Business of News

The digital media industry needs to react to ad blockers … or else

August 11, 2015

Disrupting the media industry is easy. Not long ago, I moused over to, clicked on a green button that said, “Install for Safari,” and fewer than 10 seconds later, ads had vanished. All of them. Goodbye iPad ad that unfurled down my screen. Goodbye blinking mattress ads. Goodbye car ad following me from site to site. This immediately became Web surfing nirvana: pages loaded faster, my browser stopped randomly crashing, my whole computer ran better. The Adblocker Plus plugin even told me how many ads I’ve dodged in the last couple of months: more than 35,000 and counting.

I am not alone in my love for ad blocking. Every friend I tell about it thanks me with extreme enthusiasm, as if I’d just changed their flat tire. This is how ad blocking spreads: one person discovers the blissful Web, then tells everyone they know. A phenomenon that began several years ago in online gaming circles—you don’t want to get between gamers and their zombies—has swept into the mainstream. A new report from Adobe and one of several startups helping publishers fight ad blocking shows that 198 million people globally are now blocking ads, up 41 percent from 2014. In the US, ad blocking grew 48 percent from last year, to 45 million users. A recent Reuters Institute Digital News survey put the numbers even higher, saying that almost half of all US internet users block ads.

Taken alone, my 35,000-plus blocked ads probably aren’t doing much damage to the news industry; maybe a campaign reporter will be forced to stay in a Marriott Courtyard instead of the W. (Sorry.) But taken together, ad blockers are hitting publishers in their digital guts. Adobe says that $21.8 billion in global ad revenue will be blocked this year.

Users are inadvertently putting their favorite websites out of business.

The damage is more than financial. It’s existential. The rise of ad blocking comes just as the media industry had settled on a revenue model to move forward after years of disruption and pain. The new model looked a lot like the old one: circulation revenue plus ad revenue equals sustainability. With so few people willing to pay for news, advertising was supposed to bring up the rear. But publishers seem to have totally overlooked the fact that, while print ads were relatively innocuous and unavoidable, digital ads are different. They aren’t static. They blink. They follow. They irritate. And readers can do what they never could in print: erase them. Now, a frightening reckoning is at hand, a perhaps terminal diagnosis that few seem willing to accept or even acknowledge.

“For publishers, ad blockers are the elephant in the room,” media analyst Frederic Filloux wrote a few months ago. “Everybody sees them, no one talks about it.” I asked numerous publishers and ad platforms how much ad blocking they were seeing and what they were doing about it. Most didn’t reply. A Google spokeswoman did tell me this: “We believe that ads help fund free services and content on the Web. For our part, we’re continuing to invest in ad experiences that are relevant and useful for users, ensuring that users have choice over their ad experiences online, and helping publishers continue to fund their content.”

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The problem is that surveys show many internet users, particularly younger ones, have already decided they hate online ads. As one woman said in the Reuters report, “Online ads are obtrusive, obnoxious, annoying.” And few feel an obligation to help publishers out. Some 80 percent of internet users polled by Adobe said they weren’t willing to pay even a small fee to make ads disappear. So: Readers hate online ads, most users are unwilling to subscribe online (only 11 percent do, according to the Reuters study), and few would pay to make ads go away. No wonder the publishers didn’t get back to me.

Publishers have been banking on the growth of mobile, where the ad blocking plugins either don’t work or are cumbersome to install. Back in March, a Wells Fargo analyst wrote in a report on ad blocking that “the mobile migration should thwart some of the growth” of ad blockers. But three months later, at its annual developer conference, Apple revealed that its new operating system, scheduled for release this fall, will allow ad blocking on Safari. Given Apple’s mobile dominance, the implications are potentially terrifying. Wired’s headline: “Apple’s support of ad blocking may upend how the Web works.”

There are five or six ad blockers on the market, but the biggest player—with more than 60 million active users—is Adblock Plus, part of a German company called Eyeo. It doesn’t take a technology wizard to figure out how its product, and other ad blockers, work. Without an ad blocker installed, when a user clicks on a website, the site quickly connects to ad servers that display ads in various spots on the page. Ad blockers put a wall between the website and server, stopping ads in their tracks. Eyeo has been sued in German courts by publishers who argued Adblock Plus users shouldn’t be able to block ads on their sites. The publishers lost.

