Ad blocking seems to be the topic du jour, and it is not hard to see why: ad blocker usage grew 35% between Q2 2014 and Q2 2015, and $22 billion of ad revenue will be lost to ad blockers globally this year.
Currently, an estimated 77 million people are using ad blockers in Europe – over 20% of internet users in markets like the UK, Germany and France. So as OTT viewing takes off in Europe, how should broadcasters and operators think about this problem? What solutions are open to them? How can the broadcast video empire strike back?
Ad blocking is sometimes thought of as a display advertising problem, and it is likely the case that ad blockers have grown in popularity primarily as a response to the intrusive and annoying pop-up ad formats that have proliferated in the digital space – a world away from the five-minute, 30 second spot ad break with which broadcasters and audiences are familiar and comfortable in the linear TV world. But ad blockers do not distinguish between types of digital advertising, and they block pre-, mid- and post-roll video ad formats too. TV and video content is particularly expensive to produce. Premium TV content relies on the high CPMs commanded for video advertising on all platforms to help fund the golden age of TV that we are currently experiencing. And as OTT viewing explodes, businesses need to replace their linear ad revenues with digital ones. So a broadcaster with 100 million monthly online video views, 20% ad blocker usage among its audience, an 80% fill rate and a $15 CPM would be losing $240k per month to ad blocking; almost $3 million in a year. And that is if they are only serving a single pre-roll per video – if they are serving multiple pre- and mid-rolls, as would be common for a large broadcaster, then the lost revenue would amount to many times as much.
And now ad blocking is coming to mobile, users are more aware of the option to use ad blockers, and ad blocking is becoming a more common phenomenon, no longer the preserve of the early adopter tech geek. So, if this is a growing problem, what options are there for broadcasters and major video publishers?
Option 1: Confront your viewers. Some publishers, most recently City AM in the UK, have begun to block users’ access to content if they have ad blockers in place. Directly confronting the viewer will draw their attention to the ad blocking issue and deals with the issue head on, but the media company risks losing viewers who cannot be bothered to change their ad blocking settings, or do not know how to.
Option 2: Consider alternative revenue models. Other publishers, for example Bild in Germany, offer ad-blocking users the option to pay a subscription to use their sites and apps ad-free. This gives the user a choice about which model they prefer to use to pay for their media. However, as with option 1, users may just find this onerous and switch to other media sources rather than bothering to subscribe or disable their ad blocker.
Option 3: Native ad formats. Another way to get around the ad blockers is to integrate the advertising so tightly with editorial that the ad blocker cannot distinguish it as advertising. The downsides of this include the sacrifice of editorial neutrality and the high sales and production overheads associated with producing custom, sponsor-supported content every time. It is simply much easier to trade standardised video ads at scale.
Option 4: Pay tribute to the blockers. Some ad blockers offer the option of paying them to not block ads on a site. Obviously this costs money, but it also risks being “held to ransom” by these companies and many media businesses feel understandably uncomfortable about this model and the implications of it.
Option 5: Technology-based solutions. There are three main ways to “block the ad blockers” technologically: 1) drive users to “walled gardens”, like apps, where ad blockers do not work 2) implement server-side ad stitching, so that ad blockers do not recognise ads within your videos 3) by-pass the ad blockers with a plug-in such as Ooyala’s Pulse Unlock solution. Look out for a deeper look at the various technological solutions to ad blocking, and the downsides of relying solely on server-side stitching, coming up in Part 2 of this article.
So how is your company confronting the implications of ad blocking? Which option best balances the need to preserve revenues with respect for audience preference and user experience? One thing is for sure: In 2016 broadcasters will need to consider the impact of ad blocking and find strategies to protect their digital revenues.