The Ad Blocker Dilemma
Imagine, you’re about to jump in the shower, and begin scrolling through one of your favorite online video services to find something good to listen to while you soak. After a few minutes, you find what you are looking for, tap the screen, and put your device of choice down as you pop under the water. You close your eyes, expecting a soothing song, when all of a sudden you hear: “Hey champ, do you want to make it rich??? Of course you do loser! I, the perfect man, have just the book for you.” Taken out of your relaxation by the sound of another predatory advertisement, you take a deep breath and decide to let it pass, only to still be listening to it a full two minutes later. I won’t say this was the exact scenario that led me to install my first ad blocker, but it’s not far from the truth.
I certainly was not alone in my adoption of ad blockers. According to Statista, in 2021, 51% of desktop users and 30% of mobile users utilized ad blockers for most or all of their internet traffic. Total ad block penetration rate has only increased in years, with an increase in ad blocker utilization of 80% from 2014–2021. Given the difference in user experience between ad block enabled and disabled internet browsing, this increase is in no way surprising.
Beyond user experience even, the explosion of data brokers and cyber crime in recent years has added another reason for individuals to utilize ad blockers: security. While many view ad blockers as just a way to avoid viewing unwanted marketing products, a side characteristic of many of the popular ad blocking software is a limitation on the collection of personal data or information from visited sites. The security benefits of utilizing ad blocking software have been recognized to the point that, in a December 2022 public service announcement, even the FBI recommended individuals utilize ad blocking services to protect themselves online.
Unfortunately, despite its consumer benefits, ad blockers have significant economic impacts on the sites that users frequent. Calling back to the Statista report, it is estimated that in 2021 a total of $12.12 billion was lost due to the utilization of ad blocking software. This loss is compiled through both direct advertising revenue, as well as potentially lost customer traffic of the sites purchasing advertisements. No matter how break it down, those $12 billion in losses will have a substantial impact on websites’ bottom lines. This impact has caused those who generate income via advertisements, from individual content creators to larger websites, to ask users to limit ad block use with respect to their content, to minimal success. In essence, the core issue here is that ad block users do not directly experience the negative impacts of employing the software, and are thereby unlikely to change their usage habits.
Acknowledging this situation, companies have attempted to either directly prevent ad blocking or develop alternate revenue streams. Recently, YouTube has attempted to implement both of these methods, to mixed success. In 2015, YouTube released a premium subscription service which removed advertisements for a monthly subscription fee. In 2022, YouTube made a total of $11 Billion from this service alone. While YouTube premium is a definite success, the firm’s other attempt at limiting losses has not been. In Fall 2023, YouTube amended its terms of service to prohibit the use of ad blockers, and updated its software to prevent the functionality of the largest ad blocking players. Not only did this change not have the intended effect, with key ad blockers updating within days, but it sparked public outrage and solidified the perspective of those advocating for ad blockers. While YouTube’s near monopolistic position in video streaming allows it to avoid many of the longer-term consequences of its decision to impede ad blocking, for a majority of sites users can and will likely move on to competitors should they feel they are being inconvenienced or attacked by the offending platform.
As demonstrated by the above, attempts to prohibit ad blocking will not be a successful strategy for most internet platforms. Users who utilize ad blockers will continue to do so, either finding ways around attempted limitations or switching platforms altogether. Instead, platforms should focus on either addressing users’ key concerns, be they privacy, unwanted messaging or intrusive interruptions, or adding value to the customer experience through monetization practices to have the best long-term impact. In this manner, the video streaming service Twitch has been a pioneer in positive monetization. Offering a mix of YouTube Premium like service in Twitch Turbo for non ad blockers to remove ads across the platform, creator-specific subscriptions (which offer special chat emotes and badges to subscribers) which allow for users to support specifically desired content, or twitch bits which allow for monetized direct interaction with streamers, Twitch has found a way to introduce consented monetization throughout the site. In addition, in recent months Twitch has been piloting different ways of showing ads on screen. Rather than interrupting the user experience with unskippable ads, they have begun shrinking video streams to encircle them with 15-second banner ads embedded in the video. This bypasses ad blocking without adding significant user interruptions.
While I have focused mostly on examples from video streaming services for the purpose of this exposition, the key overarching concepts remain for all websites that currently base their revenues on user advertising interaction. In order to remedy the economic impact of ad blockers, look further than the gut instinct to solely limit them, and instead focus on how you can derive monetization from positive consumer experiences and monetization consent.
