Category: Blog


Ad Blocking Puts $32 Billion at Risk Globally by 2019

We recently collaborated with Wells Fargo Securities on a survey of US smartphone users, asking them about their ad blocking preferences, and as a result we produced a US model of display ad revenue lost to blocking ($12.1 billion by 2020, the full model is available with registration here). The data we shared also assisted Wells Fargo (along with MagnaGlobal figures) to produce the following estimates of global ad spend at risk from ad-blocking. You’ll need to be an accredited investor to read their report and see their reasoning, but they gave us permission to reproduce the top-level figures here ($ in millions):

wells-chart

We think these global figures are quite conservative. The positive drivers we identified for the US projection model we built included:

  • New technical approaches for blocking
  • FTC action on deceptive ads
  • State attorneys general action on mobile ad data use
  • Better blocker app store visibility
  • Security companies enter block market
  • National media attention
  • Robust blocking browser availability
  • Generational blocking acceptance
  • Foreign actions against blocking blocking
  • Carrier-level blocking

And some of the negative drivers /hinderances included:

  • Vendors blocking adblockers
  • First-party serving
  • Native advertising increases
  • Legal actions against blocking
  • Foreign actions against blocking
  • Exemptable types of advertising

We encourage discussion around these, and have formulated some suggestions to improve the dysfunctional online advertising ecosystem.

Millennials More Likely to Pay for Content or Endure Ads?

Optimal.com partnered with Wells Fargo Securities to survey US smartphone users about their desktop and mobile ad blocking behavior. All the data we released is at adblocksurvey.com (including the XLS revenue model 2016–2020) One cut that yielded widely different results was by age group. While they may have less means than older adults, the data appears to suggest that young adults (18–29 years of age), aka “Millennials” for the purposes of this piece, are far more likely to support content creators via alternative means in an ad-restricted world. **See methodology/links to detailed data at bottom.

Blocking Rates by Age are Similar

Millennials block ads slightly more than do older age-groups, but not a statistically significant difference.

     age-blocking

Source: Wells Fargo Securities, Optimal.com (n=1,712) April 2016

Millennials 29x More Aware of Harming Content Creators

The data may indicate that 18–29 year olds are more aware than 60+ users that blocking ads harms content creators (8.8% vs 0.3%). It also shows that a greater portion of this age group doesn’t actually mind the advertising they see vs. older users (21.6% vs 11.7%), and they provide that as the top reason they haven’t installed ad blockers yet. All the age group data is available free with valid email registration at adblocksurvey.com.

wanna-harm

Source: Wells Fargo Securities, Optimal.com (n=1320 who don’t block ads) April 2016

Younger Users Annoyed at Mobile Formats

The younger adults we surveyed were far more annoyed with formats like mobile popup ads (52% of 18–29 year-olds saying it was one of the most annoying/intrusive types of ads vs. 39% of 60+ year-olds). The proportional difference was even bigger with mobile video ads: almost 40% of millennials don’t like them compared to 21.5% of 60+ aged users.

annoyed-formats

Source: Wells Fargo Securities, Optimal.com (n=407 age 18–29, n=368 age 60+) April 2016

What about Paying for Ad-Free Content?

Driven by a greater familiarity with ad-free paid content services likeNetflix, millennials appear more open to paying for an advertising-free version of a mobile web experience. The question was asked with a specific price point mentioned ($9.99 per month) which is almost certainly too high for a mainstream product of this nature, and it references carriers specifically as the providers of this service. Young adults were 50% more likely to say they’d consider paying for such a service than the remaining age groups:

more-directly-pay

Source: Wells Fargo Securities, Optimal.com (n=1712) April 2016

More Trusting Than the Rest of Us?

Finally: age appears to be the biggest determinant in the survey of whether or not a consumer says they would trust an entity to protect their personal information. As seems typical with these types of surveys, companies like Google and Facebook get perennially low marks, and growing groups of consumers indicate they don’t trust any entity whatsoever to protect their information. But as you can see from the following two charts (since it was a check all that apply, the latter counts the number of entities trusted by each group of respondents), there is a gulf in these attitudes between age groups:

age-trust

countof-trust

Source: Wells Fargo Securities, Optimal.com (n=1712) April 2016 [mean trusted entities = 1.925]

Marketers and publishers alike would naturally be wise to start understanding the differences in communications and advertising strategies for these different age groups. “The ad blocking toothpaste is not going to go back in the tube,” as I told Forbes’ Rob Hof.

