Editor’s note: Elizabeth Kalmbach is vice president and group media director at research firm Kelly Scott Madison, Chicago. Jon Christens is the firm’s director of communications. This article is an edited excerpt from Kelly Scott Madison’s summer 2015 issue of State of Media.
As online advertising increases its complexity and advanced capabilities by the day, so do concerns about measurability and accountability. While many concerns over ad viewability, cross-platform measurement and non-human traffic issues may have faded for brands working with agencies utilizing progressive approaches, there’s still another issue looming on the horizon. It’s known as ad blocking, and it is a problem that most certainly isn’t going away. As digitally-savvy young people come of age and begin customizing their own computers and mobile devices, the use of ad blockers is expected to grow.
It’s important to state up front that current ad blocking adoption numbers are not yet overwhelming, with most tallies pinning the number at around 5 percent of total Internet users worldwide. Still, as online viewership and content trends upward, the advertising community is preparing for the possibility that ad-avoidance rates may match those experienced by traditional television in the years after the advent of the DVR.
The Internet has long been an ad-supported stronghold. With only a handful of publisher exceptions charging subscription fees for content, digital media has largely relied on ad dollars to remain afloat. In contrast, the television world (pressured by the DVR and fragmented, multi-screen viewing) has been moving away from ad-supported revenue streams. Television now relies far more on retransmission fees, cable subscriptions, stand-alone OTT subscriptions and broadcast content rights (for which Netflix, Amazon Prime and Hulu pay dearly). This was a conscious decision by television producers and content owners and has created a magnificently profitable business model that will ensure long-term viability and help strengthen television’s premium identity.
So the obvious question becomes, if digital media relies almost exclusively on advertising then how does the general public currently feel about ad-blocking software and what effect is this sentiment having on usage? A recent research study by KSM and ORC International found that online advertising and ad-blocking has not yet reached the tipping point with consumers. To date, 45 percent of those surveyed were “extremely” or “very” influenced by privacy settings when choosing a browser. This number was decidedly higher for 18-to-24-year-olds and 25-to-34-year-olds, at 54 and 49 percent respectively, which on the surface seems to indicate that younger, tech-savvy consumers are more likely to take steps to limit advertising.
Nevertheless, concern does not necessarily lead to action, and only 29 percent of all adults actively set their browser to limit or restrict Web sites from gathering Web cookies. Though interestingly, this percentage actually increases as consumers age, meaning that older users are more likely to take action that adjusts their Internet experience than younger users. While cookie data targeting is an important method for most media agencies to reach the right audiences, alternate targeting options are increasingly being introduced into the marketplace to ensure the delivery of effective campaigns.
When it comes to the use of an ad-blocking technology, 47 percent of those surveyed say they do. Though admittedly, this percentage is far higher in comparison to many recent global counts (which, as stated previously, come in at around 5 percent of all Internet users or 144 million people). This likely indicates some level of confusion over the difference between ad-blocking technology and cookie data restriction. Additionally, while the rate of those who installed a blocking technology last year compared to the span of two to five years ago increased by 31 percent, 76 percent of the same respondents later stated they do not plan to add an ad-blocking technology within the next year. This indicates that for the time being, a majority of those concerned enough about online ads to take action have already done so.
To add even more perspective, one of the Web’s most popular ad blocking tools, AdBlock Plus, is currently being used on average by less than 1 percent (0.612 to be exact) of worldwide Internet surfers daily. Lara O’Reilly, Business Insider’s global advertising editor, also stated in a recent NPR interview that users of ad blocker add-ons don’t make up “… a large proportion of the Internet population. It tends to be the more technically advanced user, skewed toward males, gamers and so on." Still, savvy advertisers are continuing to monitor some important factors.
Consumers who use Google Chrome or Windows Explorer were most concerned with privacy settings (41 percent and 27 percent respectively), while only 10 percent of all concerned consumers use Safari. However, the recent announcement from Apple may alter these numbers drastically. The new iOS 9 platform will increase its capabilities to include mobile ad-blocking for all Apple devices. This could accelerate the growth of ad-blocking, as consumers who previously would not have considered seeking out ad-blocking software will have easy access to its capabilities. One could even say Apple is encouraging ad-blocking by so freely offering the capabilities to its users.
While this is an aggressive move on Apple’s part, it may come as no surprise to many in the industry who have long-considered the company to be the ultimate example of a closed system. Its technology and application efforts have always restricted advertisers to unique guidelines in an effort to protect its valuable user-base and closely guard the user experience to fit the company’s vision.
As Apple attempts to remove users from the potential ad pool and downloads of ad-blocking software continue, digital advertisers will work to avoid hitting a major bump in the road when it comes to equalizing online and offline ad revenues. It’s possible that ad-blocking technology could eventually reach mass adoption if it carries a low price tag (or no price tag, as with current Web browser platforms) and mass awareness levels but for now it’s clear when referencing current numbers that this date is far in the future. All the industry can do to soften the impact is continue its efforts to bolster consumer education by showcasing the benefits of behavioral advertising and sponsored content. On the latter, the good news is that executions such as digital native advertising and most online video spots will remain online ad placements impervious to blocking, increasing their value in the face of an evermore tech-savvy society.
Many consumers understand that ad revenues support the free content available across the Web. Digital specialists will continue to work at perfecting effective targeting methods which serve to both increase value awareness and avoid bad practices that attempt to reach those who wish to opt-out. While ad blocking is an issue on everyone’s radar, it’s one that is far off from becoming a major hindrance.
Methodology:
Online CARAVAN is conducted twice a week among a demographically representative U.S. sample of 1,000 adults 18 years of age and older. Completed interviews are weighted by five variables: age, sex, geographic region, race and education to ensure reliable and accurate representation of the total U.S. population, 18 years of age and older. The raw data are weighted by a program which automatically develops a weighting factor for each respondent. Each respondent is assigned a single weight derived from the relationship between the actual proportion of the population based on U.S. Census data with its specific combination of age, sex, geographic characteristics, race and education and the proportion in the sample. Respondents for this survey were selected from among those who have volunteered to participate in online surveys and polls. The data is weighted to reflect the demographic composition of the 18+ population. Because the sample is based on those who initially self-selected for participation, no estimates of sampling error can be calculated. All sample surveys and polls may be subject to multiple sources of error, including but not limited to: sampling error; coverage error; error associated with nonresponse; error associated with question wording and response options; and post-survey weighting and adjustments.