Monday, September 07, 2015

Widely Cited $21.8B Lost from Ad Blocking May be Inflated

Recently, several reputable news outlets including the New York Times and Wall Street Journal have cited a figure from a study conducted by Pagefair that digital advertising publishers could lose $21.8B this year as the result of ad blockers.  However, an article published by Buzzfeed claims this number could be significantly inflated due to the following:

  • Supply & Demand - The argument fails to take into account supply and demand dynamics.  If ad blocking results in fewer ads being served, the effect will be that advertisers will have the same budget to spend on less ad space.  Therefore, prices for ad space should increase and publishers will benefit from the increase in prices.
  • Mobile Apps - We all know that mobile has been a growing trend, with consumers spending more time on their phones than their computers these days.  However, even if consumers are able to block ads on their iPhones in Safari, the effect is limited because most time spent on mobile is with apps.  Ad blockers can't block ads shown in apps.
  • Advertisers will Find Other Outlets to Reach Consumers - There will be a "waterbed effect" - reduced reach in one area will result in a redistribution of ads and increased reach via other outlets.

1 comment:

Johnny Knocke said...

Hey Daphne,

This is an interesting article and i'd like to comment on it. I agree with this article that $21b figure is inflated. I think that the mobile ecosystem is rapidly changing with companies investing more money in apps, which in turn allow for these companies to more accurately market their ads within the apps because they know who is using the app, unlike within a safari browser. Advertisements within apps are smoother than browser apps and better integrated into the app in order not to block text or part of the screen that you are trying to view. In turn these advertisements should yield better revenue per click and therefore be more valuable than those ads that are being blocked in safari.

--Johnny Knocke