Advertisers vs. ad blockers: The race to Internet armageddon

Publishers need advertising dollars, but obnoxious ads have spawned a boom in revenue-killing ad blockers

Advertisers vs. ad blockers: The race to Internet armageddon
flickr/Horia Varlan (Creative Commons BY or BY-SA)

The Internet is at war with itself. An online arms race is pitting users against advertisers, publishers against the developers of ad and cookie blockers, and Apple against Google.

The war started because the classic Internet and the mobile Web are facing a crisis of advertising revenue. While the Googles, Facebooks, and Amazons are rolling in money, smaller publishers -- particularly those trying to make a living selling news and entertainment -- are desperately seeking ways to derive revenue from the expensive-to-produce content they offer.

As with most arms races, the combatants in this war tend to leapfrog each other. When users started ignoring simple display ads, advertisers developed new hard-to-ignore formats. In response, developers invented the ad blocker and eventually won the game-changing support of Apple. That got everyone’s attention, and it has accelerated the war: Last month, for example, Yahoo began (on a trial basis) to lock down the email accounts of Web users who were shielding themselves with ad blockers.

The arms race heated up a bit more this week, when Mozilla launched Focus, its long-rumored ad blocking add-on for the iOS version of its Firefox browser, the New York Times ran a scathing story on the new and obnoxious types of ads plaguing users, and Yahoo -- one of the world’s most heavily trafficked network of websites -- showed signs of self-destructing.

This is a war no one is going to win.

Yahoo’s dilemma is every publisher's dilemma

My first reaction to the news that Yahoo had blocked access to its email service for some people who use ad blockers was anger. The move was high-handed, smacks of bullying, and is a terrible way to treat customers.

But larger issues exists here: It’s not unreasonable to say “you get what you pay for.” And if you pay nothing, are you really entitled to complain if someone stops the giveaway? What’s more, Yahoo, despite claiming more than 800 million active users, hasn’t been able to increase its ad revenue and may even be forced to sell off most of its assets.

Yahoo is hardly alone. The Web’s basic business model -- free content supported by advertising -- is badly broken.

For years, publishers assumed that what worked for broadcast TV would work on the Internet. It doesn't, and it's no accident that even the most successful news operations, including the New York Times, charge for access to their content. They were forced to. Many other news sites, including high-quality operations such as GigaOm, collapsed under the financial pressure.

This situation isn't new; the story has actually been unfolding for more than a decade. When the Web first became an important force, many publishers simply took print content and poured it onto websites. The approach wasn't very imaginative, but it was free. It didn't take long for users to flock to online content -- and they expected it to remain free. News and entertainment content become the bait used to lure people into viewing, and hopefully clicking, ads.

Similarly, free email and Web search were designed to put content in front of users. For complicated reasons, Google thrived, but Yahoo didn't. Web ads don't simply lure buyers the way the industry had hoped. It took a while for advertisers to figure this out, but once they did they reacted by developing more ways to capture eyeballs.

Unfortunately for the publishers, their revenue-driving solutions are making users angry -- without increasing the needed revenue.

Ads on many Web pages are so obtrusive that users often leave in frustration. Ads on all sizes of screens are designed to get a viewer's attention, of course, but often that means stubbornly blocking the content on the page.

That’s particularly true when ads are viewed on the small screen of a smartphone. Finding the X that lets you close the ad can be difficult -- sometimes it even moves around or ignores repeated pokes. "How many times have you hit the X and it doesn’t work?" noted Tony Weisman, the chief executive of the digital agency DigitasLBi North America, in an interview with the New York Times. "Now it’s just a cruel joke."

Making the Web even more unsatisfying are the obnoxious fleets of cookies that track users’ every click and serve the same ads over and over again on every page they visit. No wonder users are fighting back with technology designed to block ads, cookies, and related tracking widgets.

Apple goes nuclear against ads

Apple's iOS 9 takes this mess to an even worse level, as my colleague Galen Gruman pointed out when the company enabled ad blocking earlier this year. Apple has made ad blocking a core feature of the operating system itself through a set of system extensions -- and there's no way to disable it.

Although Apple derives some revenue from Web advertising, it makes most of its money from hardware sales. Google, though, lives on ad revenue, and it’s hard to view Apple’s ad-blocking moves as anything but a strike against its major rival.

But users don’t care about industry feuds. Within days of the launch of iOS 9, they flocked to an ad-blocking app called Peace, which rapidly became the most popular app on Apple’s store. The developer, Marco Arment, soon had a crisis of conscience and pulled Peace, saying in a blog post, "I’ve learned over the last few crazy days that I don’t feel good making one and being the arbiter of what’s blocked."

That incident should have served as a wake up call to the ad industry. But it hasn’t. Instead, a German publisher is suing the developer of an ad blocker, and -- much more significant -- the Interactive Advertising Bureau is currently considering a legal offensive of its own, according to Advertising Age.

I wish I had a solution. This arms race isn’t going to end until the industry finds a way to drive the revenue it needs and is entitled to, without driving users crazy.

Copyright © 2015 IDG Communications, Inc.

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