'Don't blame adblocking ... annoying readers is not a sustainable model'
Published 24/11/2016 | 02:30
Till Faida may be one of the most fumed about people in world media.
As chief executive of Eyeo, the company that distributes Adblock Plus, his technology lets people block ads on their phones and PCs cutting off already diminishing revenue to publishers.
The technology is estimated to cost publishers up to €20bn a year in lost ad views and Adblock Plus is the most used service in the world with 400m downloads. In total, as many as 20pc of all internet users now block ads and Mr Faida is one of the most identifiable people associated with making it happen.
I caught up with the young German at the Web Summit in Lisbon, minutes after watching him get barracked on stage by Bloomberg Media's chief executive (Justin Smith) and the Financial Times's chief product officer (Cait O'Riordan). He was unperturbed by the withering remarks aimed his way by two of the most senior executives in financial media.
"I feel that publishers are starting to realise that it's not adblocking that is putting their monetisation at risk, it's a business model that is based on annoying the readers," he says. "That is not a sustainable business model."
According to the most recent research from Adobe and (Irish) firm Pagefair, one in seven people now block ads online. Desperate publishers say firms such as Eyeo who spread the technology are destroying their chances of survival.
Mr Faida has a different view.
"Right now, publishers are hurting and I completely sympathise with that," he says. "They are dealing with their readers moving online and they've just figured it out now. The most successful publishers will be the ones that focus on a monetisation method that is accepted by the user and doesn't rely on forcing something on users that they clearly don't want to see."
Adblock Plus's own business model is that it operates a 'whitelist' of 'acceptable' ad formats for publishers to use. The whitelist won't let things like screen takeovers or intrusive pop-ups take place. But it will let some ad formats through. Adblock Plus provides a service for companies which want to know which ads will make it past its filters. This "partnering" pitch has led to accusations of "blackmail" from publishing groups, with UK culture secretary John Whittingdale calling the process a "modern day protection racket" in March of this year.
But Mr Faida says these accusations are wide of the mark.
"They are just trying to discredit what we do," he says. "They hope that maybe, magically, their challenges will disappear. It is important that publishers realise they can't just show the same ads to those users anymore. Users have opted out of the ad experience they're getting by installing an adblocker. There is a way to win them back but it has to be done with alternative ads. There is a huge opportunity. Everyone who partners with us makes more money than they did before."
Mr Faida believes that far from destroying online publishing, adblocking services like his can save the media industry from a current "race to the bottom" with more and more intrusive ad formats.
"Look, users don't interact with ads anymore, which is why the revenues are decreasing for publishers," he says.
"So publishers feel they need to compensate for those decreasing revenues by allowing more and more aggressive ads on their site. To be honest, many journalists tell me that this is very frustrating for them because they feel it's degrading the content they're producing. And what's even worse is that this is creating a vicious cycle in which ads become more and more aggressive and at the same time less and less valuable for publishers. So what we want to achieve with our acceptable ads programme is to create an ecosystem that is more sustainable. We want fewer, higher quality ads to provide more value for everybody so there's not this race to the bottom."
As for the type of ads that fall foul of Adblock Plus's quality threshold, Mr Faida says that the list is long. But he says that it's possible to make some general observations.
"It's everything that distracts a user from what he or she wants to do at a particular point. So if you're reading an article and something is screaming for attention or is obscuring your reading, that's not good. Or if you want to watch a video but first you have to sit through a pre-roll video, this takes users away from what they really want to do. It becomes a really frustrating experience."
One problem with restricting ad formats for publishers is that money has to be made up elsewhere. Many publishers are now turning to 'native' advertising strategies to make up for the shortfall in display ad revenue. Such 'native' strategies often include reallocating resources away from journalism and toward commercially-oriented feature articles or online videos made on behalf of an advertiser.
Mr Faida says that this is a problem that only publishers can figure out themselves. But he warns against publishers moving into the commercial equivalent of 'fake news'.
"It is important that we don't gamble with users' trust here," he says. "What we have seen with banner ads is that some people clicked on a banner ad, got a frustrating experience and then learned not to interact with banners anymore. So we have to make sure with new ad formats and platforms that we don't repeat the same mistake again. You can't gamble with the trust of users. You can only trick them once or twice before they lose trust. This is why I think a sustainable approach to monetising is so important. We should all have a long-term view. And publishers should really regain the control over how they monetise their audience because only the publishers really care about a relationship between them and their audience. Many publishers have completely outsourced their monetisation to a third party that doesn't care about the relationship of publishers with the audience."
So what kind of ads should publishers be looking to encourage, then?
"If you limit the amount of ads overall they won't have to scream for attention," he says. "If you only have one or two ads on a webpage, instead of five really big flashy ones, they are not competing against each other for attention. So with our acceptable ads programme, we're trying to define those criteria. It's things like the screen size that they can occupy. But it's also things like animations, how attention-grabbing they might be as well as the separation of content and ads. There also has to be a very clear and visible label so that users can always distinguish what is organic content and what is sponsored content. To me, those are the four core criteria we are trying to establish."
Not everyone is taking the adblockers lying down. In Germany, publisher Axel Springer has banned adblock users from viewing Bild, the country's biggest-selling newspaper online. Other online publications have done the same, including the Financial Times and The Washington Post.
And Adblock Plus has faced legal action in Europe by publishers seeking to control their own ad inventory.
"We have had seven lawsuits now and each and every time the courts have said again and again, ad blocking is perfectly legal," says Mr Faida.
However, the company may face bigger competition from online giants that now stand to lose out if ad blocking becomes more pervasive. In its most recent quarterly earnings, Facebook boasted that it was fighting back against ad blocking services and had seen rates of ad blocking users stagnate on Facebook as a result. Battling cash-strapped newspapers may be one thing. Isn't Faida worried about going to war with entities as big and technically stacked as Facebook and Google?
"I would actually argue that we have more resources than them on this particular topic because Adblock Plus is open source and the filters that are the backbone of it are created by the open source community," he says.
"So we have hundreds of contributors worldwide that constantly update the filters and they are the ones engaging in this cat and mouse game that is going on with Facebook. We strongly benefit from having this community of volunteers who donate their time and effort to keeping up with blocking everything that they deem unacceptable."
Nevertheless, such a battle has begun. And while use of ad blockers is still on the rise, advertising associations such as the IAB say that the growth in users has stalled.
"It still requires a certain level of sophistication to even know about ad blockers," says Mr Faida.
"If it weren't for me, my parents wouldn't have ever heard of ad blockers. So there isn't an endless demographic of tech savvy people that want to stay up to date on the most recent type of ads that are available. So naturally if we're targeting savvy users, at some point there is a certain saturation naturally.
"It's still predominantly a product that young people use and many people wouldn't even know that adblocking is an option they have."