In many ways, Adblock Plus has become the internet’s advertising sheriff. That’s because its software, by default, allows some ads through its firewall—ads it deems “acceptable,” meeting a series of strict criteria it came up with in conversation with internet users around the world. The criteria essentially eliminate most of the ads on the market today, rolling back ad technology to the 1990s: text only, no animations, no popovers, no placement in the flow of text. In the two months since I’ve installed the software, I don’t recall seeing any ads that meet the criteria.

Websites must apply to get “whitelisted,” and an Adblock Plus employee then works with the site to make sure that the selected ads comply with the criteria. Ben Williams, a spokesman for Eyeo, told me that 700 publishers and bloggers have been whitelisted. The whitelist is how the company makes money. Eyeo charges large for-profit publishers a cut of ad revenues to be on the list, a scheme some critics have called extortion. Williams declined to say who is paying or how much, but the Financial Times recently reported that Google, Microsoft, and Amazon were among those paying Eyeo for their acceptable ads to appear to Adblock Plus users.

Adblock Plus has released a browser for mobile Android devices that blocks ads, and it’s planning to release a similar product for Apple devices. But Adblock Plus might not be the biggest threat for publishers on mobile. Shine, an Israeli company, isn’t targeting users fed up with annoying ads. It’s going after mobile operators like Verizon and AT&T, whose networks are stressed by data-heavy ads that constantly ping towers for location. Shine has developed technology that allows mobile operators to block ads before they even hit smartphones—in browsers and in standalone apps. Imagine this: A mobile operator lowers a user’s bill if she agrees to block ads, freeing up network resources.

Roi Carthy, the company’s chief marketing officer, told me the software is in pilot testing with mobile carriers, but he declined to say which ones. The idea would undoubtedly face regulatory scrutiny in the US if mobile operators attempt to use it. Net neutrality advocates have already expressed concern. But Carthy says the company is prepared to fight. “The desire to figure out how to bring ad blocking to mobile consumers is a worldwide phenomenon,” Carthy told me. Ad blocking, he said, “is an inalienable right.”

Sean Blanchfield certainly doesn’t share Carthy’s views. He worries that ad blocking will decimate the free Web.

A longtime online gaming engineer—he worked on Call of Duty and Guitar Hero—Blanchfield noticed something odd happening a few years ago: There was a 30 percent discrepancy between his games’ pageviews and ad views. He investigated and found that 1 in 3 of the ads were being blocked, a mortifying revenue hit. Ad blocking was still largely unique to gaming then, but Blanchfield correctly sensed it would spread. “Users are inadvertently putting their favorite websites out of business,” he told me.

Blanchfield started a company called PageFair, one of several startups trying to give publishers the upper hand again. PageFair has been helping publishers measure how many users are blocking ads and how much it’s costing them, as well as displaying acceptable ads under Eyeo’s requirements. But PageFair has bigger plans: It has developed new technology that allows publishers to display acceptable ads and to add basic banner ads with images, circumventing the blocking software.

The strategy lets PageFair play both sides of the debate. It understands the ad blocking community finds many online ads annoying, but it ultimately sides with publishers in their need to show ads, particularly ones that generate a lot of revenue. “Your house, your rules, your ads,” Blanchfield said. Major US publishers will soon launch Pagefair’s software, he said, but he declined to identify which ones.

There are other ideas for solutions.

Ben Barokas, a former senior executive at Google, recently launched Sourcepoint, bringing together a team of online ad technologists to develop a product that has both carrot and stick qualities. As the product rolls out in the coming months, Sourcepoint will offer software that lets publishers show ad blockers a message: “One of the consequences of using ad blocking software is that it significantly damages the value exchange between consumers and creators of digital content.” The message then urges users to click a link to disable ad blocking on that site.

Publishers can also enable a more stick-like approach, telling ad blockers that in order to continue they must restore banner ads, view a video ad, identify and views ads that are useful for them, or just pay up.

“We wanted to provide publishers with technology that allows them to provide users with choice,” Barokas told me.

Publishers must make money. The reader must not be overly annoyed.

“Otherwise, little by little, content will go away,” Barokas said. “We are not in a sustainable media ecosystem today.”

Michael Rosenwald is a reporter at the Washington Post. He has also written for The New Yorker, Esquire, and The Economist. Follow him on Twitter @mikerosenwald.