Ad Blocking Will Reduce US Online Display Ad Revenue by $12.1 Billion in 2020

Results from the Optimal.com/Wells Fargo Securities Ad Blocking Survey & Optimal.com US Ad Blocking Forecast

We at Optimal.com are sharing today that ad blocking will reduce online and mobile display advertising revenue in the US by $12.1 billion in 2020. This means that instead of a previous industry forecast of over $50 billion in revenue in 2020, that figure would be $38.8 billion (23.8% lower). According to Optimal.com’s ad blocker tracking data, 11.7% of online display ad impressions were blocked in 2015 in the United States. This projection was calculated using Optimal.com’s proprietary data sets, industry data and assumptions, and the results of a joint consumer survey detailed below. The projection model, and PDF/Excel files of all the survey data are now available to the public at adblocksurvey.com. A SlideShare version of the survey and forecast are available here.

US Ad Revenue to Drop by 23.8% ($12.1 Billion) in 2020

(US only, revenue figures in millions)

Orange is revenue lost to ad blocking, Green is US online display advertising projections per eMarketer

Source: Optimal.com US Ad Blocking Forecast, May 2016

Wells Fargo Securities and Optimal.com jointly conducted a national consumer survey in April 2016 aimed at US smartphone users, asking over 1,700 of them about their mobile and desktop ad blocking behaviors. We focused on users who have smartphones in order to hone in on what is becoming the primary means for accessing the Internet, namely the mobile phone.

Optimal.com publisher data from early 2016 shows that over 90% of ad blocked impressions are still coming from desktop (and not mobile) browsing, but the trend toward mobile blocking will intensify, especially as mobile ads are seen by consumers as far more intrusive and annoying: mobile popup ads are considered 3.7 times worse than TV ads by those we surveyed, with mobile video ads seen as 2.4 times more annoying.

Source: Wells Fargo Securities / Optimal.com Ad Blocking Survey, April 2016 (n=1320 users who don’t yet block ads)

We found that over 45% of users not yet blocking ads, are not even aware that blocking ads on their desktop browser or mobile device is possible. Given that ad blockers are often distributed to users without charge, the increase in awareness of ad blocking will be a major adoption driver, and it is possible that publisher action to curtail content to ad blocking users might actually further increase consumer awareness of online/mobile ad blocking.

In developing our forecast, we considered the blocking behavior in foreign countries (for example, Optimal data indicates companies like Germany, France, Sweden and the Netherlands already have blocking rates in excess of 20%, with countries like Greece, Ukraine and Poland in the 26–31% range) identified both positive and negative trends that will impact ad blocking behavior in the US, including new technical approaches for blocking, FTC or State AG actions on deceptive advertising, and national media attention that ad blocking garners. We have made all the survey data and full projection model available to anyone at http://adblocksurvey.com

Many technology companies (erroneously) believe they can get users to trust not only their browser, network or device as a communications tool, but also as a place to safeguard their personal information. Younger users are more likely to trust technology companies to provide solutions to safeguard their personal data, but even so, over 37% of 18–29 year olds don’t trust any entity to safeguard their information (rising to over 62% for 45+ aged users).

Online advertising companies can address many of the underlying reasons that consumers are flocking to block ads online. We recommend the following changes, one of which is industry collaboration around allowing users to fairly exercise a preference for not seeing any ads if they pay a fair amount across publishers:

  1. Canonical advertiser identity. Bad actors change names and pop-up again. Collaborate industry-wide to prevent this
  2. No malware, popups or adware. Create a three-strikes policy for providers who let anything through
  3. Universal ad-server approval. Too many firms allow any code on their site. Limit and enforce standards
  4. Restrict retargeted ads. Users get creeped out. No more than 3 pages of these ads, per action/product
  5. Three ads per page. Data shows that fewer is often better. Enforce limits on ads per page/minute.
  6. Full history of targeting data. See what data is being used to target any ad. Let the user delete/change/restrict
  7. Advertiser blacklists for users. Let user block specific advertisers from showing ads to them, easily.
  8. Label ads properly. “From Around the Web” and similar descriptions are deceptive. Enforce labeling for sponsorship/ads consistently
  9. Devote 10% of ad space to feedback. Have EVERY ad gather user feedback, and show why it was targeted. Make this visible to sites and users
  10. Allow paid ad blocking. Anyone should be able to pay a fair amount & not be hassled for blocking ads

About Optimal.com Corp.:

Optimal.com, based in Boulder and San Francisco, is the authoritative data source for consumers and publishers on the growth of ad blocking and alternative digital content monetization, and recently released a shared subscription service for websites at http://app.optimal.com. Optimal.com was founded by Rob Leathern with the goal of helping fix the broken ad ecosystem. More information about the company and its founders is at http://optimal.com

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