Egta Insight Ad Blocking: Strategies for Television and Radio Publishers June 2016
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egta insight ad blocking: strategies for television and radio publishers June 2016 www.egta.com executive summary table of contents This report examines the phenomenon of ad 5 INTRODUCTION 22 PART 5: Strategies for confronting the blocking, its impact on television and radio challenges of ad blocking, best practices and Towards a new accord in the advertising model? broadcasters operating in the digital environ- learnings 6 PART 1: The ad blocking landscape ment and the different strategies that publish- “We messed up”: LEAN and DEAL The scale of ad blocking ers may employ to counter the threat of lost Detecting ad blocker users The financial cost to publishers advertising revenues. Strategies: Why users block ads a) Ignoring the ad blocking phenomenon The extent of ad blocking software adoption is 10 PART 2: The main forms of ad blocking, lead- difficult to analyse, but several authoritative b) Ensuring advertising passes the ad ing providers and how their technology works blocker by complying with providers’ terms, sources suggest that it is widespread and grow- Deep Packet Inspection (DPI) and ad blocking or paying the ad blockers to lift restrictions ing. Extensions to desktop browsers are the Browser extensions c) Asking nicely most prevalent form of ad blocking in Europe: In-built browser ad blocking d) Content blocking/access denial this type of solution, which is typically free to the Content blocking mobile apps e) Diminishing the quality of the ad blocker user and very easy to install, is highly effective user’s experience In-app ad blocking for blocking digital display advertising. It is less f) Converting users into subscribers effective in the mobile environment. Hardware ad blockers g) Native advertising and contextual target- Network-level ad blocking ing Depending on the ad serving architecture used, 16 PART 3: The business models of ad blocking h) Permission and incentive advertising video advertising may be blocked. The major- technology providers ity of inserted audio advertising is currently im- i) Technical solutions to circumvent ad Direct user payment blockers mune from the most commonly used ad block- Charging to allow ads to be delivered j) Alternative models to advertising ers. Acceptable ads and video advertising 42 PART 6: Legal issues regarding ad blocking Publishers’ approaches to ad blocking include Selling data Germany complying with whitelising requirements, re- The WFA proposal for a non-profit regulatory Austria questing that users disable ad blockers, deny- watchdog France ing access to users, reducing the quality of the 19 PART 4: Issues specific to video (TV) and audio US ad blocking user’s experience, converting users (radio) broadcasters into subscribers, employing native advertising Ad blocking and programmatic advertising The privacy campaign against anti-adblockers and deploying technical solutions to circumvent Ad blocking and online radio The counter-arguments the ad blocking software. Effectiveness between The legality of network-level ad blocking these approaches varies. 45 egta’s position on ad blocking Legal avenues against the ad blocking provid- ers have also been explored; to date this has not been a successful route for publishers. This report is not intended as an exhaustive analysis of every facet of ad blocking; it should be considered that ad blocking is a rapidly evolv- ing phenomenon with new threats and solutions developing on a continuous basis. Page 2 © Copyright egta 2016. All rights reserved. Page 3 introduction / / Towards a new accord in the advertising model? Among the most vocal and outspoken critics of ad Ad blocking is starting to strip a significant amount blockers – particularly as their business models of revenues from digital publishers, and in the have evolved and matured – the IAB has begun a recent past has become one of the most pressing process of trying to address the underlying reason challenges for publishers: as an ever greater people turn to ad blockers: their dislike of invasive proportion of Internet users block all or most of the and overly distracting advertising. advertising that supports the online destinations This report looks at the scale of ad blocking they visit, the industry has reacted with a number and its impact on digital publishers, including of very different approaches to the challenge of television and radio broadcasters, as well as the recovering these lost revenues. various approaches that can be taken to address Some formats, and therefore certain types of the challenge of lost advertising revenues. Each digital publishers, are more affected than others: approach has benefits and risks, and each has its digital display formats, such as banner ads and champions and detractors in the industry. interstitials, are easily blocked by the most readily However, none of the approaches described offers available software. Digital audio and video, on a long-term, comprehensive solution