2019 was an increasingly scary year for advertisers, ad agencies, ad tech companies and digital publishers. While Ad blocking didn’t get as many headlines in 2019 than in previous years the fact remains that ad blockers are currently being used by up to 45% of consumers in North America and the impact is profound.
We learned that one of the main reasons for ad blocking not getting the headlines it deserved came from people across the industry burying their heads in the sand. Some publishers ignored the issue all together and didn’t even know the level of ad blocking on their site. Others who used web analytic products claimed their block rate was in the 5-10% range, so no big deal. Unfortunately they were blind to the fact that ad blockers block pretty much every analytics tool in the market, so their false positive result masked the true impact.
Nick Flood, deputy managing director of digital at Dennis Publishing said last year that “Ad blocking hasn’t vanished. It’s still a threat that can’t be forgotten. Publishers still need to find a route forward,” I would add that everyone in the advertising ecosystem needs to find a route forward too. Read on.
Indeed ad blocking has become so popular that last year even scammers now serve up fake ad blockers that trick you by using a name that is the same or similar to a real, trustworthy ad blocker. A VPN Monitor report last November by Ariel Hochstadt showed that they secretly collect data about consumer browsing habits and can even change browser’s behavior. A clear though chilling reminder that ad blocking is a huge challenge and is here to stay.
So here’s a brief summary of what we learned last year across the advertising ecosystem and then pointers as to how we can to overturn the gloomy outlook for 2020.
2019 saw US digital advertising spend overtake traditional advertising via newspapers, radio and TV for the first time with estimates from eMarketer of more than $129 billion. The elephant in the room for advertisers is why? What returns am I getting in reach, recognition or conversions. If nearly 20-40% of my target audience aren’t seeing my ads, where is the money going? Worse still, we learned, based on the demographics of an advertisers target audience, that the size of their blocked audience can be significantly higher than 25%. As described later there was a big push by advertisers last year to take direct control of their brand development and ad spend and bring transparency to and control over what’s really happening.
For ad tech companies
The big news for ad tech companies was the rise and fall of programmatic advertising. The intrusive impact of this form of advertising especially when used to track consumer behavior and worse still, capture and sell consumer data, was a major cause for the expanded use of ad blockers in 2019. It caused a flurry of regulatory activity in Europe and subsequently the USA to protect consumer data. It was reported in an article by Jessica Davies in Digiday, that programmatic ad buying plummeted in Europe highlighting that “ad exchanges have seen European ad demand volumes plummet between 25 and 40 percent in some cases, according to sources. Ad tech vendors scrambled to inform clients that they predict steep drops in demand coming through their platforms from Google. Some U.S. publishers have halted all programmatic ads on their European sites”.
For ad agencies
2019 saw advertisers becoming increasingly skeptical about the value of digital agencies. A study commissioned by Bannerflow, in conjunction with Digiday revealed a whopping 91% of brands have moved at least a part of their digital marketing operations in-house. Ad agencies were a major contributor to the deployment of programmatic technologies described above but they found it increasingly difficult to explain and justify their media buys to their clients leaving advertisers largely in the dark about how their ad spend was being used and the brands return on this strategic investment.
Considering that the majority of publishing websites depend on ad-supported business models to sustain themselves, ad blocking proved to be a big problem in 2019 with revenues being squeezed and huge losses due to ad blocking. According to Informa Group, publishers worldwide stand to lose $35b by 2020 if the risks from the blocked web aren’t mitigated. The newspaper industry is in a death spiral and the pace of this decline remains unabated. New research shows that over 2,000 US newspapers have closed since 2004, while others have had to resort to downsizing or consolidation to cut expenses in order to survive.
Publishers’ attempts to mitigate ad blocking in 2019 also didn’t work. Asking users to white-list, forcing ads on ad block users and blocking access to sites have all failed to produce any meaningful results. If anything they have made a bad problem worse. Even asking users to pay to see content has failed, unless of course you are one of a very few sites that can demand such attention.
What 2020 has in store
The good news is that every cloud has a silver lining. In 2019 we learned that a large number of ad block users are willing to give up their ad free experience for websites and brands they care about as long as ads are not annoying and don’t track or invade their privacy. We further learned that publishers who offer permission-based engagements to connect with consumers on behalf of brands, mitigated ad blocking, giving consumers choices and making their lives easier while respecting them throughout. The result is increased advertising revenue for publishers and massively improved brand reach, recognition and conversions for advertisers.So consent is the key to success in 2020,
We demonstrably proved in 2019 that by giving back control to ad block users, offering them choices to opt in or not and then making it frictionless to give permission, had a dramatically positive impact on their behavior. In fact, we achieved results from ad blocking audiences that far exceed those seen from consumers that don’t use ad blockers. With opt-in rates ranging up 70% depending on audience demographics, we delivered a 3 to 10 X click through rate (CTR) than respective non ad block audiences, nearly half of all ad impressions and significantly increased conversions.
It is now certain and proven that treating ad block consumers with respect, meeting them in their space and on their terms is the perfect way forward for all concerned. Advertisers maximize brand development, advertising reach and conversion at one end of the spectrum and publisher generate substantial new revenues at the other. All thanks to having access to a substantial audience that has been completely unavailable to them, until now.