The Battle for Internet Ads


The Battle for Internet Ads

It’s no secret that the internet is largely driven by advertising. The mutually beneficial relationship supports content based sites with advertising dollars, while marketers reach potential customers who they would otherwise never see. However, ad blocking software has the potential to cost online advertisers more than $40 billion in revenue previously driven by internet ads.

What are ad-blockers

By now, any semi-sophisticated internet user is familiar with pop-up blocking – this functionality is built into most internet browsers and automatically blocks ads and other types of pop ups. Ad blocking technology takes pop-up blocking to the next level, stripping websites of banners, sponsored links, pre-roll video ads, and other advertising. Even Google is not immune, and ad blockers change the way Google results are displayed. Although the technology has been around for a few years, Adobe estimates that 6% of the internet users are using the technology. Not surprisingly, that number is significantly higher for tech-savvy millennials.

Ad blockers come in different forms. Some simply block or prevent autoplay of certain types of files, such as Flash or Windows audio or video files, while others are more sophisticated, blocking content from all advertisers on a “blacklist.” A blacklist might be customized by the user, or is often created and maintained by a third party. The web’s most popular ad blocker, Adblock Plus, uses EasyList as the source of its blacklist. EasyList is created and maintained by four administrators, with input and support from its community of forum users.

To go along with the blacklist, many blockers also maintain a “whitelist.” Again, the whitelist might be customized by the user, dictated by a third party, or might be a list created by the software, which is often made up of advertisers who have paid to have their names added to the whitelist. Ads from advertisers on the whitelist pass through the ad blocking filter and are still displayed to the user. Notably, Google, Amazon, and Microsoft have paid Eyeo, the creator of Adblock Plus, to be added to that company’s whitelist.

The next generation of ad blockers

Until this year, ad blockers have generally been a desktop (or laptop) related issue. This fall, however, Apple caused an uproar in the marketing community when it announced that iOS 9 would support ad blocking apps. Considering that more than 50% of internet usage is on mobile devices, that change is significant for marketers.

Most apps that have been released simply block ads on the Safari web browser, which limits their impact because mobile device users tend to spend a majority of their time within apps. However, one app named Been Choice went so far as to block ads within apps, such as Facebook and Pinterest. Been Choice was fairly quickly removed from the Apple Store for security concerns, and now is only available without the in-app blocking technology, though the company hopes to work with Apple to add in the additional technology at a later point.

The battle against ad blockers

The battle against ad blockers is being fought on several different fronts. Some companies are quietly paying their way onto whitelists. Others are instead trying to defeat ad blockers with technology that prevents any content at all from being displayed when ad blockers are being used, and Yahoo recently trialed such technology, preventing some users from accessing their email because of ad blockers. The moral and practical appeal to developers that ad blockers could break the internet has, surprisingly, had some success, with developer Marco Arment pulling his Peace app from the App Store after two days of wild success. The reason he gave was that it, “Just doesn’t feel good” to hurt some “who don’t deserve the hit.”

Ad blockers have also caused a stir in the legal community. AdBlock Plus developer, Eyeo, has been the target of at least four lawsuits in Germany, all brought by German publishers over blocking advertisements on their news pages. Generally, the plaintiffs claimed that the company was engaged in anti-competitive behavior (similar to U.S. antitrust restrictions) because it was a barrier to competition and required advertisers to pay to be added to Eyeo’s whitelist. There were also claims that use of the software infringed on the publishers’ copyrights by changing their protected web pages.

The German courts, however, have found in Eyeo’s favor for now, explaining that the company does not yet have sufficient market share to hold a “dominant market position” sufficient to trigger some restrictions under German law. Nor was Eyeo’s software anti-competitive because the users have control over whether they download and use the software at all, and can also choose what ads, and how many, to view. As for copyright infringement claims, the court found that simply browsing a website was not sufficient to impact copyright protections.

This is far from the last word on the legality of ad blockers, however, and we expect other litigation to crop up in various countries. In the meantime, expect that online advertisers will be paying careful attention to the market usage of ad blockers, their effect on revenues, and new technologies and strategies for addressing their impacts.

By Anne Torregrossa

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