55 | fifty-five | white paper: ad blocking (en)

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fifty-five proprietary

Ad blockingAdoption, reactions and opportunities

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Ad blocking is now mainstream Overview and trends of ad blocking usage

How can we explain the success of ad blockers?

What is at stake for the advertising industry? How do ad blockers work? Desktop

Mobile

Answers to ad blockers Set up new guidelines and standards for the advertising industry

Educate the audience: the answer of most publishers

Make the most out of ad blockers Publishers — Learn more about your audience with ad blocking analytics

Publishers — Listen to your audience and explore new monetisation strategies

Publishers & advertisers — Think content and context

Conclusion

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Ad blockers enable users to surf the web without any ads showing on

webpages. They are in their vast majority browser extensions like Adblock

Plus that prevent banner and video ads from being displayed. Since many

internet business models are mainly if not solely based on advertising

– offering free content and/or services in exchange for the exposure

to advertising –, ad blockers are deemed as a threat for publishers,

advertisers, and the ad tech ecosystem.

As an online advertising player, are ad blockers endangering you?

How should you react to this phenomenon?

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Ad blocking is now mainstream

Overview and trends of ad blocking usage

Ad blocking is not an "early adopters"

or "tech enthusiasts" matter anymore:

it reached a mainstream audience and

is now widely used. According to the

PageFair-Adobe yearly report, in June

2015, there were 198 million monthly

active users for the major browser

extensions that block ads — and

globally, the number of people using

ad blocking software grew by 41 %

from 2014 to 2015.

Moreover, ad blocking usage is likely

to continue to spread as the age

demographic where it is most prevalent (young millennials) grows older,

but also as users update their web browsers. Web browsers, which make

it easier and easier to install ad blockers, have a great influence over this

phenomenon, depending on their

policy, their compatibility with ad

blockers, and the default settings they

choose to implement.

Finally, while ad blocking was

historically a desktop-only issue, it is

now migrating to mobile. Third-party

ad blocking browsers, which block

ads by default on web pages, are the

dominant method on mobile: they are

attracting mass adoption with 90%

Adoption rate varies across countries

Adobe/PageFair, The cost of adblocking, 2015

PHD (Omnicom) study, 2015

Google Chrome is the main driver of ad block growth

The ease with which ad block extensions can be

installed on Google Chrome, combined with the

continuing shift of internet users to this browser,

are major drivers of ad block growth. Ad block use

on Chrome increased by 51 % from Q2 2014

to Q2 2015.


10.4 %

15 %

20.3 %

25.3 %

10 to 12 %

France

United States

United Kingdom

Germany

China

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usage growth in 2015, to reach

408 million monthly active users in March 2016 1. These

browsers, such as Alibaba-owned UC Browser, are mostly

popular within the Asia-Pacific region, which accounts for

93% of their usage 1. Usage in western countries is also likely

to grow as more manufacturers and browsers start to include ad blocking

as a feature. For instance, iOS 9 and Samsung mobile devices are now

compatible with third-party ad blocking apps for their default web

browsers.

Still, in 2015, mobile represented around 38 % of all web

browsing, but only 1.6 % of ad blocked traffic globally 3.

This is presumably linked to the fact that mobile users

spend most of their time in-app, and apps are not

affected by ad blocking (yet). To date, mobile is thus

not a major driver of ad blocking growth, but it could

become one, especially if ad blocking effectively fulfills

its promise of letting users scroll larger screens without ads, get easier

access to content and services as ad-free pages load quicker, while saving

battery and bandwidth usage.

What about in-app ad blocking?

In-app ad blocking is technically possible. Yet, ad blocking apps have been systematically rejected from the

stores to date. For example, Apple removed such an app called BeenChoice from the App Store in January

2016. Since March 2016, Google even explicitly states in the Google Play Store policy that "apps that block or

interfere with another app displaying ads" are banned 4.

