How I Broke the Internet
I have to apologize for breaking the Internet. Yes, it was me. I'd have made my mea culpa sooner, but I didn't realize how great a wrong I'd done. It was selfish of me to download ad-blocking software. I thought only of enhancing my own online experience. It never occurred to me that I would be the cause of so much trouble.
The first hint that I was doing something wrong came when I visited a website and saw, where ordinarily an advertisement would have popped up, a plea that I consider either unblocking ads or making a contribution. Otherwise, I was told, the free Internet was threatened.
Evidently, the threat is real. The 2015 Ad Blocking Report, released earlier this month by PageFair and Adobe, estimates that some 16 percent of U.S. consumers used ad blocking in the second quarter of 2015, a 48 percent jump in a single year. The global news isn't much better for online advertisers: In Europe, for instance, the year-over-year increase was 35 percent. The report estimates lost global revenue due to blocking software at nearly $22 billion. "For at least some players in the media industry," wrote tech reporter Mathew Ingram in Fortune, "this looks like a cross between a Class 5 hurricane and a neutron bomb headed straight for their balance sheets."
Adblock Plus (the dominant app, and the one that I use) hides animated, pop-up and video ads, plus those that otherwise "obscure page content." Unobtrusive ads are allowed, and advertisers can apply to be added to the "whitelist" of ads that are permitted past the filters. The idea is to balance the need of websites to generate revenue with the irritation of users forced to click their way past annoying ads to get where they are going.
It's the whitelist that leads to advertiser complaints. Some have even compared the tactic to blackmail. "Trying to actively filter ads from websites is stealing," thundered a recent post at the tech site Tom's Guide. "Every time you use one of these services, you're enabling an extortion racket where ad-blocking companies charge content providers money to let their ads through the filter." German publishers and broadcasters have recently lost lawsuits against Eyeo GmbH, distributor of Adblock Plus. The court rejected their contention that blocking their advertising messages unfairly deprived them of revenue. (The publishers may appeal.)
How big are the potential losses? In a separate blog post, PageFair calculated that Google would be losing about $6.6 billion worldwide annually, except for the fact that it pays Adblock Plus a rumored $25 million for whitelist status, enabling the company to recover some $3.5 billion. If all of this is correct (and much of the calculation seems speculative), Google is still worse off by more than $3 billion as a result of ad blocking.
Then there's the matter of Google's upstream clients. Apple, for instance, receives a reported $1 billion annually for setting Google as its default search engine. But year-over-year use of blocking software on Apple's Safari browser has increased by a heady 71 percent, according to the PageFair report. With such software expected to be bundled into iOS 9, the authors say, "we expect ad blocking on mobile Safari to trend towards the levels seen in the mobile version of Firefox."
For Firefox mobile users, that level was 16 percent in June of this year, and climbing. The likelihood that Safari users will follow suit led the financial site Seeking Alpha to conclude: "Apple would benefit more by getting a revenue-sharing deal on Safari search engine ads." In other words, rather than be paid by Google, Apple should behave like Google.
One could argue that publishers have brought this mess upon themselves, with their emphasis on endless pop-ups, videos that self-animate, ads that dart on and off the screen, and the rest of the chaotic commercial menagerie of the typical site. Fortune's Ingram takes that view: "In the end, readers likely won't shed a tear as they turn on their ad-blocking software or click away to some other site that doesn't treat them so shabbily. And whose fault is that? You have to dance with the one who brought you."
Yet this criticism is incomplete. Online advertising wasn't always as intrusive as it is now. Fifteen years ago, ads were confined mostly to the margins. Web pages looked a lot like magazine pages. But users over time developed "banner blindness" -- that is, the ads stopped registering. And although why advertising works at all is the subject of hot theoretical dispute, everyone agrees that the target can never absorb the message if the he or she never knows the ad is there. Thus ads had to become more intrusive in order to be noticed.
This evolutionary process is the reason that the financial writer Felix Salmon insists that the concern over ad blocking is overblown. Companies will find creative ways around the filters, he predicts. Salmon offers the example of "native advertising." (In native advertising -- which seems to be growing, at least on social media -- the commercial content on a site is indistinguishable from the content the user is seeking.) Some observers have also looked to a future dominated by user-generated advertising, a category that, when successful, can generate plenty of buzz.
I don't know what the future of advertising will look like. I'm in the embarrassing position of agreeing with both sides. I hate the pop-ups and animations that try to grab my attention, but I quite understand the need for publishers to pay their bills. The Internet can never really be free. But like most of us, I want it to feel free. When we evolve a way to find that comfortable compromise, I'll happily turn off my ad-blocking app. Until then, I'll probably go on wrecking the web.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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