We recently spoke with Ben Williams, Director of Operations and Communications at Eyeo, one of the leading innovators in the ad blocking field, through its well-known offering, Adblock Plus, and one of the large ad blocking companies in the midst of this international battle.

Adblock Plus – How It Works

The company offers a free app, with the initiative left to the user to choose filters to “block annoying ads, disable tracking and block domains known to spread malware.” The service works on Android, Chrome, Firefox, Internet Explorer, Maxthon, Opera, Safari and Yandex.

The app enables two capabilities by default: 1) an ad blocking list, and 2) the Acceptable Ads list. The blocking list relies on EasyList, an open community project that establishes filters to block objectionable ads.

Acceptable Ads is an innovation of Adblock Plus. Gathering input from users and a broad community internationally, the company set about defining criteria for ads that can be “whitelisted,” i.e., allowed.

The criteria are publicly identified on the company’s site and include general items – page placement: “Ads must not disrupt the user’s natural reading flow:” Distinguishing the ad from the page content; and Specific size limitations. There are also very specific requirements for different types of ads, such as: Text, Image, Search, etc.

Note that a user can turn off the default settings. For example, if the user wants to block all ads, they can turn off the Acceptable Ads feature.

The company claims about 100 million active users for its app.

Adblock Plus’ Rationale

Williams explained that the company believes that advertising serves useful purposes. Its principals felt that an important step in the evolution of digital advertising was to control the proliferation of disruptive and annoying ads, while at the same time encouraging ads that were helpful and presented in a positive manner. The company states that its user surveys show that 75% of users would accept some advertising to help support websites (the other 25% wants to block all ads.)

The complicated part is in defining what is “Acceptable.” The company goes to great pains to assure people that it has relied on a very wide collection of opinions on this issue.

While the company maintains the process today, Williams explained that they would like to create a committee – including representatives from various stakeholders in both the advertising and ad blocking businesses, as well as other neutral parties, academics and the like – to oversee it in the future.

The Revenue Model

The company states that it seeks agreements with advertisers and sites, “which stipulate that only advertising matching our criteria will be displayed when Adblock Plus users visit these particular sites.”

The company’s revenue model involves a broad categorization of websites, between those considered “big” and everyone else. Williams states that for about 90% of websites that are not “big” there is no charge to be whitelisted. Then there are about 10% of websites ranked as big, meaning that they have at least 10 million ad impressions per month. The 10 million number is computed based on how many ads the site has that would be blocked because they did not meet the Whitelist criteria.

Williams explains that they work with the company to make adjustments in the ads to allow them to comport with the Whitelist criteria. He describes this as a “very manual process” that typically will involve changes to any of three characteristics of the ads –

• Size – e.g., not to take up too much space above the fold;
• Placement – e.g., not to disrupt the reader’s flow in reading the site’s content;
• Labeling – to be labeled differently than the content.

Williams states that the company works closely with the websites and computes how many ads are thereby permitted and how much additional revenue the ads bring in each month. Then Adblock Plus gets a minimum of 30% of that “additional revenue.”

He also explains that in a typical situation the customer may have some ads that clearly cannot be adjusted to qualify for the Whitelist, for example, a popup that takes over the screen, disrupting the reader. They may also have ads that clearly comply with the Whitelist. It is a third category, a middle ground, of ads that are questionable and need some adjustment that is the source of the company’s revenue.

Williams indicates that the revenue model has been working satisfactorily for the company. It has grown from about 30 employees in 2014 to 70 people today.

Ad Blocking Growth Leads to War

This type of revenue model has been attacked as “ransom,” “extortion,” etc., as the ad blocking issue has turned into a heated war. Adblock Plus, for example, has been called “an old-fashioned extortion racket” by the head of one ad industry group. Why has the issue heated up? Simply because ad blocking has caught on and grown rapidly in the past few years.

According to a survey by the Interactive Advertising Bureau (IAB), one of the principal combatants in this fight, 26% of U.S. users were actively using ad blocking services, 15% use them on mobile devices. Only 37% of U.S. users say they have not used ad blocking and are unlikely to use it in the future. A survey by Tune, a mobile marketing and analytics firm, found that 25% of smartphone users have installed ad blocking software and that the install growth rate had spike recently by 300%.

Publishers appear to believe that they lost perhaps $22 billion in 2015 and are losing nearly $3.5 billion in revenue per month due to blocked ads.

What About Facebook’s Initiative – “Love Your Advertising”

An array of tactics is already being used by advertisers and publishers to limit the proliferation and effects of ad blocking. Some of these include:

• Barring ad block users from the site (e.g., Forbes);
• Charging users for access to ad-free content (e.g., Wired);
• Persuasion – trying to convince the blockers that it is not a good thing to do;
• Using “ad block blockers” (e.g., PageFair, SourcePoint);
• LEAN (“Light, Encrypted, AdChoice supported, and Non-invasive ads”) – Criteria and scoring methodology being developed by the IAB for release in 2017 to help improve customer experience with, and acceptance of, advertising.

