What Does iOS 9 Mean for the Future of Online Ads?

The debate over blocking online ads has gathered heat and momentum with the recent release of iOS 9 earlier this September.

Amongst the changes to the software, including a 6-digit pin, the latest version of Apple’s mobile OS also includes tools programmers can use to create apps which block content such as ads within Safari’s mobile web browser.

The recent development could potentially give mobile users the same freedom for blocking adverts as they currently have with desktop browser add-ons like AdBlock and other, often free, ad blocker extensions such as Ghostery. But why have Apple chosen to include this change? And what does it mean for users, publishers, businesses and advertisers? Let’s explore.

Online Ads More Annoying Than TV Ads

It will come as no surprise that many users find online ads annoying. In a recent survey comparing online video ads and TV ads, around 36% of those polled found online video ads more irritating than TV ads. In a separate survey, repeated online ads were found to evoke increasing annoyance and anger from people the more they are exposed to the ad.

Readers have grown increasingly tired of web advertisements in form of persistent banner ads, popups and videos that automatically start playing when a page is loading. They are also tired of full screen takeovers that force the user to look for the means to stop or skip them or in some instances adverts which make scrolling uncontrollably jerky.

All of these forms of web page advertising make it difficult for the user to continue to the content they were originally looking for. It has also been found that increasing numbers of people are aware and concerned with cookies and widgets which track movements and habits online so that advertisers can target them even more persistently with adverts based on content they had previously been looking at.

198 Million Ad blockers Are Active Worldwide

In an attempt to avoid annoying, invasive or irrelevant ads many web users have installed ad and popup blocker web browser extensions. Research carried out by Adobe and PageFair has established there are 198 million active ad-blockers in use world-wide, costing publishers just short of $22 billion. At least 16% of internet users in the US use tools to block advertisements and the numbers are even higher in Europe with Poland’s 39% of internet users blocking web adverts topping the list.

Of the popular ad blockers, AdBlock has become the most popular extension of all time, and many believe it to be the best ad blocker available. With 40 million users as of July 2014 the numbers of users installing ad blocking software is expected to grow even larger. 2015 has already proven this with an increase of popup killer and ad blocker users. In the UK alone, ad blocking grew 82%, reaching 12 million active users in the 12 months prior to June 2015.

The increase in ad blocker downloads is in part thanks to iOS tools such as Crystal that enable users to take out what they consider mobile clutter based on the promise that doing so will increase page load by up to four times, reduce data usage by half and lengthen battery life.

Why Do Online Ads Exist?

The term, ‘there is no such thing as a free lunch’ is true online too. ‘Free’ services including social media platforms ultimately make the user the product, which they in turn ‘sell’ to advertisers. Facebook is estimated to make nearly $12.80 in ad revenue off of each user this year and $48.76 in ad revenue from individual U.S. users, research by eMarketer has found.

Advertisers use online advertising tactics for the simple reasons that they work and many content publishers are out of alternatives. Targeting adverts to browsers based on what the user is viewing on the web increases chances of browsers responding based on the interest they have already shown in a product.

Online advertising became a problem when the value of advertising started declining steadily thanks to the law of supply and demand. Adverts are sold based on impressions or how many times browsers view them or are believed to view them. With increased browsing, users see more web pages which means that publishers are delivering more impressions. As the number of impressions goes infinitely higher, the value of these impressions approaches zero.

What this change means for publishers is that revenue from adverts has been gradually declining for years. The most obvious response to this was to try and raise the number of impressions to offset their reducing value. This can be achieved in one of two ways;

• Increasing traffic which would result in desperate re-publishing of the stories that have the highest potential to bring in traffic.
• Increasing the number of adverts on every page with the result of pages that are chock full of in-your-face adverts.

There is a third solution and it is selling native advertising. When adverts are camouflaged as content, they cannot be removed. However, users are confused as to whether they are reading content that is independent and accurate or that has simply been tailored around an advert. A good number of publishers are going for this alternative but readers are finding such adverts obnoxious because they question their authenticity.

Why Is Apple Backing Ad Blocking?

Because Apple is such an influential player in the technology world, their move towards allowing developers the tools to create apps which block ads has caused a stir. It is suggested that Apple’s main reason for enabling developers to create mobile ad blocking software is the hope that more consumers will shift from using Safari to mobile apps.

Unlike mobile sites, Apple reviews all apps and gets a cut of the ads within iOS apps sold with its service iAd. It is suggested by some that the new ‘hook’ in the operating system could be a move to move more businesses into developing separate apps which would, in turn, benefit Apple.

It has also been suggested the the need for mobile and iOS ad blocking has experienced an increase of importance because mobile ads use mobile data, unless connected to wifi. Online mobile advertising is different from desktop and even radio, TV or print ads in that it is the customer who ‘pays’ for the ad.

In the current world we live in customers pay for mobile data plans with a capped limit of data. The more the number of ads the higher the usage of data. Hence some customers are keen to see mobile adblockers as not only a way to eliminate irritation but also to reduce network usage.

What Does This Mean for Advertisers and Websites?

Apple hold around 15% of the global smartphone market, and the content (ad) blocking facility currently only works for the iPhone 6, so the actual change to mobile ad blocking could be perceived as relatively small.

However there is significance in the fact that a technology giant like Apple, backs the idea of content blocking. The move shows a change in attitude which could be replicated by other technology companies.

What is the Future of Online Ads?

For businesses looking for new ways to advertise online, there are a number of strategies they can follow.

One strategy for overcoming ad blockers is native advertising, as mentioned previously. However this method has resulted in a lot of content on the web today being sponsored and filled with adverts and click-bait. Publishers have three other options.

1. The first is to desist from these strategies and put out premium content in order to attract higher-value advertising that targets a premium audience. This can work, but only if a publisher has a premium audience or if they have sufficient scale to create a network that is large enough to get advertisers to take them seriously.
2. Another solution is to look for revenue from other sources apart from adverts. VentureBeat has successfully done this by building a business based on research and selling high-value reports to companies that are willing to pay them well for it. This works well if you have or can put together a pool of experts and an audience for whom the information would be valuable.
3. Publishers have also been trying out paywalls. Paywalls use micro-payments and tip jars or fundraisers where readers can give some money to support the publications they like. This method is often seen on news websites which give access to a limited number of articles before requiring the user to subscribe for payment.

The reality that advertisers, businesses and users of the web face is that online adverts will become increasingly blocked, both on desktop and on mobile. Readers have reached a point where they have had to take steps to protect themselves by installing ad blocker extensions. This change makes the future looks grim for publishers that rely on web adverts for revenue. Without online ads, they must come up with alternative methods such as paywalls for their website to remain profitable or face shutting down altogether.

The scenario we potentially face over the next few years points us to the question of whether the web will be able to remain a ‘free’ entity if increasing numbers of users install ad blockers and are not willing to pay for content. How can the free web survive? Leave your thoughts in the comments.

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This post was first published by Adeo Group.

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