All you need to know about ad blockers, the death of digital ads and the end of clickbait sites.

As part of a series on the Future of Advertising, Chris Arnold has gone through over 100 blogs, articles, reports, comments, interviews, videos and research on ad blockers – now used by over 198 million people and growing over 41% YoY – to bring you a definitive summation of the crisis that is hitting digital advertising like a tidal wave and what it means for brands, publishers and agencies. 

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MacBook-Adblock

“Digital advertising is dead. Long live digital advertising,” are the parting words of a speaker at a digital conference, as he leaves the stage to a round of applause, but it may actually be too late. He may also have used the phrase, “Online publishing is dead, long live online publishing.”

It took Apple to announce that it had an ad blocker or ‘content blocker’, in its new iOS9 update on the iPhone, to take digital’s biggest crisis to a national level of awareness. Now everyone knows about ad blockers, which means its adoption could soon rise to 85%, meaning it could wipe out the majority of digital ads and a lot of websites.

Also launched this year was an ad block browser on Android. Both Android and Apple have created an easy way for consumers to block ads on billions of mobile devices, which was the next great hope for digital ad revenue.

Word is, O2 are considering installing network-level ad blocking to improve the experience for customers in bandwidth-constrained areas, meanwhile mobile operator Three will start blocking adverts at network level in the UK to rid sites of “excessive, intrusive, unwanted or irrelevant” content. .

The networks see the ads as slowing down the customer’s downloads while eating away at their data. It may be possible in the future that the networks start charging companies like Google and Facebook for riding on the back of publishers, showing that even the networks don’t like the ads.

PageFair (a company that monitors ad blocking) reports that 22.7% of web surfers are currently blocking ads and the use of ad blocking is growing at a rate of 41% per year (some claim over 80%), but this could dramatically escalate with the publicity Apple has given it. According to Google Trends, searches for the term “adblock” have doubled in the past year.

One of the most revealing insights into the scale of what is happening comes from the Ad Blocking Report (created by the IAB and YouGov).

  • 18% of digital users in the UK currently use ad-blocking software, which estimates to be 12 million users.
  • 16% in the US, which grew 48% during the past year, increasing to 45 million monthly active users.
  • Europe grew by 35%, increasing to 77 million.

That’s already a lot of people not seeing the ads.

PageFair estimates that ad blocking will cost publishers worldwide around $22bn in lost ad revenue in 2015, and much more in 2016, UBS Securities puts the damage at $1 billion for mobile devices alone.

It’s estimated that 41% of 18-to-29 year olds use ad blockers (in colleges it’s much higher) and now it’s reached tip-over, adoption is growing faster among groups like Millennials.

Ad blocking is more prevalent among men surveyed (23%) than women (13%) and the propensity to block ads decreases with age – from 35% of 18-24 year olds to 13% of people 55+. (IAB research.) But all that can change overnight, literally.

Among those currently using ad blocking software:

  • 71% are using it on laptops
  • 47% on desktop PCs
  • 23% on mobiles
  • 19% on tablets

Ad blockers are now the top downloads on iTunes. Peace, developed by Marco Arment, former Tumblr developer and Instapaper creator, shot to number one on the iPhone app store before he had a crisis of conscience and withdraw it just two days later.

However apps like Crystal and Adblock Fast, 1Blocker, Shine, BlockBear, Refine, Purify and Adamant (to name but a few) have no regrets. Adblock Fast has only been out for about a month on Chrome, Opera and iOS 9 and already has over 75,000 users.

More than one third of Greek, Polish and German internet users run ad blockers, and it’s estimated that the loss to German publishers is over €800 million a year (according to ad viewability measurement company Meetrics).

One-fourth of the surveyed publishers and marketers said they had experienced a loss in revenue potential, or revenue of 10-20% caused by ad blocking. The publisher of the AWL said that up to 85% of it’s revenue is vulnerable to ad blockers.

