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Publishers and advertisers feel threatened by Apple’s move to enable ad-blocking tools on iOS, but shouldn’t they just make better ads?
“The move to block ads on iOS could cost Google over $8 billion per year”
For the first time, iOS lets users install software that blocks ads appearing in the Safari browser. That’s great for users and mobile carriers attempting to slash the bandwidth that’s currently wasted on ads, but it represents a huge challenge to the advertising and publishing industries.
Websites make money by attracting people with good content and then getting paid for advertising placed around that content. Ad blockers aren’t new, of course – PageFair says that even now only 1 in 20 internet users on PC or Mac use them, but publisher fear Apple’s dominance of mobile ad consumption could significantly impact the bottom line. That’s because despite its relative market share in comparison with the Android platform, around 75% of global mobile ad revenue was generated by iOS devices in 2014.
The move was widely discussed at a New York advertising industry exhibition last month. “People who are creating content need to make money”, Sandy Pelland of MomLifeTV told the New York Post. “If you are a medium or smallsized website operating on very tight margins, this could make or break the business”, said
Stephen Chester of the Interactive Advertising Bureau (IAB), who warned that traditional printbased news organisations were at particular risk.
The industry will need to raise its game including development of more engaging, less intrusive ads to convince consumers they don’t need to use ad blockers. Earlier this year, Google CEO, Larry Page, told shareholders, “The industry needs to do better at producing ads that are less annoying and that are quicker to load”.
Ads impose a big drain on data usage, impacting consumers and carriers alike, with cookies and graphics consuming huge chunks of bandwidth. As a case in point, The New York Times reported that using a mobile ad blocker on Safari delivered a 21% increase in battery life, “significantly lowered” data usage and reduced page loading times.
It seems inevitable the industry will spawn whitelisting schemes (such as the Acceptable Ads program, acceptableads.org), which is free for small- and medium-sized sites and blogs to ensure their ads – which must meet certain quality criteria – are not blocked. This means users can continue to support their favourite websites without being subject to poor-quality, poorly-targeted advertising. Independently-developed ad blocker, Crystal, even lets users define their own white lists, empowering them to choose to accept ads from sites they support.
“It is tragic that ad block users are inadvertently inflicting multi-billion dollar losses on the very websites they most enjoy. With ad-blocking going mobile, there’s an eminent threat that the business model that has supported the open web for two decades is going to collapse”, PageFair warns.
Apple’s own iAds service will be unaffected by its content-blocking technology. These ads only appear in apps, rather than in Safari. Apple may even benefit as it places iAds around content culled from across the web in its own News app.
Assuming ad agencies and advertisers don’t up their game, Google is likely to feel the impact. 90% of its $66 billion revenue in 2014 came from advertising, 18% from mobile search (around $11.8 billion). With three-quarters of mobile advertising revenue generated by iOS devices, the move to block ads on that platform could cost Google over $8 billion per year.
Apple’s contribution to mobile ad revenue may force advertisers’ hands, even though the use of ad blockers has been on the rise for a while, even before iOS 9.