Good news for publishers, ad blocking is on the decline

Advertising revenues have been on the decline for newspapers for a long time now. With the switch from print to digital, publishers saw their advertising dollars replaced by digital dimes. Today, nearly 70% of all digital advertising revenue goes to just Google, Facebook, and Amazon. That’s not even including the wrench coronavirus has thrown into the mix.

Still, there’s some good news to share. The long-feared ‘adblocking battle’, which Digiday predicted would cost publishers $35 billion, might just be winding down. Today we’re digging into the decline of adblockers, the overall improvement in ad experiences, and the ad-blocking subscriber paradox.

Desktop ad blocking down, mobile up

Just released research from AudienceProject suggests the use of adblock is on the decline. While in recent years desktop ad blocker usage has soared, it appears we are now past the peak. In most countries, fewer users are using ad blockers today than in 2016. In the US for example, 41% of respondents today are using ad blockers, down from 52% in 2016. In the UK, this number is down to 15% today, from 26% in 2016.

However Germany and Sweden buck this trend, with steady growth in ad block usage in recent years.

Globally, 42% of respondents are using ad blockers, down from 49% last year. While this might seem like good news for publishers still hoping to eke out those digital dimes, this shift might be part of a larger trend of users moving away from desktop to mobile reading. The usage of ad blockers on mobile has grown globally, however this is mainly due to the significant growth in Asia. Users in Europe and North America have not been as quick to adopt mobile ad blockers, with just 7% of respondents in the US having done so (up from 5% in 2018).

It is also not as straightforward to block ads on mobile devices, with the most common method on desktop, browser extensions, not working on most mobile browsers. Most of the growth of mobile ad blockers in Asia has been driven by Alibaba’s UC Browser which does allow ad blocking.

You have 3 seconds to keep your readers

Another reason the usage of ad blockers has declined is the industry’s understanding of quality product experiences. For most publishers, gone are the days of auto-play videos, multiple pop-ups, or other highly annoying ad experiences. Previous research has found that most news readers are not against ads in general, just against bad ad experiences. A survey from Google found that 63% of users chose to install an adblocker because there were too many ads overall, plus too many intrusive ads. Hubspot even found that 68% of adblocking users would be willing to view ads if they aren’t “too annoying”.

It’s not just the annoyance factor that matters, poor ad experiences can also negatively impact the rest of the user’s interaction with the digital product. Our research in 2017 found that blocking ads on a typical news website would increase loading speed by 7x. With 53% of digital readers likely to abandon a page that takes longer than three seconds to load, it was clear how these poor ad strategies were impacting user experiences. Site speed is an important aspect in the all-important quest for improved retention. When the Financial Times re-designed their homepage they found slower site speed impacted the amount of stories read, as well as overall subscriber retention. Now when considering placing new advertising, there is a very concrete overview of how the slowdown will impact subscriber churn, which must be made up for in extra advertising revenue. It’s a similar story in France for Le Figaro, where they removed the most intrusive ads to improve the product experience overall for subscribers.

We have unplugged every single intrusive ad format and external sales house, which has cut $2 million from what we would normally have made. But that’s necessary if you want to continue building a sustainable business. We see it as our duty to do it.

Alexis Marcombe, former chief operating officer of Le Figaro

Although the tide has turned on most intrusive ads, some publishers were surprised this week when Google’s Chrome browser rolled out a new feature that blocks ads using an “egregious” amount of network bandwidth or battery power. Although this was announced back in May, many publishers had other priorities this summer (with the global pandemic and all). While Google says this should only apply to around 0.3% of ads, this is still a large number of ads given the widespread usage of Chrome globally (69% market share).

Furthermore, due to the history of intrusive ads, some readers might still wrongly believe their local news site has highly intrusive ads today. In Norway for example, Verdens Gang commissioned a survey to understand why its readers were using adblockers. 20% said they used it to avoid video and pop-up ads. These readers said they would consider whitelisting the website if it removed the pop-up ads, however VG.no didn’t even use pop-up ads. So by clarifying to readers the type of ad experience they would have, and promising it wouldn’t be intrusive, they were able to convince more readers to turn off their adblockers.

The ad-blocking subscriber paradox

Even with the decline in ad-block usage and the overall improvement of ad experiences, there will likely always be some population of readers that want to avoid ads. That’s why we often see new ad-free subscription offerings, with the most recent one coming from Bay Area News Group in the US. On 13 of their local news websites, users can now pay for an ad-free experience, which has seen thousands of subscribers opting-in.

For the ad-free subscription to recoup the lost advertising revenue, they needed to ask for at least $1 more. However, through multiple tests, the group was able to determine that they could ask for $4 extra per month for the ad-free experience. Now approximately 20% of new digital subscribers pick the ad-free premium offering. This group consumes 1.2 pages more for every day they’re on the website. Overall if Bay Area News Group is able to bring similar figures to their entire digital subscriber base, with one in five subscribers paying 33% more, they would be able to boost reader revenue by 7%.

While the initial results are very promising, the team has further plans for this premium offering. Down the line, they will sunset the policy of allowing subscribers to use ad-blockers. Furthermore the current ad-free subscription applies only to the website, while subscribers also access the journalism via the mobile app, digital edition, and AMP. To improve the ad-free offering, the team plans to review how digital ads are displayed on these platforms as well.

Publishers offering ad-free subscriptions can also benefit from improved retention, with research from the Spiegel Research Center in the US showing that ad-blocking subscribers are more likely to keep their subscriptions than others. This also matches previous research done by Mozilla which showed that people who use ad blockers spend more time and read more pages than those who don’t use ad blockers. So while ad blocking users might not be a top concern for publishers today, they are a great opportunity.

Mary-Katharine Phillips
Mary-Katharine Phillips
Media innovation analyst @ Twipe
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