The Spark – Apple iOS 9 update
The recent ruckus began with the launch of Apple’s iOS 9 update for iPhone on September 16. iOS 9 enables ad blocking on iPhone, a first for the mobile web, and with more than 682 million active global iPhone users, the digital advertising industry (Google included) immediately took notice.
Let’s talk numbers
To complete the picture some backstory is required. Ad blocking is not new, but it has been a hot topic since August, when PageFair and Adobe released a revealing study on the growth and economic impact of ad blocking. The Cost of Ad Blocking, revealed that more and more consumers are blocking ads, which has resulted in real economic loss for publishers. Consider these facts:
- As of June 2015, there were 198 million monthly active users for the major browser extensions that block ads.
- Ad block usage in the United States grew 48% during the past year, increasing to 45 million monthly active users during Q2 2015
- In 2015, estimated loss of global revenue is $20.3b.
The report further anticipates $41.4b in lost revenue due to ad blocking in 2016. UBS projects revenue loss specific to iOS 9 to be comparatively small, at roughly $1 billion. To state the obvious with all cases – it’s a lot of money, and with the future of the web trending towards mobile, the iPhone’s new ability to block content has naturally ruffled a few feathers. Most industry watchers speculate that ad blocking functionality in iOS 9 is a deliberate attempt by Apple to cut into the future revenue stream of rival Google, thus commencing allout digital advertising warfare. And for the wider media industry, one that has failed to rebuild advertising as a true revenue generation model in the digital world, any loss of existing revenue is akin to pouring salt in the wound.
Why do users block ads
An uneasy balance: Content vs. Ads
For years, Google has dominated digital advertising for the desktop web through its AdWords platform. Mobile, however, has proved a tougher nut to crack for publishers and advertisers alike. Mobile ad revenue is on the rise, but it has not kept pace with the rapid rise of mobile traffic. An examination of the Wall Street Journal family of sites found that a majority of traffic originated from non-desktop sources; however, mobile advertising amounted to just 20% of total revenue. Facebook is a possible exception. The company has been lauded in the technology community for unlocking a formula for revenue generation through targeted mobile ads. However, the success of Facebook in the mobile realm is unique. Their targeted ads exist within the walls of the Facebook app, which boasts a user base second to none (over 1 billion in number). Instant Articles are another indication that the company is working to keep users within the app where revenue generation is simplified. Apple too, follows this trend. They promote advertising environments under the company’s control. For example, the new Apple News iPhone application in which company will display unblockable ads for a 30% cut, of course. Remember, Apple simultaneously enables ad blocking features for mobile web browsing.
Adapt or Die
Because of these developments many technology watchers have pronounced a “slow death of the web”. Tech giants will further seek to carve out their own turf, at the expense of the small publishers and companies that rely on advertising revenue to stay afloat. Many ad blockers have already instituted a pay-to-play system which allow well-heeled advertisers to pay a premium and avoid being blocked. The current landscape is not sustainable and it will change. It is already reported that major retail websites are either withholding content or not functioning properly for users when ad blocking is detected on iPhone. Fortune reports that ad blocking users have been unable to render major retailer sites like WalMart. With major companies losing revenue and users becoming increasingly frustrated, something has to give, right?
Is there a solution?
While the ad blocking saga is absurd, it has at least brought the important issues of user experience and web performance to the forefront. The changes we hope to see amount to a major industry course correction. All involved players need to listen to feedback from real users and adapt accordingly. If so, we will avoid the web apocalypse scenarios that many predict.
Advertisers will translate user feedback into better and less intrusive native advertising, better data and precise targeting to create less interruptive and more harmonious means to publish digital ads. Again, we (users) do appreciate a finely struck balance – advertising brings us desired content. This awkward symbiosis can be profitable. This is evidenced by the extremely ironic fact that young, tech-savvy users of ad blockers have emerged as the hottest new ad-targeting segment.
Technology giants cannot ignore the open web, which is already twice the size of native mobile app traffic, and growing faster. Hoarding users into controlled environments does nothing to fix the larger issues at hand. This option simultaneously gives users less freedom and squashes smaller entities that depend on the web for survival.
Lastly, publishers and retail sites need to consider delivery and acceleration technologies that will solve the issues causing painfully slow load times, that frustrates users who wait extra seconds just to see a promotional pop-up. A fast, fully optimized site is more profitable and well worth the investment.
This will all change, but forward thinkers do not need to wait around for long-term trends to come about. We know this because it is already possible. Yottaa solves ad blocking. The ContextIntelligenceTM platform allows for total control over every aspect of a web application (including third-party ads), and can circumvent ad blockers. Secondly, and more importantly, Yottaa improves overall performance so that end users have a better experience, whether or not they block ads. This will disincentivise the use of ad blockers, and improve key engagement metrics like pageviews and session duration, sure signs of a profitable and efficient app.