Ad blocking on mobile has been possible for a while — with services like Adblock Plus and TrustGo allowing users to control the amount of advertising they see on apps and the mobile web. But a new Israeli start-up called Shine claims to have backing from the major wireless carriers, which could seriously threaten the mobile advertising industry.
There are some 144 million active ad blocker users around the world, a number that grew 70% between 2013 and 2014, according to PageFair and Adobe.
The rise of ad blocker usage clearly have the potential to seriously damage publishers’ online revenue — advertisers won’t pay for ads that aren’t served.
But for mobile carriers, ads can actually be a hindrance. Roi Carthy, chief marketing officer at Shine, told Business Insider that the standard app or website pings an antenna up to 50 times a minute — it’s called background signalling. Bandwidth is one of the most expensive pieces of infrastructure for a telecommunications company to operate.
It’s expensive for users too: Shine estimates that, depending on your geography, ads are using up 10-15% of user’s data plans (and not to mention sucking up battery life, and making load times slower.)
Shine originally started its life in 2011 as a company devoted to creating mobile anti-virus software. The company has raised $US3.3 million in funding to date, has 25 staff, and is based in Israel.
Its investors include Horizons Ventures — which is owned by Li Ka-shing, the billionaire chairman of Hutchinson Whampoa, the huge conglomerate that owns the “3”-branded mobile carrier, which operates across Europe, and also the company that has a stake in carriers in Asia including Hutchinson Asia Telecommunications. It also invested in a number of technology companies Facebook, Spotify, and Siri. Shine is also funded by Initial:Capital, which is an early stage investment firm, where Carthy is managing partner.
It was only recently that Shine pivoted to look at ad blocking
Carthy said: “What we discovered redefined malware, and ad tech. That doesn’t mean it has to be malicious, but [ad tech] behaves like malware. The tech and methodology is the same, [but in the case of advertising] it’s more about targeting.”
And so Shine’s ad blocking technology was built.
The ad blocker — or ad-controlling technology as Carthy sometimes calls it — aims to block ads across all mobile display, apps, and mobile video ads. It won’t siphon out “native” ads on sites like Facebook, Twitter, and BuzzFeed, however as these are an “intrinsic part of the user experience,” Carthy says.
And here’s the part that could make this technology really big…
Where Shine will differ from other ad blockers is that it will run as a white-labelled piece of software, licensing the service out to mobile carriers.
It’s up to the carriers to decide how they roll it out. They could choose to make it a premium service, where customer pays a couple of dollars extra a month or year. They could make it an opt-in, where customers get their rates dropped because they are using less infrastructure. It could be completely free, or even pre-loaded on smartphones.
It is also the carriers who will decide how much they will charge publishers, developers, and ad tech companies to get their content and networks “unblocked” from the system. Adblock Plus currently charges major publishers up to “30% of the additional ad revenues” they would have made were ads unblocked, The Financial Times reported.
Carriers are extremely interested, according to Carthy, who claims that 20 high-level execs from wireless companies attended a secret dinner Shine held at Mobile World Congress in March this year (incidentally, while Mark Zuckerberg was holding its own dinner with carriers about its Internet.org plan to bring free or cheap internet to developing countries.)
Carthy expects a carrier to make an ad blocking announcement in the next couple of months: “Conversations have transitioned from ‘whether to’ [introduce ad blocking] to ‘when, and what fashion, and how’,” he said.
“Ad blocking is a right. Full stop.”
Carthy is unrepentant when the argument is put to him that were ad blocking ubiquitous, it would take huge swathes of revenue out of the online ecosystem, and ads are responsible for keeping the majority of the internet free to browse (beyond carrier or broadband charges.)
He has many metaphors for mobile ad: Someone siphoning off a dollar of fuel every time you fill up your gas tank with $US10; chemicals being poured in rivers; smog polluting the air; and an ecosystem in which the cat has been allowed to protect the milk.
“We believe ad blocking is a right, full-stop. If the consumer decides to use it, we believe that it should be their right, and they should be able to do it with full integrity … nobody [in business] has a god-given right to exist. If you own a trucking business, and gas prices rise, and you can’t afford to pay your bills because you were not able to manage your business, you go out of business,” he said. “There will be causalities, absolutely, but I know I’m not losing any sleep knowing remnant inventory ad networks will disappear.”
At the same time, Carthy says he “likes ads” but just thinks they should be displayed in a more “controlled” environment.
Nevertheless, with the scale of a mobile carrier launch (which could potentially use adblocking as a key marketing vehicle to persuade users over to their network,) ad blocking is a serious, existential threat to internet services and publishers which rely on advertising for most of their revenues. In Germany last month, news sites took Adblock Plus to court in Hamburg to challenge its right to suppress ads from the web, but they lost their case and ad blocking was ruled legal.
Stephen Upstone, chairman of the Mobile Marketing Association in the UK and CEO of video ad tech company LoopMe, is confident that the use of ad blockers should not have too great of an impact on the mobile advertising industry.
He told Business Insider: “Advertising helps to fund the apps and content that consumers love and many consumers enjoy advertising. While some technologies can block content, large publishers have both the power and right to maintain relationships with users and advertisers. Some consumers will pay or find other ways to opt out of advertising, but this will not impact this growth of mobile advertising which is set to become the majority of global digital advertising spend and to transform and enhance other global ad markets such as TV brand advertising.”
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