Uh-oh: Ad blocking forecast to cost $35 billion by 2020
The doomsday scenario for publishers is that ad blocking becomes easier, more well known and regularly used. One researcher estimates that if ad blocking rates maintain at their current levels — and publishers do little more to combat ad blocking than they already are — they will lose $35 billion by 2020.
Informa Group’s research arm Ovum believes if publishers continue to respond to the ad-blocking threat with measured approaches, by 2020, revenue losses from ad blocking will be $10.5 billion (£7 billion) in the U.S., and $1.9 billion (£1.3 billion) in the U.K. The silver lining to that steep bill: It’s far lower than the $78 billion in losses Ovum predicts if nothing whatsoever is done to address ad blocking.
In the most optimistic scenario Ovum considered — publishers took absolutely every countermeasure they could — ad blocking would still cost $16 billion globally, by 2020.
“It’s most likely that the response will be something in between,” said Ovum’s senior analyst Charlotte Palfrey. “The bottom line for publishers is that there is the opportunity to take back control of this situation. If they do, they can rake back $43 billion: There’s a significant opportunity to stem the losses and make things more manageable.”
Publishers have been taking a mix of different methods: from decluttering sites, to improving ad experiences and prioritizing page- and ad-load speeds. One thing Palfrey doesn’t condone, however, is deploying ad blocker bans.
“Those that do that are going up against might of the internet. There are thousands of developers happy to work for free in their spare time. It becomes a game of cat and mouse. Publishers would do better to lay aside that and focus on other initiatives, like developing their apps which won’t be as affected by ad blocking.”
Ovum’s report has also put a kibosh on the threat of mobile network operators wading in on the ad blocking debate, which has been causing concern in Europe.
Mobile operator Three is the first to start pushing for network-level ad blocking and will run a 24-hour trial mid-June to test it. It’s currently marketing this to its customer base to gather opt-ins. Publishers are now turning wearily to this new threat, with many including Guardian News and Media’s chief revenue officer Tim Gentry saying the move is “undermining” publisher revenues.
“Three’s decision to push ahead with network-level ad blocking risks undermining the ad-funded digital economy by forcing publishers who invest heavily in original content to either pay Three for carriage or face having their business model seriously disrupted,” he said.
Mobile operators have indeed been eyeing network-level ad blocking as a handy new revenue stream, according to Palfrey. But Ovum’s numbers predict that there’s not too much to fear from publishers here, partly because all implementations will need to be opt-in, and partly because people generally spend more time browsing via WiFi than mobile internet.
“This will reduce over the next five years, but even in 2020, traffic over WiFi will still account for a significant majority of traffic coming from smartphones and tablets,” added Palfrey.
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