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A guerrilla test of ad-free: Let subscribers leave their ad blockers on

For the last couple of months, we’ve been conducting a novel experiment at the Bay Area News Group, the newspaper chain that owns The Mercury News and East Bay Times.

We set out to see if people will pay for an ad-free experience online, but we didn’t have the engineering resources to actually give it to them.

Our workaround? Just tell people: If you subscribe, you can leave your ad blocker on.

It’s a surprisingly simple solution. Hundreds of millions of people worldwide already have ad blockers installed and are benefiting from faster loads and cleaner pages.

This is the poor person’s version of ad-free. And it works.

Starting on Feb. 1, we started flagging visitors we detected running ad blockers and showed them what’s become a pretty standard message online: please disable your ad blocker on the site, or subscribe.

There’s one key tweak in our wording: “with or without your ad blocker on.”

It’s not the strongest message, and I lobbied for something more strident (“You can leave your ad blocker ON!”). But I’m not the boss, I’m not even an employee. I have been showing up once a week at the company’s offices in San Jose since November, under a Jim Bettinger News Innovation Fund grant from the John S. Knight Journalism Fellowships at Stanford.

Since becoming a fellow in 2016, I’ve been focused on finding out if people value ad-free news experiences and if it’s profitable to give it to them for a price. The first part is absolutely true: people definitely value ad-free. Fewer distractions, faster page loads — there is nothing not to like. The second is probably true, but I’ve still yet to prove that without a doubt.

So, how do we know people value ad-free? We asked them in a survey.

Here are the details:

  1. We sent a survey to 107 people who signed up after clicking subscribe on the above message. Twenty responded, and all 20 respondents said they left their ad blocker on after being given the option to do so. 100%! No one decided they’d just turn off their ad blocker if they didn’t have to. While this could be due to inertia, what’s clear to me is this: When people pay for content, they expect to have an ad-free experience, just like they get at Netflix, HBO, Pandora, YouTube and many other online services.
  2. Comments showed that people are cognizant of the role ads have in funding journalism, but they still don’t like them:
“I would accept ads if they were placed in a more thoughtful way so they don’t interfere with my ability to read the news.”
“ We need you now more than ever. Keep up the good work. I hate ads, but I understand you need to rely on their income, so if I have to disable my ad blocker I will — but I’d prefer to just give you the $ directly.”
“ I have an ad blocker because I find interest-based ads to be creepy … if there were an ads-free version of the paper at a slightly higher cost I would be likely to subscribe at that higher rate.”

3. Eleven of 20 people said they’d pay more for ad-free access if they had to, anywhere from between $0.50 to $4 more per month. One wouldn’t pay more and eight were unsure.

4. All 20 said it was “moderately,” “very,” or “extremely” important to leave their ad blocker on after subscribing. No one said it was “not at all” or only “slightly” important.

5. Five of 20 said they want to support local journalism or read about their community in explaining what led them to subscribe.

6. Two respondents said they couldn’t turn off their ad blocker or didn’t know how. Many businesses, government institutions, schools and other organizations block ads on all computers on their network. Let’s not punish them by cutting off access.

7. People who use ad blockers come from all walks of life. Among our respondents were teachers, designers, a software engineer, a systems administrator, the director of a non-profit, an architect, a financial analyst, an attorney and some unemployed and retired people. Incomes ranged from below $25,000 to above $150,000, and ages from 19 to above 65 years old (our respondent sample skewed older).

Is it profitable to offer people ad-free experiences?

Let’s break this down a little. In a previous post, I explained BANG visitors generate about $0.02 per page view in ad revenue. That’s risen to about $0.025 in the most recent 30-day period (this is higher than I calculated previously, but the amount ebbs and flows over the year).

One way of thinking about it is that offering an ad-free subscription for $10 per month would be a bad deal for publishers if the subscriber consumes more than 400 ad-free pages a month. That’s nearly four times greater than the average of someone who clicked subscribe in the latest 30-day period, which is about 111 pages (that’s also higher than I previously saw, but seasonality, plus big stories, are to blame).

This argument kind of makes sense, because there’s an opportunity cost to an ad-free page view. We could have served those pages to someone else for $0.025 in revenue per page, and instead we served them for nothing.

Or could we?

Remember, BANG now has a paywall up, so no one can get to 111 page views in a month without subscribing. And because ad-blocking visitors get stopped on their first page view, they’d never rack up enough article views in a month to hit the paywall for “regular” visitors, where the appeal to subscribe doesn’t say anything about ad blockers.

Not to mention, it’s not like page views are pieces of pie, where once you dish them out, they’re gone. There’s an infinite supply, and there are plenty of ad buyers who’ll place ads on the next page.

However, we could force ad-blocking visitors who want to read more to both pay for a subscription and disable their ad blocker.

