How the Ad Industry Should Respond to Ad Blocking

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As online ads have become ubiquitous, ad blockers have become more and more popular in recent years. In fact, the top paid iPhone app is now an ad blocker, and that presents a myriad of problems for the entire web publishing ecosystem. Content creators and publishers may find their ability to monetize their work to be limited, while advertisers fear that they will see a dramatic decline in the number of impressions they are able to generate and the number of people they influence.

The results of initial studies on ad blocking technology range from worrisome —UBS says ad blocking technology will only impact ad revenues by $1 billion — to downright terrifying, as Moz and Fractl found that nearly 2/3rds of millennials are already using an ad blocker.

Early reactions to ad blockers have also been varied, as some publishers havesimply disallowed their use, while others have moved to environments where they believe they’ll be out of the reach of ad blocking. Naturally, Twitter’s users had an awful lot to say, including whether or not it was morally wrong to use an ad blocker, and what the impact could be on the overall user experience. Some in the industry have gone so far as to call it “robbery, plain and simple.”

In addition to the controversy, it seems that advertisers may be spending their money in the wrong places as well. According to eZanga, with Emerging Insider Communications, advertisers ‘waste’ over $6 billion a year in fraudulent advertising. There aren’t many- if any- regulations on where ads show up, who sees them, or if they’re effective. According to the report, marketers spend between 30% to 70% of digital budget on bots, not human impressions. Needless to say, this is highly problematic.

While publishers and advertisers hope for a long-term solution, there are a variety of challenges to confront in the short term. To overcome these hurdles, individuals and teams in the industry will need to address the concerns that carry the most direct impact.

Publishers: For the time being, publishers must figure out how to accurately assess the value of their inventory and price accordingly. They’ll also need to understand the percentage of their audience that is using ad blockers, because there can’t be a linear relationship between the decrease in “advertisable audience” and CPM, if publishers want to stay in business. Publishers will also need to play a pivotal role in creating new types of ads that readers and viewers won’t want to “turn off.”

Content Creators: Perhaps the most underreported piece of the story thus far has been the impact that ad blockers can have on the people who actually produce content. For them, it’s crucial that the quality of their work keeps audiences engaged and coming back for more content. Anything that results in smaller audiences will combine with a smaller number of people seeing ads and compound the issue at a publication.

Agencies: Whether ad blockers lead to higher CPM’s, less reach, or something else entirely, it will be critical for agencies to continue showing their clients the value they’re bringing to the table. By way of example, the Moz and Fractl study cited earlier says that more than 60% of millennials aren’t seeing ads. As an agency, it will be imperative to either find news ways to reach that 60% or to generate more interest and stronger results from the remaining 40% of millennials.

Agency Creatives: The previous bullet addresses a large portion of the concern that agency creatives are seeing, but there is another issue creatives should be considering as well . For the first time, one bad apple can actually spoil the whole bunch. Each consumer who has chosen not to use an ad blocker is literally one irrelevant ad away from changing their decision. Creatives now need to work for both their clients and their industry.

Ad Exchanges: Ad exchanges will need to do everything in their power to update their technology to account for a huge range of possible outcomes as well as integrate viewer data to deliver more targeted ads paired with relevant content. Ad blockers add a new point of failure that should be tracked, and exchanges will need to be able to address this concern.

Advertisers: The people behind the marketing initiatives and brands we’ve come to know are, at the very least, going to need a bigger appetite for creativity, and to some extent, for risk. Assuming publishers create new ways to reach an audience, and agencies find ways to make up for lost impressions, we’re going to see new and unique marketing options (both digital and otherwise). Brands that are ultimately successful will allow their agencies and their internal teams more latitude for these opportunities.

While the word “disruptor” is thrown around far too often in the tech industry, the proliferation of ad blocking technology has the potential to change the status quo for the online advertising space. Publishers, agencies and advertisers will need to work together to find ways to engage the same customers who have actively taken steps to communicate they are not interested in seeing ads. Ad blocking technology isn’t a death knell for the industry, but it is certainly a wake-up call that will require a strategic investment of time and budget.