Is the latest ad blocking by Apple's iOS 9 poses serious threat to digital advertising?
One impact that Apple announcing ad blocking in iOS9 has had is that it discussions about the death of online banner advertising and the reportage on ad blocking has probably made more people aware of Ad Blockers, and the likelihood of them using them has increased. I've been debating ad blockers off and on for a year now with friends on Twitter, and this is essentially how I view ad blockers now:
2. The publishers are right: In general, advertising is commoditised to a level where it attaches little value to the quality of the content or the publishers brand. The rates have been ridiculously low, the payment cycles are too long, which means that in order to sustain, publishers end up trying to: 1. sell as much advertising as possible, 2. Increase the number of impressions served or clicks on links, and 3. Offer intrusive upgrades (some of them call them 'innovations') as a means of getting higher rates. There are other revenue models, but very few that scale the way advertising scales, and subscriptions are tricky in a market where supply of content is infinite. Publisher brands are increasingly becoming less important, and not many advertisers are looking at a positive rub-off that brand affinity might bring.
3. The Advertisers are right (kinda): They're spending the money, and their focus on the return on investment is justified. The situation that existed with traditional advertising - "Half the money I spend on advertising is wasted; the trouble is I don't know which half", is a little better online: in the sense that they have more data to figure out what is not working. The problem is with how online advertising gets measured: the emphasis on performance driven advertising has had a negative effect on publishers, and as a result, on readers because it pushes publishers to get more clicks and engagement with ads.
All in all, this is essentially the impact of the enormous scaling of content and audience that has taken place across platforms (not just publishers) which has led to an enormous scaling of supply of advertising inventory, which has brought prices down and commoditised the audience (i.e. you're just a number). The second key development is that, as the Verge rightly pointed out, we're in the midst of a battle between Apple, Google, Facebook and Amazon over world domination. Ad blocking hurts Google the most. Everyone else is just collateral damage. It's a similar situation with Internet.org, in my opinion: Google and Apple won at the operating system level, so the battle has shifted to the network level, with Facebook woo'ing telecom operators and governments.
1. The technology battle over ad blocking will hurt the web: Readers have the right to use ad blockers. Their browser, their prerogative. This means that publishers will be pushed to do two things: firstly, block users who use ad blockers. Their website, their prerogative. Ad blockers will try and beat this. Secondly, they'll push users towards apps because publishers can control the advertising in apps, not the browser. The push towards apps is already accelerating, and this has negative implications for the open web and impacts diversity and choice of content: you can have millions of websites on the web, but you can't have millions of apps on your handset.
2. Banner advertising won't die: But it will hurt. There will always be users who don't use ad blockers, unless the operating systems integrates ad blocking, and keeps it on as default. Given that India is Android country and Google depends almost entirely on advertising for its revenues, it's unlikely that they'll integrate ad blocking into Android. The increase in usage of apps means that more inventory will be available within apps.
3. The switch to native advertising will be unsustainable: Native advertising (as in custom content) is not scalable both for the advertiser and the publisher: the cost of creating content specifically for an audience or a publisher is much too high, and even if the ad can be replicated across publications and platforms, automated distribution is likely to be impacted by ad blockers. That brings manual processes in play, which add to the cost of delivering advertising, whether at an agency, network or will only work for large platforms that aggregate audiences.
4. Other business models for media will have to emerge: Advertising has been the easiest model, and especially frictionless when through networks such as Google's Adsense. It has meant that, a certain scale, you can run an ad supported media business without having to do sales. The alternative to advertiser-pay is reader-pay, and two alternatives exist: subscriptions and paywalls, and value added content (which we're trying).
But all of this depends on the machinations that are also taking place at a discovery level: with the switch to mobile, social media discovery is becoming more and more important, which means even having an audience will eventually depend on how you play (or get played) by the likes of Facebook and Twitter.
(The author is the editor and publisher of MediaNama. The article, dated September 30, originally appeared in the mentioned online publication.)