Ad blockers: A solution or a problem?

It's a cause. It's a curse. It's just business. Ad blockers take a bite out of the $20 billion digital advertising pie.

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Finding a middle ground

If Faida feels any sense of irony that his business model seeks remuneration from publishers that have suffered financial damage inflicted by a product his business distributes, he doesn't show it. Rather, he frames the argument in terms of moving away from the current "black and white approach," where all ads are blocked, to "finding a middle ground."

But where is the middle? What constitutes an annoying ad is subjective, but Faida says Adblock Plus has worked with the open-source community to develop and publish its acceptable ad guidelines. "Ads must be static -- no animations or blinking banners, they must be separated from content and clearly marked as ads," he says.

That's not viable, says Rob Beeler, vice president of content and media at AdMonsters LLC, a research and consulting firm that serves advertising professionals. "It's technically possible to adhere to their guidelines, but the CPMs [cost per impression] I would be able to get would be so low that it probably isn't worth it to most publishers."

In fact, he doubts that most publishers can afford to take "such extreme measures" as abiding by the conditions of Adblock Plus' program, especially when the digital advertising market has been moving toward high production quality ads with rich text and digital video.

And signing a deal with Adblock Plus won't make the problem go away entirely. The Acceptable Ads program has been controversial within the Adblock open-source community as well.

Some people took issue with the concept of opting Adblock Plus users into the whitelist by default, says Schumacher. The controversy split the community after the program was announced in December 2011 and led to the development of Adblock Edge, a version of Adblock that does not support acceptable ads -- or even offer an option for users to opt into such a program.

Other ad-blocker strategies

There are other ad blockers out there that don't monetize using this type of approach.

Some offer pay-what-you-want and/or "freemium" services. For example, the similarly named AdBlock, a competitor to Adblock Plus operated by former Google engineer Michael Gundlach, accepts donations and has no external investors.

Another service called Disconnect offers an add-on by the same name whose primary objective is to block tracking scripts -- but in so doing, it also blocks website ads relayed from third-party advertising networks. Disconnect's co-CEO Casey Oppenheim says his pay-what-you-want business model has taken off, with 3% of users contributing and 20% of new paying users choosing to subscribe annually. (There's also the chance that Disconnect will offer premium for-pay features in the future.) "Online privacy is a mass-market opportunity for the first time," he says. Which may explain why the company has drawn more than $4 million from venture capitalists.

(Faida at Adblock Plus declined to say how much money its investors have put up, but Schumacher, the biggest investor, says it's less than what Disconnect has raised so far.)

Ghostery, owned by marketing firm Evidon, doesn't block ads by default, but lets users block ads selectively after presenting information about the ads and companies behind them. Evidon's "data donation" business model asks users to opt into its GhostRank panel, which allows Evidon to collect anonymized data on the tracking elements and the webpages that Ghostery users visit.

Countermeasures

There is no historical model publishers can look to in dealing with these issues, says Harold Furchtgott-Roth, a former FCC commissioner who is now a senior fellow and director at the Center for the Economics of the Internet at the Hudson Institute. "In the traditional media markets, the publishers deal with a finite number of content providers. On the Internet you have essentially an infinite number of places to go," he says. If publishers push users with ad blockers too hard, those users -- and their friends -- will just go somewhere else. And with so many choices, he says, users don't care if a publisher goes out of business.

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