Publishers are concerned that with less money coming through advertising they won’t be able to fund sites or even invest in improving them. But critics suggest publishers need to rethink their economic models.

SPAM WEB MARKETING

A typical example of pop-ups getting in the way. No matter how hard we tried we couldn’t remove them. Would anyone do business with a pushy salesman who annoys them? No! Classic example of what Americans call ‘rude marketing.’

Adblockalypse

At first this may seem hype but in fact it is without doubt true. The online publishing industry, sales house and the media industry are in crisis, but it is one they have created. They have literally killed the goose that laid the golden egg.

The “abuse of the consumer at the hands of advertisers” is not an unfair comment from a blogger, and now the consumer is able to fight back.

As one commentator, reacting to an article wrote, “advertisers let loose on the web is like a bunch of paedophiles let loose in a children’s playground, they just can’t help themselves.” Strong words but it reflects how strongly people feel.

It’s now almost certain that ad blockers will kill off the digital ad industry model as we know it, just like TPS (Telephone Preference Service) killed off cold calling. This crisis will certainly change online publishing forever, forcing a new economic model, something we have seen in both retail and the music, film and TV industries. The lesson here is to stop defending, accept the consumer has the power of veto and start innovating

“Solution strategies such as increasing the relevancy of advertising significantly could slow down the proliferation of ad blocking; however, they cannot stop it. “ (BVDW report on ad blocking.)

Digital ads won’t completely die, but they do need to evolve and we are talking more revolution than just evolution

“90% of experts believe that the impact on the German advertising market through the use of mobile ad blockers will force change, ranging from significantly to very significantly. 85% of the experts believe that mobile ad blockers will prevail.” (BVDW report on ad blocking.)

It’s ironic that an industry that called traditional TV advertising a dinosaur is now one itself. But then TV called radio one too when it first launched. What goes around comes around.

Can we trust online anymore?

This just adds to recent concerns by brands that people aren’t seeing their ads as much as figures claim, and accusations of spin and even fraud, which is forcing clients to reconsider their digital ad spend.

According to an eZanga report, advertisers in the US waste more than $6 billion a year due to fraud –  networks of ad bots – machines creating countless non-human impressions that brands pay for.

I certainly wouldn’t trust any numbers from digital, we only have to see the scandal of social media and how easy it is to fake followers, likes and views. That’s not to say it’s rife with bad practice but it’s an industry that is poorly regulated and too easy for dubious players to move into.

Consumers themselves are become less trusting of the web due to mass fraud, phishing, malware and sites that over claim and under deliver.

Why consumers love ad blockers

To quote one blogger, Well if you managed to produce meaningful ads and not just some crap, maybe I will be interested. However, I don`t believe in the current advertising ecosystem on the web. It just sucks.”

The number one reason is they hate all the ads “too intrusive, often irrelevant and bad, really bad” was one blogger’s comment. Nearly 48% cite the fact ads interfere with their online activity.

The second reason for installing ad blockers is in fact privacy – consumers hate being spied on and followed about. “For many of us it’s the invasion and stealing of our personal data that makes us use ad blockers.”

The third is because it slows down the system and uses up your data, which is a big issue on mobiles, “why should we pay to get ads?”. Top of ad hate lists; interstitial ads and pre-roll videos.

Other reasons include protecting their kids from ads, fear of malware, reduced battery life on mobiles and removing social media widgets.

And finally, social norming, “because everyone else is using it” (college student).

In the US they have created a new term for intrusive ads “RUDE MARKETING“. When you humanise it you realise why consumers want to block ads online.

Ad blockers like Adblock and Adblock Plus (ABP by Eyeo) are here to stay and are forcing change. Eyeo’s CEO Tim Schumacher advises marketers to “get creative or get lost”, adding that brands must learn to live with it.” He makes no apology for the change he and other ad blocker software developers are forcing upon the industry, hopping he’ll actually force “a better advertising landscape” for digital and mobile.

