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Ad blockers will cost publishers US$27B by 2020, says British study

This comes as digital ad spending is expected to shoot up annually to more than US$239 billion in the next three years

PUBLISHED : Thursday, 12 May, 2016, 12:43pm
UPDATED : Thursday, 12 May, 2016, 2:11pm

Ad blocking software could cost digital publishers over US$27 billion by 2020, according to a new report by Juniper Research.

Use of the software has been on the rise. Globally, there were 198 million active ad blocking users in August 2015, according to a report by Pagefair, representing a 41 per cent year-on-year rise. A recent study by eMarketer suggested that more than a quarter of U.K. internet users will be using ad-blocking software by the end of next year.

A number of developments have been driving the trend. Some of the most common reasons people are using ad-blockers include the intrusiveness of adverts, the lack of relevancy and specifically on mobile, the fact that loading of adverts slows down web pages and uses data.

"Smartphone users will be able to experience faster page load times, creating a better user experience. Much like desktop browsing, consumers will also be less likely to have their personal data shared with third parties," Juniper Research's report said.

Digital ad spending has been on the rise with revenue forecast to grow 12.1 per cent annually to US$239.87 billion in 2019, according to PWC. Mobile ad revenues will outstrip display by 2018. But ad blocking software has put this revenue under threat.

Many marketers and advertisers have not yet cracked mobile advertising, giving rise to products aimed at blocking ads.

Last year, Apple released a feature to allow developers to make ad blocking tools for its Safari mobile web browser with the iOS 9 update. And earlier this year, U.K. mobile carrier 3 started to block adverts at a network level, essentially bypassing the need for users to download individual software. Juniper Research said it expects more mobile operators to roll this technology out.

Ad blocking software makers such as Shina have been on the offensive and in February, the Israeli company's chief marketing officer called its solution a "nuclear weapon" threatening the industry.

Publishers have tried to fight back however. A group of French newspapers carried out a week-long campaign where they blocked people using ad blockers from accessing their websites.

In-app ad blocking?

Ad blocking so far has focused on allowing people to block ads on web pages. In-app ad blocking hasn't yet taken off but is a possibility. Juniper Research said however that when speaking to players in the market many "feel the practice to be morally unethical or the technical challenges too costly".

"The application in which adverts are blocked raises ethical questions about the future of independent and small scale app developers. With ad blockers dissuading potential development, there is fear that app stores will see a decrease in the amount of new applications uploaded," the study said.

"The biggest hurdle facing mobile application ad blocking is the technological challenges that it brings. In order to block the advertising content, the technology needs to cease the ad call or block the application's connection to the Internet. To achieve this, the code must be placed directly in the smartphone Operating System or in the applications Service Development Kit."