We hope to freely share more of this type of data as we further explore this subject.

**Methodology:

Note: the 1,712-person survey was conducted among a balanced sample of US smartphone users using the 30mm-person SurveyMonkey Audience Panel (407 respondents were aged 18–29, 483 were 30–44, 454 at 45–59 and 368 were 60 years of age or older). The raw data for the age groups and questions mentioned here is available for free at adblocksurvey.com after email registration.

Optimal.com / Wells Fargo Ad Blocking Survey

The results of our joint consumer survey conducted with Wells Fargo Securities, and the Optimal.com US ad blocking forecast (2016-2020) are available in a SlideShare presentation here, or if you want to download the PDF of the presentation and the actual projection model in XLS format, along with the XLS of all the survey charts, then please visit adblocksurvey.com.

I wrote about the results in a post on Medium.

The survey was jointly conducted with Wells Fargo Securities used the SurveyMonkey Audience Panel of 30+ million users, the base selected was US smartphone owners and was weighted and balanced on gender, US location and age.

The Optimal.com Top 10 Consumer Needs

These are the top 10 items we feel consumers should get out of online advertising. None of these is trivial, but nor are any of them impossible.

vertical_optimal

Over $8 billion in wasted mobile data!

We have been quietly testing hundreds of ad blockers, most of them for iOS devices (thanks to Apple’s decision last year to allow these apps). We also built a data savings calculator for you to estimate how much extra mobile data you might be burning, loading stuff on the mobile web you never asked for.

We estimate that if all US iPhone users with iOS 9-capable devices used one of the top 10 adblockers we tested, iPhone users in aggregate could save $7.19 a month, or about $8.3 billion in the US alone! We ran across 7 websites for 3 minutes, and loaded 1712 URLs on average, whereas the top 10 blockers on average needed just 493 calls to render all the content and images on these sites -> this means that advertising technology accounts for 71% (1,228 hidden items loaded) what loads on your mobile phone in an average web session!

  1. Business Insider wrote about the data calculator today.
  2. Here’s the data calculator, give it a try!

optimal-savings-calculator

Installing and configuring these applications is somewhat cumbersome, so we provide assistance and support to subscribers to help them with this process. But if you are one of the 30% of smartphone owners in the US to occasionally or regularly exceed their mobile data plan, adblocking is simply a must. (BTW we also hope you’ll sign up for our $5.99/month service to compensate publishers for their content –>  it’s only fair! But it’s your choice!)

Sign up for our mailing list to learn when we have test results and data available on Android phones, desktop browsers and other devices!

Mobile adblocking reduces battery use by 50%

According to research conducted by The Wirecutter, “one of the easiest ways to make your battery last longer may surprise you: Install an ad blocker“:

We ran an automated Wi-Fi Web-browsing session in Safari on an iPhone 6s, cycling through a set list of websites for two hours with no ad blockers; then we ran the same test with the 1Blocker ad blocker installed. Without the ad blocker, the test used 18 percent of the phone’s battery, but with the ad blocker, it used only 9 percent—so viewing ads doubled the impact of Web browsing on the phone’s battery! We ran a similar test on a 2015 Moto X Pure using the Ghostery Privacy Browser and got results that were even more dramatic: With no ad blocker, a two-hour browsing session in Chrome used 22 percent of the phone’s battery, whereas the Ghostery ad-blocking browser (which uses the same browser engine as Chrome) consumed only 8 percent.

Do Carriers Not “Get” Mobile Web?

We know the extent to which mobile carriers indirectly benefit from the heavy hidden-autoplay-video-laden mobile web pages we’re constantly subjected to, but did you know they’re either (willfully of not) misrepresenting how bad it is on their own marketing and consumer websites?

Carriers continue to create hard-to-compare/oddly-tiered mobile data plans. But in addition is the incredible difficulty of figuring out how much data your phone could be burning through as you navigate the mobile web.

While you’re trying to (X) out of that popup ad on your mobile phone, lots of unwanted stuff might be is loading in the background without your knowledge.