Let’s examine the cost of allowing people to leave their ad blocker on. Instead of seeing pages with ads, say those people consume 111 ad-free pages. That’s 111 pages x $0.025 per page in foregone revenue, or $2.81 a month. So we’re collecting $10 versus $12.81 from a subscriber who sees all the ads.

But again, given how important it seems for ad-blocking visitors to keep their ad blocker on, they might not have signed up for the $10 to begin with if they were forced to see ads.

To me, that’s an easy discount to offer, especially since we’re also giving away the first month for $0.99 to new subscribers. I’d rather take the $10 and not worry about the $2.81 I’m losing. Heck, the person had been contributing $0 by blocking the ads to begin with.

However, there are certainly super consumers — like the people whose appetites can turn all-you-can eat crab offers into money-losers — who could turn this notion on its head. Just looking at averages does not fully account for those super fans.

And people who actually subscribe by filling out all their credit card details are different than people who just click subscribe. The clickers are the ones who average 111 page views a month. The actual subscribers are the cream of the crop of that group, and by definition consume way more than that, given that people who just click subscribe but don’t actually subscribe get stopped after their first page or pages.

Here’s where I disclose the shortcomings in our test, and next steps we have to tackle:

  1. We don’t have an exact count of how many pages each ad-blocking subscriber is consuming because of gaps in our tracking. It’s a little like selling 3-for-1 pizzas without knowing how much they cost. And that is partly a consequence of our current tracking platform (Google Analytics), the fact that we’re not linking visitor cookies to actual subscriber IDs, and a shortage of developer resources. We are re-engaging newspaper industry analytics guru Mather Economics to help us close the gap. We’ll have more to share when that partnership takes shape (recall that Stanford adjunct professor Sam Savage and I built an ad-free pricing tool based on Mather data).
  2. We don’t know how many people turned off their ad blocker. See aforementioned comments about tracking. But any who do help boost ad revenue.
  3. We’re not exactly sure how much impact the message had. While our survey respondents clearly said the ability to leave their ad blocker on was important, we also tried to compare our results to that of sister paper, The Denver Post. The Post’s message to ad blockers is slightly different. It’s red, for one. And it doesn’t tell you that you can leave your ad blocker on if you subscribe, even though that’s their de facto policy. In fact, that policy was stated publicly in an impactful editorial that was prominently supported by local TV outlets, so it’s hard to consider Post readers to be a clean control group.

A quick look during comparable periods (Feb. 8 through March 5) shows that Denver got significantly more subscription clicks than BANG’s as a percentage of total times the message was seen (0.12% to 0.07%). Denver also converted significantly more of those clicks to actual subscriptions than BANG (21.5% to 13.3%). That said, the raw number of subscribers who come through the ad blocker message was about the same, because BANG has more overall traffic: about 2.3 per day.

But the competitive markets are different: In Denver, The Post’s competition consists of local TV stations; in BANG’s case, it has competitors including The San Francisco Chronicle and an array of technology websites and startups. A true A/B test of different messages will have to be conducted among only BANG’s audience members.

4. We didn’t catch all ad blockers. Because of a variety of technical issues, we are completely missing some ad blockers running on some browsers. See the aforementioned tracking discussion.

5. Ad-blocking visitors are a relatively small group. Not everyone uses an ad blocker or has even heard of them. And since Feb. 1, ad-blocking visitors accounted for just 9% of the total number of people who’ve subscribed. Making the experience more enticing for ad-blocking visitors is not the be-all, end-all solution to boosting reader support for journalism.

There are some sensitivities in trying to answer this question, for sure.

News organizations married themselves to the digital ad economy way back when they decided to participate in the open web. And despite Google and Facebook grabbing the lion’s share of digital ad revenue and growth, ad revenue is a serious, big deal for publishers and makes them a lot of money.

However, the sheen is off. Ad rates are falling, Facebook is pulling back from news, and the prospects for growth have seemingly disappeared.

There’s no sugar-coating the tough times at the newspaper chain, either. It’s a unit of Alden Global Capital-owned Digital First Media. In the short time I’ve been around, more than 50 journalists have walked out the door through buyouts or layoffs.

Revenue from the printed newspaper is going to continue to shrink and digital ad revenue is just not making up the difference.

Digital subscriptions, memberships and donations are now among the only bright beacons in a battered news economy.

In my view, people who block ads represent an opportunity, not a problem. They are canaries in the coal mine, a bellwether group of discerning visitors, who by their actions tell publishers if their website or app experience can be improved. They also want something — ad-free access — and it’s not hard to give it to them.

Our small survey shows that they respond to appeals for support. They feel a sense of civic duty, and want to stay in touch with their local community.

We ought to value them, not demonize them. It will be better for readers and journalists in the long run.

Ryan Nakashima is a grantee of the Jim Bettinger News Innovation Fund and was a JSK Fellow at Stanford in the class of 2016–2017. He is also a technology writer at The Associated Press based in San Francisco. He lives in Menlo Park, California with his wife and three kids.

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