In 2015, users spent 88 % of their mobile time in-app 2

In the Asia-Pacific region, 36% of smartphone users access mobile web pages with an ad blocking browser 1

1 PageFair, Mobile Adblocking Report, 2016

2 Adobe/PageFair, The cost of adblocking, 2015

3 The Mobile Majority, "iOS9: Will Mobile Ad Blocking Ruin Advertising?" September 2015

4 Google Play Store Developer Policy Center, Privacy and Security section

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Why did you install an ad blocker?

69 % interruptive or annoying ads

66 % negative impact on site performance

60 % excessive number of ads

Teads, Why People Block Ads, A Global Report, January 2016

How can we explain the success of ad blockers?

Users install ad blockers mainly for three reasons:

— Get rid of ads that undermine their experience when browsing;

— Stop being tracked for those concerned with privacy issues;

— Browse the web more

efficiently with pages that

load quicker to save battery

and data, especially for

mobile users.

Ad blocker users are reacting

against what they think has

become an unpleasant if not

unacceptable online experience. They have quite a rational and proactive

approach when deciding to use this solution: IAB 4 research indicates that

although simply hearing about the existence of ad blocking technologies

is the primary reason for installing it, some users spontaneously start

looking for them too.

The entire advertising industry is now at a critical

turning point: most players acknowledge that

the ad blocking phenomenon is symptomatic

of having let user experience aside for too

long when designing new formats. The rapid

development of multiple formats and platforms,

combined with the myriad of players involved in

the advertising chain does not help clarify who

exactly is to blame, or more importantly, how the

industry should react to the rise of ad blockers.

4 The Interactive Advertising Bureau is an advertising business organisation that develops industry standards, conducts research,

and provides legal support for the online advertising industry.

"We have let the fine equilibrium of content, commerce, and technology get out of balance in the open web."— Scott Cunningham, IAB Tech Lab

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What is at stake for the advertising industry?

Ad blocking raises several issues. Obviously, it threatens the

traditional monetisation model of content providers and

ad tech vendors. Ad blocking was estimated to cost over

$ 21 billion in 2015, which is 14 % of the global ad spend, and

overall, the global cost of ad blocking is expected to reach $ 41.4 billion

by 2016 5.

As regards advertisers, IAB research shows that ad blocking reduces the

available inventory since less ads can be displayed, especially to young,

male audiences (early adopters). The imbalance between supply (users

who you can display ads to) and demand (the ads that you want to show

to your audience) subsequently triggers a cost increase. It also affects

audience value: when ad blockers disable tracking resources, valuable

opportunities to re-engage users simply vanish. Moreover, it can skew

campaign performance measurement, therefore impairing advertisers'

trust in reliable performance data.

Finally, it may be argued that ad blocking ironically narrows down user

choice and could end up increasing costs for them. Indeed, the current

online advertising business model has enabled publishers to give free

access to content for over a decade. As subscription fees replace

ad-supported content, ad blocking could potentially create a web where

only those who can afford to pass through the paywall would access

information, and consequently threaten media diversity.

5 Adobe/PageFair, The cost of adblocking, 2015

Ad blocking cost$ 21bn in 2015

$ 41.4bn in 2016

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How do ad blockers work?

Desktop

Ad blockers prevent ads from being called by ad servers, and are in their vast

majority browser extensions, like Adblock Plus. Their raw material is a list of sites

and scripts identifying all regular expressions, sequences of code, file names,

or frameworks inside a webpage that connect that webpage to ad servers. This

open source database, called the Easylist, is fed by an active pro-ad blocking

community. Ad blocking extensions store the Easylist and block the matching

requests when screening the webpage code.

Note that users have a "whitelisting" option, meaning that they can green-light

specific sites to run ads. They can also report ads they deem unacceptable.

Mobile

On mobile, one should rather talk about "content filtering" (and not ad

blocking per se) - meaning the ability to block any type of content in webpages,

among which are ads. But technically, content blockers follow the same

principles as desktop ad blockers: before the web browser loads a page or an

item referenced on a page, the content blocker matches it with the patterns of

its filter. Content filtering apps, like Crystal, allow for a lot of customisation, and

users can theoretically block entire sites in reference to keywords they choose

to exclude. In fact, Apple has been giving users the possibility to read articles

without ads for a long time, with the Safari "reader mode" functionality.