Adblock Plus is the world’s number one ad blocker, and has been downloaded over 300 million times on desktops and has over 60 million active global users, Adblock has over 40 million – which is growing daily. Both are available for mobiles. Schumacher’s ambition is for ad blockers to reach 100% of millennials.

Besides display ads, it can block tracking, malware domains, banners, pop-ups and video ads – goodbye pre-rolls!!

Ironically he’s a great lover of advertising and believes that in fact ad blockers are doing the industry a service by cleaning up the web of bad ads, bad content (supported by ads) and bad practice. “We want to force online advertising to be more creative.” He also wants to force advertisers to be more responsible.

But he’s not alone in his dislike of badly targeted ads, Facebook’s head of ad tech, Dave Jakubowski believes that on mobiles the banner ad is intrusive and redundant and needs to go.

Adoption of ad blocking is greatest among the very people advertisers want to reach like youth, millennials and affluent middle classes. Most students now have it so that trying to target advertising at them is almost pointless.

Of course ad blocking isn’t new, TIVO allowed people to skip the TV ads, MPS blocked direct mail and TPS blocked sales calls and the data protection act was designed to stop companies abusing data – all resulting in a massive rethink by the ad industry

Will gaming sites win or loose?

The PageFair / Adobe ‘The cost of ad blocking’ report predicts that the gaming industry could be one of the biggest victims of ad blockers as visitors to gaming websites are significantly more likely to block advertising. Given the cost of creating games against a simple editorial site, ad income is critical to earning back their investment.

The video gaming site Destructoid discovered through PageFair that nearly half of their 3 million monthly users had ad blockers, costing the company millions in lost revenue.

Kids have sussed that if you want to play a game app ad free just put the phone on flight mode – who needs an ad blocker?

But good gaming sites get loyal followers so there is much more opportunity to appeal to them to pay. One idea has been a sort of crowd funded model, where players are asked to pay but the fee goes towards the next game in development, giving them a sense of ownership and engaging them emotionally.

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Is blocking ad blockers smart or dumb?

To quote one blogger, “Yesterday I hit one that said, “Disable your ad blocker to view this site.” COMMAND – not even a request. I left. There isn’t a website in the global web-o-sphere I need to see that badly!”

Yes, for about 5 minutes because no sooner have you created software that blocks an ad blocker than they have updated theirs and it’s up an running again.

But a lot of experts advise against it as this will only anger consumers. “Any brand that gets past a consumer’s ad blocker will be seen as untrustworthy,” to quote one comment online.

If you’re going to block the ad blockers, you don’t want any brand being put in a situation where a user who wanted to block an ad, then sees it and it has a negative effect.

Brands need to understand that research tells us that it’s not that users don’t want to see ads—it’s that users don’t want a bad experience or unable to get the information they want to get to quickly. So cheating an ad blocker won’t engage a consumer or sell anything. It’ll just make them hate your brand because they feel abused.

Sites that demand you disable your ad blocker just get ignored. Try asking nicely was the technique one Norwegian consumer technology news website used.

city-am

Another approach is to reason with consumers, explaining that by blocking the ads the publisher can’t fund the site. City A.M. was the first newspaper to block content to those with adblockers enable, explaining they needed ads to pay journalists.  Though the message above no longer appears, so I guess they thought better if it.

Tek.no was one of the first sites to tackle the issue of users blocking ads face on, after discovering 50% of their users had an ad blocker. They implemented an ‘ad block-wall’ which respectfully asked their users to either pay for the content (explaining why) or whitelist them. The results were very positive. However, when I went to their site they didn’t spot my ad blocker, shows how quickly ad blocking technology beats ad blocker blockers.

A recent addition to the game is FREEWALL by Rezonence. It works by granting the user access to premium content in return for accepting a meaningful and brief brand message or experience; in return the advertiser compensates the publisher.

By contrast, Yahoo has taken an aggressive approach and been preventing some of its users with ad blockers from accessing their email accounts, We are unable to display Yahoo Mail. Please disable Ad Blocker to continue using Yahoo Mail.”. The outcome is people are leaving Yahoo. Proves someone in Yahoo doesn’t understand the consumer at all.

