Ad blocking will cost online publishers $22B this year, report finds

Ad blocking will cost online publishers an estimated $21.8 billion in lost revenue this year, says a new report, and that number could rise dramatically as mobile ad blocking technology becomes more prevalent.

Release of Apple iOS 9 this fall could lead to billions more in lost revenue

Ad blocking extensions on mobile devices could force online publishers to fundamentally change their business models as ad revenue dries up. (Bloomua/Shutterstock)

Ad blocking software will cost online publishers an estimated $21.8 billion in lost advertising revenue this year, says a new report published Monday, and that number could rise dramatically as mobile ad blocking technology moves to mobile devices. 

The report found that 198 million people worldwide are using ad blockers online, a 41 per cent increase from June 2014. 

The enormous growth in the number of global users began in 2012 and has been rising steadily since then, says Sean Blanchfield, the CEO of PageFair, a company that tracks trends in the ad blocking industry and consults with publishers on how to recover lost online advertising revenue. PageFair produced the study in conjunction with Adobe. 

Ad blocking — using extensions, plug-ins or specially developed browsers to prevent ads from showing up on your screen — began as a phenomenon limited to tech-savvy early adopters. In the past few years, however, the technology has been welcomed into the mainstream. 

"The total economic impact was a lot larger than we intuitively thought at the outset of putting the study together," says Blanchfield. "We just didn't expect to see a number that large."

More people are employing ad blockers because of a "growing distrust of the advertising industry" and fears over what advertisers are doing with personal data and information gleaned from tracking online activity, says Blanchfield. 

Growth in the number of people employing ad blockers is correlated with the 2009 introduction and subsequent popularity of Google Chrome, which surpassed Internet Explorer as the most popular internet browser in North America and Europe last year.

Chrome supports a range of ad blockers, even though the majority of Google's revenue is derived from hosting online ads. There are currently 126 million people using an ad blocker with Google Chrome, a 51 per cent increase from last year, says the report.

Apple iOS 9 could be a 'game changer'

By 2016, the total global cost to online publishers could be $41.4 billion, the report estimates, as more people use ad blocking extensions on their internet browsers and as mobile-based ad blocking technology gains momentum. 

The biggest revolution yet in the ad blocking landscape could come this fall, when Apple is expected to release iOS9, the newest iteration of its mobile operating system. For the first time, Apple will give developers the capacity to develop iOS 9-specific ad blocking apps that will be supported by Mobile Safari, which currently represents about 52 per cent of the global mobile browsing market. 

"It could be a real game changer in terms of mobile advertising," says Blanchfield. 

For years, the mobile space has given online publishers — many of whom rely on revenue generated from online ads to stay in business — a reprieve from ad blocking technology. But Apple's move toward supporting ad blocking on its mobile devices could push more publishers to put content behind pay walls or incorporate more "advertorial" content into their business models, Blanchfield says. 

"It's kind of a tragedy, that people using ad blockers are inadvertently inflicting losses on the sites that they visit most and like most."

Shake-up for online advertising

Eyeo, the company that operates AdBlock Plus, one of the world's most popular ad blockers, is developing its own browser for iOS 9, as well as an app that can be run with Mobile Safari.

"It's clear that the next step for ad blocking will be on mobile devices," says Ben Williams, communications and operations director for Eyeo. "Ad blocking's growth is a symptom of poor advertising and there's obvious demand for mobile solutions."

Mobile ad blocking is already going mainstream in India and China, where two extremely popular browsers with a combined 600 million users come equipped with an ad block extension. 

Ultimately, ad blocking is going to shake up the multibillion-dollar online advertising industry "in a positive way," says Williams, who rejects the notion that online advertising is the only way to make money on the internet.

"The idea that we can't find other ways to monetize online is absurd to me."


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