The rise of ad blocking is becoming a serious problem for digital media companies. And for Google, it’s turning into a multi-billion dollar issue.
PageFair, a company that works with publishers to measure the cost of ad blocking and to help them display less intrusive advertising that can be whitelisted by the ad blockers, estimates that Google lost out on $US6.6 billion in global revenue to ad blockers last year.
PageFair used Google’s own revenue numbers, plus market data from research companies eMarketer and comScore to predict Google’s total potential ad revenues across YouTube, search, and its display advertising properties AdSense and DoubleClick. It then assumed a “conservative” user ad blocking penetration of 10% in the US (PageFair’s data says ad blocking is actually up to 13.6% of users) and an average rate of 12% internationally.
Adblock Plus, one of the most popular ad blockers and the company PageFair used to come to its $US6.6 billion figure, does give internet companies the chance for their ads to be whitelisted if they meet an “acceptable ads” policy — which includes what the ad blockers deem as non-intrusive ads like sponsored search links. But bigger digital advertising companies like Google (as well as Microsoft, Amazon, and Taboola) are made to pay Adblock Plus huge fees — up to 30% of the additional ad revenues they would have made were the ads unblocked, according to The Financial Times.
Business Insider has contacted Google and Adblock Plus for comment and we’ll update this article once we hear back.
Google has managed to claw back around $US3.5 billion by getting on ad blockers’ whitelists, PageFair says. But the blog post adds that Google is rumoured to be paying $US25 million to Adblock Plus alone just to do so.
The PageFair blog post reads: “This is a relatively small sum for a global corporation with revenues of nearly $US60 billion, while being a huge cash injection for a fast-growing adblocking startup in Cologne. It is not credible that these funds are simply being spent on the administration of the acceptable ads program. Instead, they are presumably being reinvested in the future development of adblocking … Although paying Adblock Plus may recover some short-term search engine revenue, it also tightens the adblocking stranglehold on the remainder of Google’s revenue.”
But Google is not necessarily critical of ad blockers, in spite of the threat they pose to its revenue. Earlier this month Google CEO Larry Page was questioned by shareholder at the company’s AGM as to whether he was worried about the rise of ad blockers.
He responded that the best response to ad blockers from the industry will be to create better ads. And he added that: “I don’t think there’s been any major change in that dynamic [use of ad blockers] in the last year or anything like that.”
That said, there has been a lot of news surrounding ad blockers in recent months. Adblock Plus has a released a new ad blocking Android browser, and a carrier-backed plan to block ads right at the source (the data centres) before they even reach a customer’s smartphone were both announced last month.
Meanwhile Eyeo, the German company that owns Adblock Plus, has been victorious in court on four separate occasions versus online publishers arguing users should not be allowed to block ads on their sites and deprive them of revenue — most recently winning a case against German broadcasters RTL Interactive and ProSiebenSat1.
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