So who is to blame? The advertisers? The agencies? The sales houses? Or the publishers?

To quote a blogger writing about clickbait, According to the Grand Unified Theory of Content, publishing companies have two ways to measure the value of a piece. They look at how much money it cost to produce, and at how much monetizable attention—in the form of display advertising—it captures.”

All you need is for 50% of an ad to be seen for one second and you can bill an advertiser, which means publishers incentivise page views over engagement and clicks over reads. With ad blockers these sites are destined to die.

So who is to blame? Probably all in combination.

The publishers gave the sales houses too much power which they abused, flooding sites with endless ads. The media agencies just bought quantity over quality. The agencies didn’t do good ads because the clients won’t pay for them, wanting them cheap and fast. The clients were led to believe targeting was all and creativity was irrelevant. Even Google, in their defence (after all they are the biggest culprit in placing ads) say that good ads are 70% creative and only 30% targeting. So why are 90% of digital ads so bad – are marketing directors just not listening to experts like Google? Or too busy trying to meet targets?

Publishers like the Washington Post are researching their readers’ attitudes and finding out what is considered intrusive and what is acceptable and what type of advertising they find valuable – then trying to give them more of what they want and less of what they don’t.

The IAB battle against ad blockers

Even though most savvy people are accepting that a new economic model needs to be found, the IAB (USA) are strongly apposed to ad blockers, “We believe in an ad supported internet” they state on their website, “Depriving the internet of advertising dollars will reduce the diversity of voices in digital media.”

They do recognise ad blockers as a “potentially existential threat to the industry.”

They have come up with the L.E.A.N. ads programme – Light, Encrypted, Ad choice supported, Non-invasive ads. They do at least recognise some of the key problems but want a more self-regulated solution and admit that “each digital ad is lugging around so many companies’ requests for data that the ads are physically, literally impeding the delivery of content.“ Adding, “pre-loading ads not in view slows sites down, prioritizing advertising over people’s desire to get to the content quickly.” They agree that ads that cover content should be banned.

IAB website with block

Ironically, while reading their policy on ad blockers and the section on disruption, this popped up in front of the text!

They go on to recommend that, Advertisers and their agencies should voluntarily abandon the most upsetting forms of digital disruption. While autoplay video ads may work in some mobile in-stream environments where a consumer can swipe them off the scream quickly, it may be time to retire autoplay in other contexts.”

Getting advertisers and publishers on board is one thing but trying to complain that ad blocking software is ‘extortion” or “robbery” is very emotive but won’t convince consumers. And trying to convince them that they will lose all those free sites as the downside of using ad blockers is a good and valid argument but one I doubt will persuade. Their solutions are probably too little too late.

There have already been several legal battles against Eyeo (makers of Adblock Plus), but both were lost. The courts don’t agree with the publishers, a Munich court ruled that Adblock Plus did not breach laws on competition, copyright or market dominance, rejecting arguments brought by leading commercial broadcasters ProSiebenSat.1 and RTL.

Fewer ads, better targeted, better quality – is programmatic one answer?

The current chaotic system has led to this crisis, so out of it needs to come some kind of order. I was recently speaking on mobiles and consumer engagement to over 300 people at the PubMatic Ad Revenue Europe conference in London and it was no surprise that ad blockers was the number one topic of conversation – a large percentage of the audience were publishers.

Guy Phillipson, CEO of the IAB (UK), declared an Adpocalypse state where consumers are responding to the cluttered web pages that are getting in the way of the content. The need for publishers and buyers to leverage data to enhance messaging and segmentation and demand higher quality creative has never been greater.

Publishers agree that to fight the ad blocking onslaught it is incumbent upon their teams to enhance the quality of content created and deliver that content to consumers dynamically.

Brands also understand that they need to get back to basics and produce engaging, superior creative that is interesting. If they don’t they may find it’s the publishers blocking them as well.

