Ad blocker use is on the rise. More and more ways of letting people block ads are being introduced to market. Apple, for instance, will allow ad blocking on iPhones, and there is a mobile phone service carrier plan to allow ad blocking across entire networks.
Ad blocking poses an existential threat to publishers and big sellers of digital ads like Google — which is reported to have lost as much as $US6.6 billion in revenue to ad blockers last year.
Now one former Googler is fighting back against the blockers.
Sourcepoint is launching Thursday with $US10 million in Series A investment funding. The company’s CEO and co-founder is Ben Barokas, the former general manager of marketplace development at Google. He moved to Google in 2011, when it acquired his online advertising optimization company Admeld for $US400 million.
Speaking to Business Insider, Barokas explained that to solve the existential crisis ad blockers pose to publishers, Sourcepoint wants to help the publishing community solve two problems: It has the technology to punch through “all the ad blockers.”
And it wants to help publishers have a more open dialog with readers about the transaction that takes place when they consume content: The implicit (but often over-looked) understanding that publishers serve ads in exchange for content being presented for free. And that a transaction needs to take place in the first place because content requires investment.
Barokas explained the “lightbulb moment” that led to creating Sourcepoint: “When I was at Google, a number of publishers, especially in Germany and France, said: ‘Can you fix our ad block problem?’ The feedback from publishers was: ‘You own the biggest browser in Chrome, and we are feeling a lot of pain, can you fix this problem?'”
But Barokas said Google decided not to prioritise ad blocking in its roadmap, adding that it is a company that promotes user choice. Indeed, earlier this month, Google CEO Larry Page downplayed the threat of ad blocking when he was asked a question about it earlier this month, saying it was instead up to the industry to make better ads that people wouldn’t want to block.
So, having spent around three years at Google, and hungry for new opportunities, Barokas set about on his mission to build a company that could provide a solution to ad blockers. He has brought on board former AppNexus CTO Geir Magnusson, former COO of LiveRail (the ad tech platform acquired by Facebook) Brian Kane, and serial entrepreneurs Jeroen Seghers, JP Carlucci, and Matt Adkinsson.
Its investors include Spark Capital, Foundry Group, Greycroft, and Accel Partners Europe, as well as a number of advertising and tech executives including Millennial Media CEO Michael Barret, Mediamath CEO Joe Zawadski, Moat CEO Jonah Goodhart, and LiveIntent CEO Matt Keiser.
How Sourcepoint plans to solve digital publishing’s existential problem
Barokas says Sourcepoint’s technologists have the expertise to stay one step ahead in the cat and mouse game of blocking the ad blockers.
The other part is that Sourcepoint is taking a different approach. There are many other “ad blocker blocker” solutions already in market for publishers, but Barokas says these only solve half the problem, and often just provide “unsophisticated solutions” that just replace a publisher’s intended ad with a lower-quality alternative.
Barokas told us: “The more I thought about it, this was less about just ad blocking. Ad blocking has accelerated through the crisis digital content is facing — the inability to monetise, and the lack of monetisation in the migration to mobile.”
“The biggest problem is that content consumers and content creators don’t have a transparent transaction that occurs on a regular basis so that each of them knows where they sit in the ecosystem,” Barokas added.
Here’s how Sourcepoint works: It will let a publisher decide how to present a message to a web visitor that has an ad blocker installed. The publisher could choose to circumvent the ad blocker and serve the ad, or it could say to the visitor “our ads pay for your content, how about you choose to allow them,” or it could allow the user to choose their advertising experience (three ads for three stories, for example,) or the publisher could ask them to pay to subscribe.
Barokas said Sourcepoint is working on a number of “sophisticated” subscription options that are designed to take away the friction that usually comes with subscribing to a website’s paywall.
We put it to Barokas that someone in favour of ad blockers might argue that if advertising on websites wasn’t so irritating, people wouldn’t choose to block it — so an ad blocker blocker, or messaging that persuades a user to view ads, might be damaging the experience that user intended.
Barokas referred to the fact that ad blockers charge big digital media companies hundreds of thousands of dollars a year to get their ads whitelisted: “It’s blackmail. It’s extortion. It’s not fair. That being said, [ad blocking] is not against the law, it’s legal in Germany, the US, the UK … but at the end of the day it’s also legal for publishers to give people messages and say you can choose ads. It’s not fair for journalists like you not to have food at your table, it’s not fair not to have a roof over your head. It goes back to transparency and fairness … if users opt-in to having advertising subsidizing the experience, we can serve that ad, [and if an ad blocker continues to block the ads] then that would be illegal.”
For now, Sourcepoint is offering its services to “two dozen top 100 comScore publishers” for free. That not only includes the ad blocker circumvention software, but also analytics tools for publishers to establish who their ad blocking audiences are.
Further down the line, Barokas is exploring different business models including a software as a service-type licensing option, an advertising recovery service which would take a cut of ad revenue returned to the publisher, taking a percentage from new subscriptions the publishers sign up, or a mixture of the three.
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