This January marked the 10th anniversary of AdBlock Plus, a browser plug-in that banishes ads from web pages. It isn't the only ad blocker; but AdBlock Plus dominates, with 500 million downloads, according to Eyeo, the company behind the software.
And after a decade hoping that ad blocking would just go away, online publishers are starting to freak out.
"When you do sit down with a…top-5 media company in the world, and you talk about an ad-block rate that can be more than 30%…the level of urgency that comes across from the publisher is so significant, it's unbelievable," says Brian Kane, cofounder and COO of Sourcepoint, a startup opened in April 2015 to help content sites track and fight ad blocking.
Sourcepoint surveyed about 150 execs from 120 "premium" publishers in the U.S. and Europe last November and December, with about 60% saying that growing use of ad blockers is a threat to their business. Sourcepoint won't name participants but says that one-third of the companies are in the top-50 trafficked online content companies, as ranked by comScore. Nor will it publicly name the clients it assists in monitoring and working on strategies against ad blocking, but Sourcepoint privately named to me some companies that are among the biggest online publishers.
Data from PageFair, a company that works with publishers to produce less-intrusive ads, shows how bad things are getting for ad-supported online media. It released a study in mid-2015 showing that 45 million Americans and 77 million Europeans were blocking ads, costing online publishers an estimated $21.8 billion in lost revenue for the year. The numbers are likely higher now, as the 2015 figures were already up 45% in the U.S. and 35% in Europe from 2014. (Apple's support for ad blocking on mobile devices in iOS 9 has made the situation more unsettling).
As AdBlock Plus's power grows, tempers are flaring. The Interactive Advertising Bureau (IAB), the trade organization for online ad companies, cancelled AdBlock Plus's ticket to its Annual Leadership Meeting at the end of January. In his keynote address at the meeting, IAB president Randall Rothenberg called AdBlock Plus "an unethical, immoral, mendacious coven of techie wannabes." Sourcepoint cofounder and CEO Ben Barokas was even more blunt. "They've consistently just said, 'Hey, we don't give a fuck. And we're going to go and continue our raping and pillaging of the content creators,'" he says of AdBlock Plus. "I think as long as they have that stance, there will be no peace."
To do battle, about 60% of publishers expect to use "ad block circumvention" in the next year and a half, according to the Sourcepoint survey; but their weapons aren't too powerful. Just over 60% of combatants will employ "consumer messaging"—asking viewers to not use an ad blocker. Around half will allow access only if visitors disable their ad-blocking software. Forbes tested the approach on a sampling of visitors from December 17 to January 3. Of the 2.1 million people who encountered the wall, less than half (903,000) turned off their ad blockers. A full paywall won't deliver much, the publishers admit: Only about 30% of them expect more than a tenth of viewers to pay for access. "Renegotiating access one user at a time barely works, even for premium publishers," writes Sean Blanchfield, CEO and cofounder of PageFair, in an email to Fast Company.
Web publishers from the Sourcepoint survey express little interest in working with (and sometimes paying) Eyeo to "whitelist" acceptable ads that it will allow through. Only about 9% of American and 8% of European companies expect to do so. If Eyeo agrees to unblock ads it deems acceptable, it charges publishers a hefty 30% of the additional revenue it estimates they gain by having the ads run. But there's still no guarantee visitors will see the ads. Whitelisting is on by default in AdBlock Plus, but users can still change the setting to to block all ads, including the whitelisted ones.
None of the countermeasures by publishers address the main problem: Online advertising sucks for viewers, as even the IAB admits. "We messed up," writes Scott Cunningham, SVP of technology and ad ops, in an October 15 post on the organization's blog. "The fast, scalable systems of targeting users with ever-heftier advertisements have slowed down the public Internet and drained more than a few batteries."
Worse, they endanger users: Malware-laden ads easily slip into those fast, scalable and automated ad network systems. Such "malvertising" can do anything from redirecting viewers to a scam web page to injecting ransomware that locks their entire computer up. "For consumers, an ad blocker can be used as another line of defense against malware attacks," writes Jan Sirmer, analyst at antivirus company Avast, in an email.
Google recently reported that it employed more than 1,000 people to block 780 million bogus, annoying, or malicious ads in 2015. Barokas tosses the blame for fraud and abuse back at Google for its self-service and largely automated advertising system. "If there's somewhere you have an interface where you can try to inject something nasty," he says, "and you don't have to talk to anyone, you don't have a relationship, and you don't have all that much vetting and vigilance that goes around that transaction—that's what happens."
With his righteous indignation, and F-bombs, Barokas resembles Steve Carell's portrayal of Mark Baum, the disillusioned hedge fund manger in The Big Short (based on real-life Steve Heisman)—even down to his intonation. Like Baum, Barokas is a veteran of an industry that he sees as going off the ethical rails. He and Kane started in online advertising around the turn of the millennium, working at big players such as Google, DoubleClick (now part of Google), and AOL. In 2007, Barokas and Kane cofounded Admeld, an early provider of real-time bidding—the self-service practice allowing advertisers to buy up available ad space on a publisher's site. (Google bought Admeld in 2011 for a rumored $400 million.)
Barokas doesn't buy the claim that today's publishers and ad exchanges, such as DoubleClick, Rubicon, or PubMatic, can't keep sketchy and dangerous ads out of the network. "Any publisher has the ability to blacklist advertisers and not accept advertisers that they don’t know about or don't want," he says. "Many choose not to go down that path in order to maximize revenue." (According to a December 2015 IAB report, however, fraudulent advertising actually costs the industry $8.2 billion per year.)
Barokas and Kane join with the official reform position of the online advertising and marketing industries: Ads need to be of higher quality, ad exchanges need cleaning up of bogus and nefarious content, and consumers should have a clearer understanding of how they are targeted and input on what they see. Google, for example, allows users to see what kind of data is in their profile and select or deselect advertising interests. PageFair works with companies to use only ads that pass the Acceptable Advertising guidelines set by Eyeo.
But Barokas and Kane recommend an additional practice: A paid option for a no-ad or minimal-ad version of sites. Instead of paying for each site individually—the classic paywall used by sites like the Wall Street Journal and the New York Times—subscribers would get access to a constellation of major sites.
"The way that paywalls have been implemented to date," says Kane, "it's sort of the analog of paying ten dollars a month for a specific record label's catalog, and only that catalog." He and Barokas instead want to build a fat bundle of major content providers—all the big labels—the way Spotify does for music. "We're interested in working with the NBCs, the CBSs, the ABCs, all the major media networks, as well as the top newspaper and magazine publishers in the world," says Barokas.
The first problem is that even most of Sourcepoint's own survey participants don't like that model. Only about 22% of American and 16% of European publishers said they are likely to implement a "Spotify for content" (as the survey called it) in the next year and a half. And Spotify, facing strong backlash from content creators who claim they've gotten stiffed, is a problematic model. There are also a lot more web content providers than record labels. If Hulu couldn't get all four major U.S. TV networks together, how can Sourcepoint get all the networks as well as major "print" websites? And what about newer content creators? Would BuzzFeed (#30 on comScore) join up with old media like the New York Times?
Unless—and until—Barokas and Kane show results, advertising looks like the main way to keep media companies alive on the internet. Furthermore, unless—and until—ads become less annoying and dangerous, AdBlock Plus looks like a sensible tool for consumers—and a growing threat to the sites they like to visit.
This article has been corrected to reflect how PageFair works with publishers.