If you’ve tried to check your phone’s mobile data usage, you’ve probably run into issues like: delays in reporting (Verizon always has an 8–9 hour delay for me), non-specific/unintuitive classifications or categories, huge disclaimers like “Data Utilization does not reflect actual amounts of data used and does not match billed usage for data roaming, delayed usage and similar billing charges” [Verizon] — which calls into question what the hell this information is (it gets worse, see below), and along with the delay, may make it useless (but we can’t know for sure).

It seems some of the mobile carrier billing infrastructure is old and creaky, so I figured (hoped!) perhaps mobile carriers would give their consumers tools to help them figure this stuff out ahead of time. In my quest for understanding, I headed over to the carriers’ websites.

All the major carriers are spinning a less-than-truthful story (via their data calculators) about how much bandwidth mobile web pages use. We’d think they themselves are the best source of data on this issue, but apparently not ….

Size of web page according to mobile carriers

Mobile carriers think mobile web pages are between 0.17 and 0.92 megabytes in size. This wasn’t even true 6 years ago.

The industry-standard for webpage size is HTTParchive, which has been tracking it since late 2010. Their January 2016 average page size figure is 2,225Kb, or 2.17Mb (megabytes=1024 to a Kb). That means that T-Mobile overstated this figure by 57%, Sprint by 76%, Verizon 82% and US Cellular by 92%. The average web page today loads more in just fonts and stylesheets than US Cellular thinks constitutes a full page.

Average web page size online

That’s 77% smaller than reality, on average. It would have to be back in 2010, for ANY of these carriers be close to a correct number, back then.

AT&T did a different kind of estimate based on the amount of time you spend on web pages in a month — which rate works out to be about 15 megabytes per hour. Our own tests routinely show many mobile web pages reaching 15–20 megabytes within a few minutes of activity (or 38Mb in under 3 minutes here!).

Ironically, on a fast connection, you may not even notice the difference between a 10Mb hidden-video mobile web page and a 2Mb just-lots-of-images page.

At least not until your mobile bill shows up.

A version of this first appeared on Medium on February 7, 2016 here.

In 2016, 14% of Users are Blocking Ads

Data shows big differences in adblocking by country

Optimal.com is building an adblocking service to help consumers, and we also give major websites tools to measure the rate at which users are blocking ads on their pages.

Below is a summary of data we’ve collected anonymously from over 30 million users from 1/1/16 to 2/13/16. We plan to release more aggregate information in the near future, especially to understand the many differences between mobile and desktop ad blocking. On this latter point for now I will only say that desktop adblocking is approximately 10x more prevalent than mobile adblocking (for the time being).

While our dataset has visits from over 240 countries, the traffic profile is somewhat skewed to the United States, so we ended up with an unweighted average blocking rate of 13.7% and a weighted rate of 14.0% (we used Internet Live Stats to weight by internet user%).

Here is the summary by top 50 countries for combined mobile and desktop ad blocking, with a comparison to the US% of 11.7%, ordered by their rank in our sample but also showing their rank when weighted figures are used:

optimal.com-top50

As you can see, adblocking is far more prevalent in Europe with Poland leading the way at 31.2% on average! South Africa, the Philippines and South Korea are examples of large countries with adblocking rates under 10%. Smaller but still interesting, here are the next 50 countries, 51–100:

optimal.com-next50

Data Source: Optimal.com, 2/14/16 All Rights Reserved

Advertising Needs to Become Harder to Buy

Can we shift to fewer, more expensive ads?

We trust television ads far more than online ads. We’ll get back to that in a moment, with some hard numbers.

Google built the world’s easiest-to-use advertising system, which now nets them over $67 billion in ad revenue per year (2015). Almost anyone with a credit card can start buying ads for a few dollars, and send traffic to a website (which can now be setup for free or very little, with free or low-cost tracking and optimization software — heck, Google Analytics is free!).

According to the Wall Street Journal, in addition to automated systems that stop many pattern-matched bad ads from ever being placed, “more than 1,000 of Google’s 60,000 employees monitor and remove ads”. And yet, while Google’s advertising growth was 13% from 2014 to 2015, the growth in the number of ads it removes was 3 1/2 times higher than that.

