Relax, blocking mobile ads won't kill publishers

Online publishers are apparently doomed. “Things could get ugly quite suddenly,” says Charles Arthur. “The future for most publishers is likely that of pure content production only”, says Ben Thompson. Ad blockers, says Frédéric Filloux, are “now threatening the whole ecosystem”.

The Cassandras’ thesis is simple: online ads are annoying, and people respond to them by installing ad blockers. On phones, ads are even more annoying, but we haven’t been able to block those ads – until now. With the advent of ad blocking in iOS 9, the end is nigh: advertisers won’t be able to reach readers, publishers will no longer be able to sell their readers to advertisers, and the entire publishing industry will come crashing down.

This thesis is wrong.

The argument here is an old one. Back in 2010, Ken Fisher published an article headlined “Why Ad Blocking is devastating to the sites you love,” and received a huge amount of pushback in return. In the end, it turned out that ad blocking was not a big deal: online ad revenues rose steadily at most websites for the subsequent five years, even as they exploded on Facebook.

In reality, the rise of the internet – more people spending more time on more pages – turned out to be much bigger than ad blocking. Brands realized that if they wanted people’s attention, and the people were online, then they had to start spending serious money on online campaigns. And so they did.

Some of that money, of course, was wasted: this is advertising, after all. Brands were charged for billions of ad impressions that were never seen by a human, for any number of reasons. Maybe the tab wasn’t the active one in the browser. Maybe the user had installed an ad blocker. Maybe there was a case of outright click fraud, where scam artists put up a web page with ads on it and then got robots to reload that page millions of times.

But there’s waste in all advertising. TV ads are your cue to wander off to the kitchen to grab a beer; ads in newspapers and magazines are often never seen at all; posters on the street get defaced or otherwise covered up. At the margin, if a brand wants to ensure that its ads are actually seen a certain amount of time, it’s just going to have to buy that many more impressions, to make up for all the inevitable wastage.

Is the wastage priced in to online ad prices? Are CPMs lower as a result of the fact that advertisers need to buy more of them to get the desired number of impressions? It’s hard to say for sure, but there’s no particular evidence for it. Advertising is, to use an internet term, lossy. The chief marketing officer of a given brand would love to be able to sit down with every potential customer, look them in the eye, and start talking to them about her product. But that’s not possible: if you want to reach a mass audience, you have to be OK with the idea that many people might not actually be paying attention to what you’re saying.

The same is true on phones. When iOS 9 comes out, some small percentage of users will immediately download one of the new ad blocker apps. Over time, more of those apps will get installed. And possibly Android will allow its own users to follow suit, for fear that otherwise they will jump ship to iOS.

But before that happens, publishers – along with the ad industry at large – will already have started making moves to minimize the problem, including whitelisting their ads, and doubling down on so-called native advertising. (This post was brought to you by Goldman Sachs!)*

Brands know full well how much time we spend staring at our phones, and they will find some way to reach us there. If anything, the rise of ad blockers will help them to do that: the annoying banners we see right now are in large part a function of ad agencies which simply don’t have the time or the technical expertise to do anything better. If ad blockers mean that better-designed ads end up reaching more people, then you can be sure that ads will start getting better quite quickly.

Already the big platforms, especially Facebook, have solved the mobile-native advertising problem with much more elegance and success than any traditional digital publisher. Those skills are sure to make their way down to publishers and the ad-tech ecosystem. Which doesn’t mean the future is rosy for digital publishers: the platforms still hold the upper hand. But, realistically, if you’re drawing up a list of things which are likely to kill digital publishing, mobile ad blocking technology has to be somewhere near the bottom.