Recently Facebook announced a new approach that will apply to its desktop, not mobile, users and ads. Facebook is basically blending ad info into the HTML content flow, to make the ads indistinguishable from the content.

The Facebook announcement was combined with another announcement regarding users’ Ad Preferences, which stated in part that they were:

making ad preferences easier to use, so you can stop seeing certain types of ads. If you don’t want to see ads about a certain interest like travel or cats, you can remove the interest from your ad preferences. We also heard that people want to be able to stop seeing ads from businesses or organizations who have added them to their customer lists, and so we are adding tools that allow people to do this. These improvements are designed to give people even more control over how their data informs the ads they see.

There already is a very active back and forth in the industry on the subject of whether ad blockers can come up with workarounds to Facebook’s technology for disguising these ads. While some success has been reported on this front, Williams of Adblock Plus told us that in view of Facebook’s massive resources and technology knowhow there are likely to be repeated rounds of workarounds, followed by revised versions of the software by Facebook. He is reasonably confident about the ability to find workarounds because, as he put it, “There is an incomprehensibly large open source community that will work on them.”

In sum, it seems to us that Facebook’s tone is that they give the user a say in their ads and that users in return should learn to love their ads.

Our Take – Towards a Possible Reasonable Solution?

First, let’s put ad blocking into perspective. It is a very old technique. Probably the most economically effective ad blocker to date was invented in the mid-1950s, the TV Remote control. As an article from interface design firm Punchcut stated: “The wireless remote and its mute button, introduced in 1955, were designed specifically for ads.” (“Lost Signal: 7 Lessons From TV History.”)

The exact economic impact of how many ads were blocked by remotes, and later DVRs, may not have been measured, however, with the devices being used by perhaps billions of viewers (and since TV ads could be “blocked” by just leaving the room), the question arises: Why the big fuss, the hyperbole and exaggerated rhetoric about something so historically-rooted as ad blocking?

We suspect that the answer lies in the change in the nature of the relationship of the viewer, or listener, to the ad in the digital age. In earlier times it was extremely difficult, or impossible, to get any precise measure of how many people actually saw or heard an ad. We owned a magazine at one point and in many discussions with other advertisers and publishers learned that effectiveness of ads was deduced largely from product sales or overall results and couldn’t be tied back to how many people actually watched or read the ad.

Contrast that to the digital age where web advertisers have the tools and analytics to pretty much know exactly how many (and, often, even who) clicked on or at least was exposed to their ad.

These tools have, understandably from a commercial point of view, led to those in the advertising chain wanting to get paid for every last click, exposure, eyeball, whatever they can get paid for.

Demonstrably it has led to a lot of garbage advertising – popups, text ads that interrupt content, audio ads that come on automatically when you enter a page, and so on.

In our opinion, it has also led to a sense of entitlement on the part of advertisers and publishers; a view that: “We’re entitled to every single eyeball that we can possibly get to watch or listen to our pitch and anyone who interferes is stealing from us.” Some have even suggested that there is some kind of a legal right to this revenue and that ad blockers are violating laws.

In our view, since resistance to advertising has been ingrained in people for generations, it’s naïve to pretend shock and outrage when all that has happened is:

As new digital media outlets have grown and new digital techniques for advertising have been tried, new digital techniques for blocking some (or many) of those ads have also emerged.

We think the obvious solution is sensible discussion about reasonable limits to the type of advertising that should be allowed on digital media. We believe that the approach that Adblock Plus has pioneered of trying to define Acceptable Ads is partway towards a solution. If the company can succeed in forming the type of committee to oversee this effort, that Williams described to us, it would be a further positive step. The LEAN approach worked on by IAB also sounds like a step in the right direction. (IAB has also promoted a concept called DEAL – Detect, Explain, Ask, Lift/Limit – which encourages publishers to engage with consumers on the subject of ad blocking.)

Logic would appear to lead to some sort of self-regulation by the industry, which appears to finally be aware of the customer antipathy that abusive advertising practices create. Adblock Plus emphasizes that this is the true mission of the company, to get the advertising/publishing industry to adopt standards. We asked Williams, if this happens, what role there might be for Adblock Plus itself and he responded that he believes that because of the company’s vast experience with the worldwide community of users, its inclusion would be needed to gain widespread legitimacy for any industry initiative.

Note: Ad Blocking and Mobile Apps

A survey and report from PageFair, an anti-ad blocking company found that 419 million smartphone users are blocking mobile web ads. It stated that in-app ads also “can now be blocked.”

Williams, however, states that ad blocking of ads in mobile apps is a “night and day” difference from ad blocking of web-based ads. In general blocking of in-apps ads has proceeded very slowly because it involves different technical considerations than blocking of website-based ads, the latter of which can blocked by a browser plugin.

So the outlook for ad blocking of apps-based ads is highly uncertain. (See, e.g., “Why Ads In Apps Can’t (And Probably Won’t) Be Blocked,” Marketing Land 10/21/15.)

Visit their website: www.adblockplus.org