In 2015, Google removed over 780 million ads from its system! And undoubtedly, a lot of them were being uploaded by many of the the same questionable advertisers, popping up again and again. And for publishers, supply platforms/exchanges and networks without some of the scalable automation Google uses, it’s even more difficult to manage.

adoperations

adsremoved-google

Source: WSJ, Google

Online advertising has also become easier to buy via other companies and intermediaries working with them who have launched self-service buying systems on top of ad companies’ APIs, like Facebook’s and Google’s.

In addition, “content ad” companies like Taboola, Outbrain, Content.ad and RevContent aggregate thousands of small (sometimes fraudulent, and often whack-a-mole) advertisers themselves, and help them end up on premium publisher websites. Publishers throw up their hands and disclaim responsibility for what ends up on their site, except perhaps if the little image accompanying the ad is too NSFW.

Consumers still trust television advertising far more than online advertising — and their “trust” (loaded word that is) for online ads skews high because of the incredible depth and breadth of information available online (as seen by trust in search engine ads being higher than in other online ads). By the way, Nielsen’s 2015 Global Trust in Advertising Survey points out some significant differences between US and European users. Both groups have similar trust in recommendations from people they know, but Americans are far more trusting of all forms of advertising than Europeans are.

ad-dependence

That said — at 63% vs. 39% for Americans, for TV ad trust compared to trust in mobile ads (62% higher), and 45% vs. 26% for Europeans (73% higher), the phenomenon is of a similar scale. But trust is a fragile thing, and can easily be lost.

In their widely-cited article in the Journal of Marketing Research, “The Defensive Consumer: Advertising Deception, Defensive Processing, and Distrust”(2007), Peter R. Darke and Robin J. B. Ritchie find that all advertising suffers when consumers encounter deceptive advertising, and that we then revert to some of the negative stereotypes we may already have about advertising and its claims in general.

darke-ritchie-2007

Source: Darke and Ritchie, 2007

Even the best advertisers thus suffer when bad advertisers push consumers to distrust advertising. What is the solution? Could it be to drastically reduce the number of ads (which will increase consumer attention and response rates) while increasing the hurdles to buying them, not by inefficiency in creating or buying them (which has been a problem many online platforms have looked to address), but instead by drastically lowering the number of ads available online and increasing their prices.

While it seems easier than ever for people to get themselves onto (reality?) television, there’s evidence that we still judge the money it takes for a brand to get onto television as a barrier worthy of according some trust to (“why would they spend all this money to lie to us?”).

The average cost for producing a national 30-second TV commercial rose at a rate similar to inflation over the past 20 years, to over $350,000 in 2011. What’s important to note is that they did NOT come down significantly despite rapid technology changes over that time period — the barrier to creating big-screen advertising remains high. But of course, our point here is to mainly examine online ads, not television. The cost of creating an online ad, if video, could be significant, but on average it is a lot closer to zero than to $350k.

Source: American Association of Advertising Agencies’ Television Production Cost Survey
Source: American Association of Advertising Agencies’ Television Production Cost Survey

Big Brands Don’t Have TV Advantages as Easily Online

Brands could have (but typically don’t exercise) a lesser- but significant advantage of being able to spend lavishly to build a high-impact, super-engaging digital ad, that they are used to (and in fact, have to be) doing in the television world. But I think they’re afraid and confused, perhaps rightly so, because their spend is routinely marginalized by direct response advertisers who know when they can put in a dollar to make three, and have found that they can sometimes piggyback on others’ production values (by straight-up cheaply copying the look and feel of legitimate websites) and they aggressively ferret out the online ad spaces that convert into weight-loss or muscle supplement subscriptions, auto insurance quotes or mortgage applications.

In TV, the top 200 national advertisers account for two-thirds of TV spending…

large-media

Change is Hard

Nobody is going to get rid of the advertising dreck overnight, and big advertisers aren’t going to suddenly pay 5x higher prices… unless that is, there is an immediate step-function change in advertising space and availability. People will have to be able to make hard decisions and weather the storm of temporarily reduced revenue.

One way that is happening (sort-of) is via adblocking, but the problem is this:

A 50% reduction in ad space because 50% of people are blocking ALL ads is NOT the same as everyone blocking 50% of the ads they would otherwise see

One problem with adblocking is that blocking is currently mostly an all-or-nothing proposition for an individual. We need to reduce ad supply and increase demand as response rates presumably increase, but we also need to create innovation and new models that split up the results of this binary-adblocking-decision users are (being pushed into) making.

