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Dear Ad Blocker, You Are No Kitten.

A lot has been said about ad blockers and what they mean for the future of advertising. Is it considered stealing? Would ad blockers put publishers out of business, or could they be the catalyst for changing a business model that was broken to begin with?

The answer to these questions is yet to be seen, but there is an immediate effect of turning on ad blocking:

What impact does ad blocking really have on advertising?

There are several ways of looking at it, but first let’s consider two things:

  1. How many people are going to download and install an ad blocker?

The Power of Defaults

If Apple were to make ad blocking on Safari the default and just stripped out the advertising, that would be a big deal. If it requires people download a third party app, go in the settings, and install a special thing then that is very different. Maybe 5–10% of the population would go around the default and change the settings.

Take Google Maps for example, which has about 100 million active users on iOS, out of the 400 million+ iPhones out there (an impressive feat). But even at that high watermark for a product widely known as being superior, only about 25% of the iPhone users made the switch.

The rise of ad blockers will be short lived.

Mobile app usage has grown by 90% this year. Apps dominate our time and attention, with only a fraction of the time on mobile taking place inside the browser (where the ad blockers come in). According to comScore’s Mobile App Report for 2015, only 13% of all mobile usage was spent in the browser.

87% of all mobile usage is in apps.

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comScore: The 2015 U.S. Mobile App Report

Does the discussion around ad blocking focus on the wrong thing?

  • Facebook is the number one mobile app by total time spent for nearly half of its user base (which is 1.5 billion).
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comScore: The 2015 U.S. Mobile App Report

We get our news from platforms and aggregators, curated by networks. Content gets discovered by being shared. The publisher’s home page on mobile is not the first destination, which is different than how news discovery was done on the web (let alone spending 30 minutes in the morning reading the paper that you paid for — ads included!)

What’s happening with ad blockers in Safari is a diversion.

What if Facebook became the ad blocker? With Instant Articles, only native ads will show alongside the text. Facebook of course wouldn’t be blocking the ads per se, but if publishers want their content showing up in the feed, it’s time to start monetizing in a way that wasn’t invented at the inception of the web.

“In business, there are two ways to make money. You can bundle, or you can unbundle.” — Jim Barksdale

The change that’s happening in the news business goes beyond bundling and unbundling and the revenue model changing. The news industry is going through a fundamental restructuring.

As Marc Andreessen writes in his excellent post about The Future of the News Business, now that everyone is on the internet, three things happening simultaneously:

  1. Distribution is going from locked down to completely open, anyone can create and distribute. There is no monetary premium for control of distribution.

The third point is most important. The big opportunity for the news industry is increasing volume, drastically. If you look at the number of smartphones globally, the total addressable market for news will be around 5 billion people by 2020. In the next 5 to 10 years the news industry can increase its market size 100x by serving billions of people that have never been connected.

In the kind of markets where people don’t have $9.50 a month in data usage charges just from ads for daily visits to the Boston.com home page.

So how do you make money?

If people really value something, they should be willing to pay for it. Their call to action could be more subtle… but the combination of subscription + ads seems to be working for the Wall Street Journal:

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#MakeTime for the Journal.

Or maybe, you’re one of the top journalism institutions that doesn’t want to deal with (their readers to experience) banner ads whatsoever? The Financial Times shows you the headline, but you’ll need to pay up to read anything.

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And then there are micropayments, which are now made possible with technologies like Bitcoin and The Blockchain. Pay $0.10 an article with a frictionless payment and no obligation to sign-in, enter a credit card, or have any on-going relationship with the vendor. Although the concept of micropayments has been tried before, so some people are skeptical.

There are many ways for news businesses to monetize now and in the future in this exciting new era for journalism.

Advertising is and will continue to be a core part of the business for many news organizations, just not in the ineffective way it has been transitioning from print → to web → to mobile — regardless of ad blockers being installed by any portion of the population.

Now what’s better than cat photos on the internet?

Videos of kittens. I want to buy Friskies cat food and I don’t even have a kitten.

BuzzFeed has mastered the art of getting data, learning from it, and bundling the content creation with the business side of things where the content is the advertising.

Native advertising are ads that people actually like. That is the goal of native advertising. You make ads that people like, and in the social web people will share them. And you don’t need 10MB of ad-tech that follows you around the web for loading up an ad that goes through an ad exchange and may happen to be somewhat relevant. With native advertising the identity is inherently built in by who shares it. That, and from the platforms we so generously give to our likes, habits, and information.

For example, if I’m writing a post about ad blockers and looking for tweets that could be relevant, Twitter will know to show me a promoted tweet about Crystal: the self proclaimed #1 ad blocker!

It was peak irony so I downloaded it, and of course had to tweet.

For more on the future of advertising and micropayments listen to the a16z podcast episode with Chris Dixon and Benedict Evans (where many of the concepts in this post were learned from, thank you both) and join the conversation on the episode’s Product Hunt page!

Written by

I tweet about Startups, VC, and MUFC. All your tweets are my favorite. @Nivo0o0

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