Ad blockers: A solution or a problem?
That said, there are in fact companies that say they can help publishers with ad blocking issues.
ClarityRay takes a more active role. Like PageFair, it provides a tool that lets publishers monitor blocking activity to show them that they have a problem -- and then sells them a remedy. ClarityRay offers a service that CEO Ido Yablonka says fools ad blockers into allowing ads through. "Ad blockers try to make a distinction between content elements and advertorial elements. We make that distinction impossible," he says.
His customers declined to be identified on the record, but sites given to Computerworld to try did continue to display ads with AdBlock or Adblock Plus running, and a former executive at one publisher -- the Alexa top 100 firm -- says the business has used the service to recapture about $2.5 million in blocked ad impressions annually.
But that doesn't work for all publishers. Destructoid.com's Gonzalez isn't comfortable using a service such as ClarityRay that's designed to defeat ad blocking. "Fighting the people who want to block us is a quick way to lose those readers," he says. "So a product like ClarityRay, for us, would be a last resort."
As one would expect, Yablonka is a vocal advocate for the publishers who are his potential customers. "Content owners should have final control over the page," he says. But while he sees his service as helping recapture revenues, he acknowledges that his business model, which takes a cut of recaptured ad revenues, benefits from the "malfeasance" of ad blockers. So, he says, ClarityRay is moving away from fixed CPM (cost per impression) model "so we don't have a vested interest in seeing the problem become bigger."
Going forward, he says, ClarityRay will charge a percentage of CPM cost over the publisher's entire ad inventory, rather than taking a cut of the value of recovered ad impressions.
Watching the consumer
Alan Chapell, president of consumer privacy law firm Chapell & Associates, says the rise of ad blockers has created a tug-of-war between publishers and ad blocking product developers, with users in the middle. "There's confusion around who owns the user," he says.
With publishers so far unable to successfully implement paywalls or other alternative revenue strategies at scale, growth in the use of ad blockers poses an existential threat to the economics of the Internet, says Furchgott-Roth. "If the ad blocking groups prevail, it will substantially erode the business model for providing online content for free. You'll see a lot of websites disappear." But, he adds, "Other business models will take their place."
Everything turns on what consumers do next.
Existing users of ad blocking software may be a lost cause. Once consumers decide to block ads and experience the cleaner Web pages and faster load times that ad blocking delivers as it filters out bandwidth-hungry animations, video and other advertising content, they're less likely to want to give it up.
But will mainstream consumers in the U.S. turn to ad blockers in a big way? "The numbers have not reached the point where publishers are panicked," says Chapell. "But if those products were on 80% of computers, we'd be having a very different conversation."
Schmacher says adoption rates in Europe could be a harbinger of what's ahead for the U.S. In Germany, for example, about 15% of users run ad blockers -- three times the rate in U.S. But Europe is also very different from the U.S. in two key respects, he says: Europeans are more vigilant when it comes to privacy and ad tracking issues, and as part of its antitrust case against Microsoft, EU regulators insisted that consumers be given a choice of browsers on computers they purchased. Many chose Firefox, he says, where ad blocker add-ons have made the biggest gains.
With billions in ad revenue at stake, there's a big incentive for advertisers and publishers to figure out a way to preserve the current business model. And in the arena of countermeasures, ClarityRay's approach may be just the first volley. While Schumacher admits that the "URL-swapping" mechanism used by ClarityRay works, he says Adblock can easily make modifications to defeat it if more sites start using that service. But, he admits, ClarifyRay and others will probably move on to other methods to fool ad blockers, and that could be the start of an arms race between the big publishers and ad blockers.
Furchgott-Roth thinks that's a battle that the ad blockers would have a hard time winning. "The economic model between sites and advertisers is so powerful that they will figure out some way to allow this to continue." And it won't be just the small startups like ClarityRay and PageFair, each with about $500,000 in backing, that the ad blocking vendors will need to worry about. Ultimately, he says, "Google has more money to invest in this than do the ad blocking companies."
For some smaller publishers catering to more tech-savvy audiences, dealing with the effects of ad blocking is fast becoming a matter of survival. Since appeals to users haven't worked at Geekzone, Freitas is trying to deal with the declining ad revenue problem by coming up with other ways to generate income. For example, he has developed a sponsored tech blog where community members receive early releases of new mobile phones in exchange for writing about their experiences in a blog. "They can write anything they want, and Telecom New Zealand pays for that," he says.
With display ad revenues declining and paid contributions a tiny fraction of revenues, such models are the key to recovery. "The big takeaway for publishers is that you have to have a diversified income stream to survive," he says.
Read more about E-business in Computerworld's E-business Topic Center.
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