Part of that requires brands to return to real human insight and not just tech numbers. Number crunchers have little idea about real people, and know nothing about consumer psychology. The secret is getting a balance between the two. Part of the problem has been consumers being reduced to just targets – a word used in warfare to mean something you wish to destroy. How ironic.

Rajeev Goel, CEO and co-founder of PubMatic (ranked by Deloitte as one of the fastest growing companies in the US) points out that programmatic means “publishers can maximise the value of their digital assets – the content, the advertising relationships and most importantly, the connection they make with consumers – and help publishers understand all these things holistically across mobile, desktop, native, video platforms and whatever may come in the future.”

The most successful companies in publishing are those who have been successful in finding a balance between the use of data, technology and quality content and value their relationship with consumers. With programmatic they can cut out the middlemen and manage their own advertising inventory, allowing them to impose their own values and even screen ads.

I personally see programmatic as one solution to this crisis because it “empowers good publishers to take back control of their advertising,” something they foolishly gave away before.

Learning from others

Digital can learn a lot from TV and direct marketing, both industries that took decades to get it right. Serve quality, avoid excess and respect the consumer and they’ll respect you back.

Direct Mail became hated, with millions signing up to MPS and putting NO JUNK MAIL stickers on letterboxes, because of the abuse of the medium, mainly by financial institutions and charities. Bad creative, poor targeting and too much were the main 3 reasons consumers turned against the direct mail industry. Terms like ‘carpet bombing’ summed it up.

Now direct mail is seen as a quality and a highly responsive channel and is growing in popularity again, in part due to declining online ad response rates. Brands like Sky, BT, TalkTalk, Virgin Media, Barclays, Boots and Direct Line spend significant percentages of their marketing budget now on DM (more than on digital ads).

Whereas TV asked for your undivided attention, the web didn’t care as long as you went click, click, click. In fact the idea of the click through as the measure of ad performance on the web was the idea of a direct marketer, Ken McCarthy (back in 1994) which makes it ancient history today. His idea was adopted and became the obsession of websites and advertisers for decades, even if it is now regarded as meaningless by many. Pity the industry didn’t adopt another direct marketing idea, “Make the important measurable, not the measurable important”.

But then is it any surprise that change is slow, most media publishers are still using the Victoria consumer definitions of A,B,C1,C2,D,E which is also meaningless.

As for page views, US based Chartbeat looked at user behaviour across 2 billion visits across the web and found that most people who click don’t read -55% spent fewer than 15 seconds actively on a page, making them worthless.

For two decades, publishers have been using page views as a key metric, now the progressive thinking publishers are looking to measure engagement in minutes and seconds rather than links clicked.

To repeat, consumers don’t actually hate all advertising, just too many irrelevant, bad ones that are too intrusive, it’s all about balance and respecting the consumer.

According to the IAB, the most common reason people would be less likely to block ads is if they didn’t interfere with what they were doing (cited by 48%) followed by having fewer ads on a page (36%). One in seven (14%) would be less likely to block ads if they were more relevant.

Even though some say if there were an ad blocker for TV people would use it, in fact research shows people actually like a lot of TV ads and when playing back pre-recorded shows the majority don’t skip ads.

When advertising is really good creative it’s seen as good by the public, take the new Christmas TV ad for John Lewis, it’s already had over 17 million views on YouTube, last year’s had over 25 million. Old Spice and Gorilla even more. Good ads when entertaining can be as popular as the programmes. So the challenge is, can you make your digital ads as good as the content?

Of course publishers could learn something from the model used by one of the biggest and most visited content sites, that has no ads or subscription – Wikipedia.

It’s founder Jimmy Wales originally planned to use ads for funding but back in 2001 said they’d be non intrusive. But funding by donation has proved so successful they don’t need ads, in one funding session alone they raised $35m.

Will content save the day?

