-Blocking Forecast, the phenomenon will result in a 26% loss in Internet advertising revenues in 2020, which equates to $78.2bn globally. However, if publishers act now, that percentage could be as little as 6%, or $16.9bn. The question is: How can publishers make that much of a difference?

Publishers need to make consumers understand the value of content

Although anyone in the content creation business understands that advertising pays for "free" content, the average consumer doesn't associate advertising with paying for content. Therefore, in a time where consumers are increasingly seeing advertising as intrusive and irritating, is it any wonder that consumers don't see a problem with blocking adverts?

To take back control, publishers need to show consumers why advertising is needed and that it can be a positive addition to content. Part of this conversation should involve alternative monetization methods such as micropayments so that consumers can avoid adverts while still funding their favorite sites. Micropayment options will help consumers appreciate the value exchange involved in "free" content.

As well as communicating with consumers about why adverts are so important, publishers also need to work with advertisers to improve the consumer experience. The quality of the adverts is a major issue for many consumers. There are not enough examples of web-delivered adverts that enhance the experience for the reader. Advertising on other platforms, such as in magazines or on TV, often appears to the consumer to be more thought-out and part of the overall experience than Internet advertising. Consumers are likely to respond positively to Internet advertising that aspires to be as appealing as advertising on other platforms.

Forcing adverts on consumers through ad reinsertion or by blocking users of ad blockers from accessing content will have a negative long-term effect, even if they prove to be effective in the short term. There are already ad blockers that can defeat such software and the balance between the two opposing technologies will be unpredictable. Ovum predicts that the ad blockers – with input from a network of unpaid developers – will win the battle and ad blockers will remain more advanced than the anti-ad blockers in the long term.

Not only will websites that try to force the issue risk annoying consumers further but these websites also risk driving readers toward their competitors who don't require ad blockers to be switched off or who provide an alternate means of paying for content.

Choice will be a powerful weapon for publishers in the ad-blocking war. By making the ad-funded model a positive choice for the consumer, publishers will stem ad-blocking losses – and create consumers who are more engaged with advertising.

Appendix

Further reading

Ad-Blocking Forecast Report: 2015–20, ME0002-000671 (June 2016)

Ad-Blocking Forecast: 2015–20, ME0002-000676 (June 2016)

"Ad blocking could cost the digital publishing industry $78.2bn in lost revenue," TE0007-001029 (June 2016)

"Publishers should follow the Swedish example to solve the ad-blocking problem," ME0002-000658 (March 2016)

Telcos in Mobile Advertising: Operator-initiated Ad-blocking, TE0003-000879 (October 2015)

Ad-Blocking: How to Address the Threat to Revenues, ME0002-000606 (September 2015)

Author

Charlotte Palfrey, Senior Analyst, Digital Media

charlotte.palfrey@ovum.com

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