Do ad blockers hold the clue to the future of advertising?

Has 2016 been the year of the ad blocker? The numbers of worldwide users has soared driven by mobile uptake. Ad blocking is high on the agenda for both publishers and advertisers.

Last month Adblock Plus (the leading ad blocker) announced they were starting to sell ads through their acceptable ads platform.

As I wrote at the time, ABP will have to choose whether they want to continue to serve their customers as an ad blocker, or become a platform that delivers ads and work closer with advertisers. They cannot do both.

Ad blockers have tapped into a growing sense of disenfranchisement amongst users, but they offer a temporary protest, not a long term solution.

Instead of ad blockers, 2016 will be remembered as the year when we rethought the value exchange at the heart of online advertising. Ad blockers are the canaries in the mine, indicative of a deeper transformation.

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Since the first modern ads were sold in 18th century newspapers, it has been assumed that the publisher who has bankrolled the production of the newspaper owns their audience.

Successful publications gain bigger audiences, which in turn creates bigger advertising revenues for the publisher.

The first online banner ad was published in 1994. Online advertising, or “new media” as it was then, imported the same revenue model that had worked for print but just with new and much more accountable ways to measure e.g. impressions and clicks.

Publishers have continued to exercise their ‘ownership rights’ and have harvested as much data as they can about their audiences which they then sell to advertisers. But online audience are fundamentally different to print audiences.

Imagine if the next time you bought a newspaper the publisher had fitted it with a little device that tracks your behaviour. It records everything you read in the newspaper, and everything else you do for at least the next 30 days.

The publisher then sells this information to any advertiser who will pay for it. The next time you come out of your door there is someone there trying to sell you car insurance before you can even get to your car door. This is effectively what happens online today with users’ data, collected by cookies dropped on publisher sites. No wonder that web users are questioning the notion of ownership and beginning to assert their rights.

Faced with increasing amounts of advertising, much of it irrelevant or poor quality, consumers have a binary decision between accepting all ads, or blocking everything.

In the UK while 27% of all adults currently use an ad-blocker, an additional 20% have considered using an ad blocker in the past and an additional 16% are considering using one in the future.

That’s 63% of all UK adults that are using or considering using an ad blocker.  With over 500m downloads of ad blockers worldwide this is, as Ben Williams from Adblock plus told me, “perhaps the biggest vote of no confidence in history”.

But recent research by the IAB (‘Who blocks ads, why and how to win them back’) suggested ad blocker uptake is levelling off. Could we have reached peak ad-blocking?

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Our recent survey, conducted by Toluna,  found that 72% of all UK adults are worried or very worried about the amount of information that is being collected on their web behaviour.

Their concerns are systemic, installing an ad blocker is only a tactical solution. Ad blockers are not just a reaction to poor quality ads. 40% of UK adults are using ad blockers to keep themselves safe from malware and 12% are using them to control their data usage (a much bigger concern in a mobile first nation like India). So even if new installations of ad blockers in the UK has plateaued, the underlying problems have not.

So what have advertisers been doing to respond? So far, even by their own admissions they have not been doing enough. The IAB has championed the case for making better ads and has set up an alliance to empower their L.E.A.N. and D.E.A.L. principles.

But as one delegate at a recent IAB conference put it, “Frankly, we’re going to continue to use the ads that are most effective at generating revenue, even if they irritate the consumers. We’re all accountable to our C-suite for generating revenue”.

As an advertiser, I understand the pressure they’re under to hit lead targets. A click through rate of 1% is seen as “good”, but ignores the experience of the other 99%! Advertisers are aware of the problem, but haven’t fully understood the reasons behind it and consequently haven’t started to take proper action.

Are there currently too many ads? It depends what sort of site you’re visiting. Whilst 53% of all adults believe there are too many ads, there’s a big difference between someone who tends to visit news and business information sites, and millennials who are watching a lot more video, visiting forums and gaming.

The fact that two thirds of millennials are using ad blockers is partly due to them visiting sites that show more intrusive advertising, but mostly due to them having a different view of the world.

Unlike generation X-ers, millennials do not remember a world before internet advertising, moreover they have grown up in a world that is accessible only through the net. They are used to value exchanges where they remain in control of their value (like Airbnb, Uber, Zipcar).

They are innately sceptical, particularly of an advertising model that seeks to disenfranchise them from their own data. And yet, this is exactly the sort of audience that advertisers need to reach as they mature and wield greater disposable incomes. We have an imperative to find a way to engage with this audience.

“Half the money I spend on advertising is ignored” to adapt Wannamaker’s original pearl of advertising wisdom. Whilst 29% of UK adults think the ads that they see are not relevant to them, exactly half of all UK adults (50%) state that they ignore all the ads that they see online.

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So what might the perfect online advertising experience look like? If we could make the adverts more relevant and more targeted then we would not need to have as many of them. The user would not have to wade through hundreds of irrelevant ads, instead they might only see a few but they would be personalised around their actual needs, resulting in a higher conversion.

Data is at the heart of this optimised ad experience, but aren’t consumers already worried about the current volume of data being tracked? In fact, we found that 26% of all users would allow more data to be collected if it meant more targeted and more relevant ads.

Consumers are beginning to appreciate the volume of data that is being collected and recognise the value and vulnerability of that data. Data vulnerability is actually driving an appreciation of the value of that data. The General Data Protection Regulation in 2018 is going to accelerate consumer empowerment and defend the data rights of all consumers. The amount of personal data is going to increase, whilst at the same time the demand from publishers and advertisers for that data is also going to increase.

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First consumers become aware of the scale of the problem – the 72% who are worried about how much personal data is being collected. Next they are motivated to understand what is happening and how it works. The final step is taking action – the 27% of UK adults who have used an ad blocker.

Awareness and understanding increases every day, and the percentage taking action will also inevitably increase – but that doesn’t necessarily mean blocking ads.

First consumers become aware of the scale of the problem – the 72% who are worried about how much personal data is being collected. Next they are motivated to understand what is happening and how it works. The final step is taking action – the 27% of UK adults who have used an ad blocker.
Awareness and understanding increases every day, and the percentage taking action will also inevitably increase – but that doesn’t necessarily mean blocking ads. A bigger change is coming that will empower individual users, the future of advertising starts here.
 

Survey data referenced in this article was sourced from a specially commissioned survey to 1,000 respondents in the UK via Toluna Quicksurveys

Tim Flagg is founder of Advantagious.com, a marketing consultant and host of the ClickZ Digital Marketing podcast.

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