Of course the new fad for 2016 is content, or native advertising. “Forget display ads, it’s all about content” I keep reading on endless blogs and LinkedIn posts. Yes and no, the amount of content on the web has multiplied so much that no one needs any more.

Advertising income has been a stimulant of clickbait sites (also known as ‘yellow journalism’) these are those poorly written junk sites that have engaging headlines like ‘5 vegetables that can make you slimmer’ or ‘10 celebrities that were porn stars’ (I did read that one and it was rubbish).

Those living in the Attention Web use curiosity, exaggeration and celebrity references to get you in just to get the clicks and bill the advertisers. Their existence is driven 100% by generating ad revenue and are the junk content of the internet. Hopefully these will be the first to go with ad blockers.

Content is a great idea but not an easy one to deliver. The idea that brands can all create great content that rivals those created by experienced and expert content creators is a little optimistic. After all, we consumers have lots of places where we can still find top notch content, and ad blockers will actually result in a raised standard of content, so do you honestly think any brand trying to engage millennials, for example, can rival Vibe or the LAD Bible (UK’s largest online entertainment website)? That’s like hiring an agency to write an international hit record. Best of luck with that one!

Chartbeat, who work for Time magazine and thousands of other publishers, have analysed thousands of sites and concluded that on a typical (non native) content 2/3 of people exhibit more than 15 seconds of engagement, but on native ad content that plummets to around 1/3, only 24% of visitors scrolled down the page at all, compared with 71% for normal content. This is because native is rarely as interesting as non native content.

Are we prepared to pay for content?

Yes if it’s good, relevant, informative and interesting.

One of the arguments the online publishing industry use is that you can have free sites without advertising. Actually that’s not factually correct. There are loads of vanity sites out there, including most blogs. Plus endless content used to improve search, just put in any medical condition.

Many consumers are prepared to pay, after all we already pay for newspapers, magazines, cinema, TV downloads – if it’s good we’ll pay. But like so many things that are free, it’s usually poor quality (Evening Standard being an exception).

The FT and the Washington Post, for example, only allow subscribers to access their content online. Quality can demand payment, and these publications get it.

A new model from the Netherlands offers publishers a smart way to get paid for content without adverts, and again proves people will pay for quality content.

blendle

Blendle have put almost all newspapers and magazines in Holland behind one paywall, and made it so easy to use that young people (under 35) have starting paying for journalism again. Within it’s first year it has gained over 250,000 subscribers, without doing any advertising itself!

Unlike paying for one publication, the Blendle scheme means you only pay once and can access any article (from their partners) and pay for what you read, with no ads. Additionally, you can reject bad content and clickbait, meaning they don’t get paid. The incentive for publishers is to produce better content. A win, win for both publishers and readers.

Within its first year they have proved that people will pay for quality content and also like the idea that they can avoid clickbait. Top of list are more in-depth pieces, analysis and interviews.

In the UK, READBUG is fundraising to create a similar model to Blendle.

Are ad blockers legal?

Publishers have been screaming “foul play” and even threatening to take legal action.

But, as one blogger commented, “how can an ad blocker be illegal if pushing ads on us, stealing our data and invading our privacy isn’t? Fair point, the publishers really have no argument.

Digital Darwinism – who suffers the most if ad blocker adoption reaches 85%?

It’s very likely that adoption will reach 85%, especially among the key target audiences brands want to reach. We are yet to see who will suffer, who will die and who will adapt. Here’s a top line only.

Google (through DFP) is the biggest provider of ads on the web, so will suffer but they do have paid search to fall back on and with every business it has to peak, it can’t just keep expanding. Ironically, their Chrome platform accounts for 51% growth of ad blocker use.

Apple gains, because iOS 9 includes a refined search that auto-suggests content and that can search inside apps, pulling content away from Google and users away from the web, it allows users to block ads, and it offers publishers salvation in the form of Apple News, inside of which Apple will happily display (unblockable!) ads, and even sell them on behalf of publishers for just a 30% cut.