What is "private browsing" and how is it different from ad blocking?

"Private browsing" is a feature in web browsers to disable browsing history and the web cache. It allows

people to browse the Web without storing local data in cookies that could be retrieved at a later date. Private

browsing will not block ads at all, however it answers one of the reasons why people are using ad blockers:

allowing them to leave no trace behind - that could be later used for retargeting, for example.

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Answers to ad blockers

Set up new guidelines and standards for the advertising industry

In a statement in October 2015, IAB conceded that the whole industry

had "lost track of the user experience", by "targeting users with

ever-heftier advertisements that have slowed down the public internet

and drained more than a few batteries". In this context, several initiatives

have been undertaken by advertising players:

— IAB advocates for new standards in the global digital media supply

chain, that would result in cleaner ads minimising all negative impact on

user experience. It has thus launched the L.E.A.N. initiative, an acronym

standing for Light, Encrypted, Ad-choice supported, Non-invasive ads.

The organisation has been working on a L.E.A.N. scoring, with consistent

criteria that advertisers and

publishers can be judged on.

— IAB Tech Lab also went

further by developing the

D.E.A.L. detection script

(Detect, Explain, Ask and

Limit), an open technology for

publishers to consistently and

reliably determine whether ad

blocking is occurring on a page, and take action accordingly.

— The native video advertising platform Teads published a "Manifesto

for sustainable advertising", with 10 steps to "engage, not enrage,

users", among which are the banning of interstitial banners, pop-ups and

non-skippable videos.

D.E.A.L

— Detect whether ad blocking is happening during a page

load, with a consistent and reliable script

— Explain media and advertising value exchange to users

— Ask users to turn off ad blocking or whitelist the site

— Lift restrictions or Limit user access

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— AMP (standing for Accelerated Mobile Pages) is a project initiated

in October 2015 by Google, intended as an open-source standard for

any publisher to build fast-loading mobile webpages. It introduces a new,

"lighter" HTML format, built to prioritise speed without sacrificing rich

content. AMP HTML is already used by major publishers like BBC,

El Mundo or Condé Nast.

To be continued...

A coalition of ad tech companies collectively known as DigiTrust is working to come up with a unified user ID,

so publishers will not have to overload their pages with multiple pieces of third-party software, or pixels that

negatively impact user experience. The initiative aims at delivering a better internet experience by reducing

the number of data calls and thus page load times, providing more trusted integrations with third-party

partners, and helping to reach targeted audiences at greater scale, across a broader set of platforms

and devices.

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Educate the audience: the answer of most publishers

Most content creators affected by ad blocking now understand why users

block ads. They believe that the smartest way to tackle this challenge is

to listen to, inform and convince their audience of the industry-wide value

of advertising. This strategy is being implemented with an array of tactics,

that range from politely asking users to turn off their ad blocking software,

to restricting or even denying access to the content, and/or implementing

a "soft" or "hard" paywall. As well as educating their audience about the

risks of ad blocking, these publishers also commit to showing cleaner ads,

as they understand that some types of ads, like pop-ups, can be irritating.

The "guilt message"

The New York Times has called

"To block or not to block" a

philosophical question, and

Fortune 500 ran a spread on the

ethics of ad blocking.

The "soft" paywall

In October 2015, Axel Springer took

the decision to post a message each

time an ad blocker user would access

the Bild website (Europe's

best-selling newspaper), asking them

to disable the extension and surf for

free on the website, or subscribe to an

ad-less version of Bild for €2.99 per

month. In November, the publishing

house reported that the proportion

of readers using ad blockers on the

Bild websitedropped from 23 % to a

"single-digit" number.

The "hard" paywall

The Times adopted one

of the toughest strategies

by implementing a "hard"

paywall, that only gives access

to a preview of a selection of

articles and then requires a paid

subscription.

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In France, the online publishers' trade

association GESTE has launched

the "Week without Ad Blockers",

to remind users that "content and

services are not free" and emphasise

"the indispensable character of

advertising as a source of financing".

