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Ad blockers: A solution or a problem?

Robert L. Mitchell | Jan. 16, 2014
It's a cause. It's a curse. It's just business. Ad blockers take a bite out of the $20 billion digital advertising pie.

Going forward, he says, ClarityRay will charge a percentage of CPM cost over the publisher's entire ad inventory, rather than taking a cut of the value of recovered ad impressions.

Watching the consumer

Alan Chapell, president of consumer privacy law firm Chapell & Associates, says the rise of ad blockers has created a tug-of-war between publishers and ad blocking product developers, with users in the middle. "There's confusion around who owns the user," he says.

With publishers so far unable to successfully implement paywalls or other alternative revenue strategies at scale, growth in the use of ad blockers poses an existential threat to the economics of the Internet, says Furchgott-Roth. "If the ad blocking groups prevail, it will substantially erode the business model for providing online content for free. You'll see a lot of websites disappear." But, he adds, "Other business models will take their place."

Everything turns on what consumers do next.

Existing users of ad blocking software may be a lost cause. Once consumers decide to block ads and experience the cleaner Web pages and faster load times that ad blocking delivers as it filters out bandwidth-hungry animations, video and other advertising content, they're less likely to want to give it up.

But will mainstream consumers in the U.S. turn to ad blockers in a big way? "The numbers have not reached the point where publishers are panicked," says Chapell. "But if those products were on 80% of computers, we'd be having a very different conversation."

Schmacher says adoption rates in Europe could be a harbinger of what's ahead for the U.S. In Germany, for example, about 15% of users run ad blockers -- three times the rate in U.S. But Europe is also very different from the U.S. in two key respects, he says: Europeans are more vigilant when it comes to privacy and ad tracking issues, and as part of its antitrust case against Microsoft, EU regulators insisted that consumers be given a choice of browsers on computers they purchased. Many chose Firefox, he says, where ad blocker add-ons have made the biggest gains.

With billions in ad revenue at stake, there's a big incentive for advertisers and publishers to figure out a way to preserve the current business model. And in the arena of countermeasures, ClarityRay's approach may be just the first volley. While Schumacher admits that the "URL-swapping" mechanism used by ClarityRay works, he says Adblock can easily make modifications to defeat it if more sites start using that service. But, he admits, ClarifyRay and others will probably move on to other methods to fool ad blockers, and that could be the start of an arms race between the big publishers and ad blockers.


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