to the ad the other hand, are in some cases delivered by blocking phenomenon and an end to the arms race. technologies that the most common ad blockers This may only follow a deeper re-engineering of cannot disrupt. the relationship between consumer and publisher Digital audio, which can be delivered as a pre-roll that removes – or at least reduces – the ad or in-stream, is particularly advantageous as an ad blocking imperitive. format in this regard: the major ad tech providers in digital audio employ server-side ad insertion, rather than client-side ad insertion, which puts audio beyond the reach of many ad blockers. Furthermore, as audio is often consumed on the go, mobile apps are a very important delivery mechanism; mobile remains far less affected by ad blocking than browser-based access, and it is technically more difficult to disrupt the delivery of advertising within apps on iOS and Android. However, ad blocking is a technological arms race. On one side, a highly committed community of – to a large extent volunteer – developers constantly strive to offer Internet users a completely ad-free experience. On the other side, publishers and ad tech companies are trialling a range of approaches, some of which seek to exert pressure on visitors to change their behaviours and others of which circumvent the ad blockers by technical means. Page 4 © Copyright egta 2016. All rights reserved. Page 5 more than half of all people who are aware of the highest incidence of ad blocking, with 62% of part 01: the technology’s existence have installed it2. time spent in front of video consumed on a desktop figure 01: The ad blocking GlobalWebIndex, another declarative study, noted device going unmonetised. High figures for ad headline stats a 10% increase in the proportion of Internet users blocked video in the UK (42%), Spain (41%) and landscape worldwide who use an ad blocker on their main France (33%) demonstrate the scale of unrealised computer, putting the figure at 38% in Q4 20153 revenues for European publishers, a region that prevalence of ad blocking on mobile devices, with the report’s authors cite as an example of an ad / / The scale of ad blocking 37% of mobile users responding that they currently block saturated market. Fully 14 countries within use an ad blocking technology and 42% saying that the EU were found to have more than one third of Ad blocking technologies have existed since the million they are interested in doing so in the future. This viewed video time unmonetised due to ad blocking. 198 early 2000s, and Adblock Plus was first released as leaves only a small minority of mobile users who an add-on for the Mozilla Firefox browser in 2006. Aside from market-level reports, there are a Users of ad blocking extensions are not interested in deploying the technology. However, the usage of ad blockers has remained number of measures publishers can take in order worldwide relatively limited until recently. Measuring the / / The financial cost to to estimate the percentage of traffic on their proportion of Internet users deploying ad blocking publishers platforms that comes from ad blocking users, and technology is no simple matter, as the software by doing so assess the economic impact in terms often prevents the tracking of visits and other PageFair and Adobe estimated the global of undelivered advertising impressions. Several analytics. It is worth noting early in this report that economic cost of blocking ads at $21.8 billion in technology companies offer solutions to do just $21.8billion much of the research published on ad blocking 2015, with approximately half of that borne by the that. Several of the approaches to addressing the and the reasons behind it has been sponsored by advertising market in the US, and they expect this issue of ad blocking, which are explored in later Cost of ad blocking globally in technology companies active in the field, and that figure to rise to $41.4 billion in 2016. The same sections of this report, depend on identifying these 2015 interpretation of survey results should be made authors estimated that ad blocking cost Google users in the first place. It should be noted that with this fact in mind. about $6.6 billion in 2014, representing some 10% privacy campaigners are starting to warn of the of the company’s annual revenues1. Whilst video potential illegality of browser-side web scripts that PageFair – a start-up specialised in analysing ad only represents a relatively small part of digital detect ad blockers, as this may be considered non- blocked traffic and recovering associated lost adspend, behind search and display, it is currently consensual access to people’s personal data6 (see revenues – and Adobe released the first of their the fastest growing category. The scale of the page 44 for further details). 62% annual reports on the rise of ad blocking in 2013, threat to companies that monetise premium, Of online video time cannot be calculating the extent of ad blocking using a long form content through advertising is clearly / / Why users block ads number of sources.