Around 40 publishers participated,

each in their manner, by displaying

educational messages and asking

(or forcing) users to turn off their ad

blocker. The results were encouraging:

following the campaign, the audience

using ad blockers had decreased by

11 to 20 %, depending on content

categories.

A Week Without Ad Blockers, at Le Figaro

Daily newspaper Le Figaro was seeing

approximately 20 % of its monthly traffic

affected by ad blocking. During the French

"Week Without Ad Blockers", it progressively

blurred the content as readers using an ad

blocker clicked through the website, and

displayed a banner asking them to turn it off.

The articles were illegible by the time users

reached their

fourth page.

At the end of

this weeklong trial, 20 % of ad blocker users

had whitelisted the website, and 5 % had opted

for a paid subscription giving them access to

advertising-free content. Comforted by these

results, Le Figaro decided to extend its ad

blocking ban.

Digiday, "How Le Figaro got 20 percent of its blocking

readers to whitelist the site", April 2016

Workaround solutions that do no get to the root of the problem…

While some advertisers and publishers try to find a reasonable way of meeting the ad blocking challenge,

others have chosen to completely overstep it by trying to show ads at all costs, or to "clean" what and how

many ads are displayed, more or less arbitrarily. For example:

— Encryption to fool ad blockers' lists – e.g. the AdGateway project by Digiteka

— Filtering out the "minimal amount of ads" – e.g. DYP Solutions, which created a web browser extension

to display one non-intrusive ad on the webpage, blocking all other ads

— Paid whitelisting – some companies have paid a fee to appear on Adblock Plus's "Acceptable Ads List",

meaning that users will see their ads, regardless of their choice (unless they adjust their settings from default

to the strictest possible)

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You can track ad blocker users

directly in Google Analytics,

by using a fake ad-related

script (like advertising.js) which

will trigger an ad blocker and fire an event in

Google Analytics.

Learn more: "Measure how many of your visitors

are using Adblock", dcarlbom.com

Make the most out of ad blockersHow can you make the most of ad blocking, even if, in the first place,

you consider it as a major threat to your business?

Publishers — Learn more about your audience with ad blocking analytics

Ad blocking is actually an interesting tool

to better understand your users thanks

to webanalytics.

You should closely monitor the ad

blocking rate of your website, but also

the rate of ad blocker users who have

whitelisted your website. Treat these

KPIs as a new source of user feedback,

providing insights on the acceptance level

of ads on your site and the awareness

of your users as regards ad blocking extensions. fifty-five has performed

such analyses for major publishers, and can help you monitor the right

KPIs and take action accordingly.

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Case study

Ouest-France is one of the leading French newspapers. fifty-five worked with Fabrice

Bazard, Director of Digital Services, to help them achieve full compliance with

European privacy law through cookie management, and performed an extensive

ad blocking analysis on their website. Here are a few insights extracted from this analysis.

— 1 out of 5 visits is affected by ad blockers, implying a significant impact on Ouest France's revenue.

— The ad blocking adoption rate depends on users' socio-demographic profiles and browsing habits.

Ad blocker users are mostly young males, and social networks drive a greater share of ad blocked traffic than

direct access. The study confirmed that the more recent the browser update was, the more likely it was that

an ad blocker was activated, especially on Google Chrome and Firefox. Mobile ad blocking remains a fringe

phenomenon.

— Ad blockers positively impact engagement indicators: the analysis showed that using an ad blocker could

almost cut page load time by half, and that ad blocker users visited more pages and stayed longer.

What's next?

Following this first quantitative analysis, fifty-five is proposing to help Ouest France determine and implement

its strategy towards ad blockers, by further exploring what motivates their readers to use ad blockers, and by

testing an array of educational messages and formats.

Publishers — Listen to your audience and explore new monetisation strategies

Once you better understand your

audience, show them that you are a

'user-first' type of player that takes their

needs into account. Explore new revenue

streams and richer, content-driven ad

formats, thanks to targeting and A/B

testing tools. Listen to your audiences

and let them guide your search for a new

"commercial model built on value over

volume," as journalist Jeff Jarvis 6 puts it.