Facebook stands to lose out online, unless you are using the app. But because it’s an app its Instant Articles will also track you and serve unblockable ads inside the app.

The Apple vs. Google fight has never been more heated or more tense, Google has the web, Apple has the iPhone and Facebook has its app, which gives it an opportunity to present itself as the saviour of media.

Publishers and sales house will fall in big numbers but what we’ll see is less quantity and more quality, so maybe it’s a form of natural digital selection, or Digital Darwinism as it’s been called.

Adblocker web 

Whitelisting – will brands and publishers lose out? Or will the best survive?

Adblock Plus operates a whitelisting system that does allow some ads to get through. Although the process of selection is largely subjective. The vetting system, known as “ acceptable ads” has been incredibly divisive amongst big brands.  Schumacher says “If we whitelist a certain ad format, it then goes onto the community forum and sits there for seven days so the people can decide too.”

There has been a lot of controversy about AdBlock Plus’ deals with brands and sales houses. Some people have called their approach “extortion” but as much as the publishers, sales houses and brands may hate ad blockers, Schumacher has the billions of internet users on his side.

Brands will not miss out if they get smart, which they haven’t been to date. First get creative, spend more on better digital ads and you’ll get them whitelisted. Encourage your agencies to be creative and be prepared to pay for it – you don’t get good ads from bad briefs, short deadlines and a low budget. Smart thinkers are starting to suggest advertisers should spend up to 50% of their budgets on execution (or content) and less on spread it across too much media – make each moment count.

I always use the X-Factor example with clients. Media is the equivalent of the stage. You’ve got this far now what are you going to do to impress the judges? Nothing? Just stand there? Well that’s what a lot of ads do. Of course not, you are going to do the best you’ve ever done to engage and win over those judges and beat all the other contenders.

By embracing whitelisted publishers would still get the ad revenue they needed to function, and users would have the control to block sites that go overboard in their ad serving. The outcome is that sites that control their advertising best win and others fail, leaving less completion in the marketplace.

Another simple way publishers can improve their chance of whitelisting is to sell less ads but for more. AOL devised a brilliant new ad format called Devil. It combines static with video but its real genius is that it’s the only ad on the page, which allow sit to command a higher rate.

It’s simple, think human to human (H2H not B2C). Start with the consumer not the content or ad. Even the business to business industry, instead of talking about B2B uses P2P (people to people).

How much do big brands really spend on digital?

Truthfully it’s actually hard to say and what is defined as advertising and what isn’t? If you are comparing it to other media channels, is search really advertising or just directory? What actually is “total digital ad spend?” If you included everyone who spends, from the big brands to the one man online specialist shop, it gives a very different picture than just looking at the top 1000 brands.

The IAB’s latest figures claim that digital advertising in the UK was worth £3.975 billion in 2015, up 13.4% from 2014. Total digital ad spend grew 13.4%. Display advertising revenues grew (others claim they are decreasing) at more than twice the overall digital rate and ad spend on mobile increased 51% to £1.08 billion.

Of course these figures include all advertisers, a look at many of the top 100 spending brands through BRAD (audited by Nielsen) shows a very different picture.

The reality is that most of the top brands are only spending a small percentage of declared marketing budget on digital display ads. The average FMCG brand (in the top 50 spenders) spend over 50% on TV, some as much as 90%, and less than 1% on digital.

Ironically Google spends 61.5% of its budget on TV and 16.9% on digital – good to know it supports its own model. Ironically most of the big digital brands spend more money on traditional media channels than digital ones.

Of the top 40 ad spenders, 50% spend more than 50% of their ad budget on TV. Only 3 (Vodafone, O2 and Google) spend more than 10% on digital ads, while most spend less than 1%. Most spend more on radio than digital ads.

VW for example spend 54.7% on TV, 10.5% on radio, 3.9% on OOH, 2.7% on direct mail and only 2% on digital ads.

Sky, the biggest spender, spends 42.7% on paid TV, 11.9% on OOH, 7.4% on direct mail and 3.7% on digital ads.