That said, we’re going to have to get rid of 60+% of the ad space out there, maybe even more, and with increasing prices and improving consumer acceptance and response rates, I think we have a shot at a stable or growing ad market if we do it right. I don’t know exactly how it’s going to happen, just that it has to: time to start thinking creatively once again.

“Turn off your Adblocker” is a Mistake

Websites should fix their ads before asking users to take risks

I applaud Forbes.com for being one of the first to take a stand and do something to protect their ad revenue. When I was at Root Markets in 2006, Forbes and the New York Times were two of the first publishers with whom we tested our unique approach to online advertising (that was ultimately a failure, but more about that some other time). Forbe’s initiative to block adblockers, however, is a big mistake and here are the three reasons why:

1. The “Circle of Trust” is still too big. The problem isn’t that websites like Forbes can’t trust their partners. It’s that they can’t trust who their partners choose to trust. As my friend Don Marti points out, even Google is serving malware through its ads. I’ve written several other items about this problem, but let me be clear for publishers: If you’re asking consumers to turn off adblockers that currently may protect them from malware that your ad partners may serve, the onus is more than ever on YOU to be absolutely sure that you won’t serve them that malware. This means that you need to take down all third-party ad tags/javascript because you simply cannot be sure they’re not going to serve bad code. Realize too the following important aspect of this issue:

Adblocking is no longer only about annoyance; it’s now also about protecting your device(s) and network from malware

2. The Adblocking Prisoner’s Dilemma. Forbes’ Lewis Dvorkin shared the following statistics about their recent ad blocking test, asking a subset of their users to turn off their adblockers in order to continue reading Forbes’ content (Source: Lewis Dvorkin, Forbes.com):

forbes-back

manyarticlesThe Prisoner’s Dilemma in this case refers to the situation that faces the majority of website publishers, in my opinion. If every site could block ad blockers, all publishers would be better off. But in a world of multiple sources for the same story, users can easily hit the back button or choose a different source for a story, from aggregators like Techmeme. This means that websites that “defect” and don’t block adblockers, will potentially see more users for commodity content than their brethren that block adblockers.

 

To me the important numbers I’d want from the Forbes test are the ones in yellow below, to see retention rates of those users in these groups compared to the average Forbes.com visitor:

data-wanted

3. Consumers may tell their friends about you. Look at the tweet I started this piece with. Over 4,400 retweets and counting. If the average retweet gets (let’s say) 100 impressions, that’s 440,000 people from one tweet alone who now may think twice before clicking a Forbes.com link on social media or elsewhere, if they are adblock users. They don’t think the website will respect their adblocking wishes, they may never visit. This effect is more difficult for the publisher to measure directly but make no mistake, when combined with other (I am sad to say but it is true that these are) everyday occurrences like malware being served to a Windows user via your website, the anti-consumer sentiment from blocking adblockers may just not be worth it. Here is a quick example:

It might be the case that we are headed back to a world of premium publishers serving up their own ads, knowing who the actual advertisers are, and so being able to assure the consumer that turning off the adblocker will have no negative consequences. But we are a long way from that — the adtech-industrial complex is deeply embedded with premium publishers and that won’t unwind quickly or easily.

OTOH I believe that you should get to have your cake and eat it — adblocking users should have an opportunity to still support websites AND block ads. Hopefully over time, paid-adblocking will become a standard. To learn more, visit Optimal.com to sign up for updates -> we’re launching soon. Business Insider did a nice write up about what we’re planning. So did Forbes (oh, and Techcrunch).

Here are some other things I’ve written related to the Brave New advertising world, all of which I hope you will read some time!

  1. The Mobile Video Ad Lie
  2. Carriers are making more from mobile ads than publishers are
  3. Mobile video ad lies continue
  4. Your TV attention is worth just 18cents an hour
  5. Do mobile websites deserve to die?
  6. Why real-time bidding is a big bust
  7. What consumers deserve from digital ads
  8. The downward spiral of deceptive ads
  9. Thanks, Network Advertising Initiative!
  10. The future is about filters
  11. Let’s not talk about privacy
  12. An allegory about the online data business
  13. Who the f*** is that advertiser?