Forbes adopted a testing approach for its

monetisation strategy: visitors using ad blockers

were asked to disable the software, in exchange

for a 30-day "ad-light

experience", a notion

which is still under a series of tests and will shift

based on the data collected.

6 Jeff Jarvis, "Death to the Mass, Media must rebuild its business around relevance and value, not volume"

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Native ads register 9 % higher lift for brand affinity and 18 % higher lift for purchase intent than traditional banner ads 7.

Can native advertising still be blocked?

Some types of native ads can still be detected by

ad blockers.

To solve this issue, native advertising companies

like Ligatus Native show ads by serving them

through a reverse proxy pointing to the publisher's

servers. Ads are located on the same servers as

the content, so the ad blocker cannot block them

without blocking the whole content too.

Publishers & advertisers — Think content and context

In this perspective, going native can be an

interesting strategy. Native advertising consists in

showing content-driven ads that blend into the

editorial environment, and are related to topics

that actually matter to your readers. It was experimented by major

publishers, like The New York Times, Forbes or Buzzfeed.

Indeed, native ads are in line with the website's content and style, meet

the same quality standard as editorial content and, most of all, deliver

real value to the audience, where advertising has too often come to be

seen as merely intrusive and useless

by increasingly angry users. With

this type of advertising focused on

content, brands can develop a service

for users with a promotional purpose,

and publishers can sell valuable skills,

rather than merely space for eyeballs.

Brands can show their capacity to

produce well-researched, interesting

promotional posts, possibly backed by

relevant partnerships and influencers.

A great example of this approach is the

informative study about women inmates in America published in the

New York Times, which cleverly introduced and promoted the main lines

of Netflix's show "Orange is the New Black".

7 Sharethrough IPG Media Labs, "Native ads vs. standard banners", 2015

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Beyond native advertising, there is an imperative need to focus on quality

formats and to ensure that campaigns are delivered in the right context

– for example by making sure that there is some form of coordination

and transparency between what is bought through programmatic DSPs

and what is bought directly from ad networks, that the formats used are

responsive, or by monitoring and setting up capping conditions through

the careful analysis of business objectives and data. In short, designing,

executing and monitoring marketing campaigns that aim at touching

people, instead of triggering impressions or clicks.

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ConclusionAd blockers are symptomatic of a more general trend: users have grown

weary of online advertising and want to take back control over their online

experience. Brands, publishers and ad tech players cannot overlook these

expectations anymore. They must rethink advertising, communication

and marketing as a whole, and learn how to consistently leverage and

combine creativity, data and technology.

The right answer to ad blocking is both pragmatic: know who uses ad

blockers among your audience and why, whitelist a number of ad formats

that are acceptable for you and explicitly ban non-acceptable formats,

support standardisation –, and strategic: switch to a user-first mindset,

think quality, context and content… and be ready to accept the costs if

needed. Digital advertising is no longer to be thought of as a cheap form

of advertising, and must be planned for with consistent resources and

expertise. This cannot be done without proper training and education

across the whole advertising industry. Only that way can brands offer the

best contextualised experiences, and be felt as providing real value,

to gain back people's interests.

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Part of You & Mr Jones, the world’s first brandtech group, fifty-five is a data company helping

brands collect, analyse and activate their data across paid, earned and owned channels to increase

their marketing ROI and improve customer acquisition and retention. Headquartered in Paris with

offices in London, Hong Kong, Shanghai and New York, the data company was named by Deloitte

as one of the fastest-growing tech firms in Europe, thanks to its unique technology approach

combining talent with software and service expertise.

www.fifty-five.com | [email protected] | Paris • London • Hong Kong • Shanghai • New York June 2016

Key readings


PageFair, Mobile Adblocking Report, 2016

IAB, Adblocking Report: Who Blocks Ads, Why, and How to Win Them Back, July 2016

Teads.tv, Why People Block Ads, 2016

More information

www.ampproject.org

www.digitru.st

55 | fifty-five | white paper: ad blocking (en)

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