Unilever spends 74.3% on TV, 7.5% on OOH and just 0.2% on digital ads. P&G spends 64.9% on TV, 31.3% on press and only 0.5% on digital ads.

The lowest spend, and an exception to all the others is TalkTalk, who spends just 12.4% on TV, 25.1% on OOH, 21.8% on direct mail 20% on press but spends 8% on door drops against 0.6% on digital ads.

Which begs the questions, why is 70% of content in the marketing press about digital when it represents so little of most big brands’ spend? TV is still the favourite media of the top 50. Even radio gets a bigger spend.

Either way, there’s a lot of money to be lost through ad blockers.

Dinosaur omeisaurus

Will the agencies suffer?

To quote a blogger, “Most creative is always terrible. Could digital creative be better? Absolutely. Digital agencies have been chasing technology and not creative execution for the past decade. How many times have we heard “the big idea is dead?”

The bad ones, yes, because they have been churning out junk ads and if you are a client and now want good ones, you need a change of agency, so good news for the more creative agencies.

SUMMARY

“Why are people adopting ad blockers on mass? Because brands were so obsessed with data, following consumers around and digging into their private lives – in a vain attempt to understand them – that through their actions, they proved they didn’t understand them at all.”

Ad blockers are here to stay. The publishing and digital ad industry will have to change their economic models and their attitude towards consumers – the customer is now king and he’ll behead you if you don’t.

The outcome is simple. Bad ads not only don’t sell, they now aren’t seen. If you want them to see your ads (or to be whitelisted) you need to respect them and give them better creative ads, that are relevant, interesting and non-intrusive.

And you need to understand them better, forget A,B,C1, invest in proper insights, understanding emotional motivations, even NLP (it’s what sales people use) and combine that with data and use someone who understands consumer psychology to guide you – not a calculator that graduated in maths from Oxbridge.

And don’t be fooled by any publisher claiming to be able to block ad blockers, even if they can, research shows consumers will not like you for ‘cheating’ your way past their wall of defence. It’s like closing the door on a pushy door to door vacuum salesman, only to find him sitting in your kitchen, having come in the back door uninvited.

The outcome will be less junk, more quality. Who could not want that?

Digital advertising is dead. Long live digital advertising. Long live quality publishing.

Chris Arnold is a founding partner of Creative Orchestra, Comobi2 and COGLab. He has been a Creative and board Director of Saatchi & Saatchi and the former chair of the DMA Agencies Council and the Creative Council.

He is also a regular blogger on Brand Republic and contributor to Marketing magazine.

 

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LINKS

FairPage The 2015 Ad Blocking Report – www.blog.pagefair.com/2015/ad-blocking-report

Time Magazine – What you think you know about the web is wrong. http://time.com/12933/what-you-think-you-know-about-the-web-is-wrong/

Blendle – www.blendle.com

PubMatic – www.pubmaticblog.com

IAB on ad blocking – www.iab.com/insights/ad-blocking

Adblocker Plus – www.adblockplus.org

LAD Bible – www.theladbible.com

  • Katey Walter

    Brilliant article. Well researched. A bit long but nice to get all the facts without a sales pitch.

  • Katey Walter

    Love the term ‘rude marketing’, when you humanise it then it makes you think about the relationship between marketing and consumers.

  • Katey Walter

    Chris Arnold’s fact full speech on mobiles and consumers at PubMatic’s Ad Revenue Europe 2015. @PubMatic https://youtu.be/MZk9YDpvDa4

  • disqus_38aaBbYgXN

    OK, so I am being that guy. It is actually en masse.

  • Katey Walter

    Yep, en masse

  • Chris Arnold

    Interesting article in the Sunday papers over the weekend on ad blockers.

  • Chris Arnold

    A few people have told me that they are seeing diamonds between the paragraphs. Alas that’s something to do with how Brand Republic have set up the bogs. And for some reason the Tweets don’t register either?