Monday 24 October 2016

Irish publishers set to miss €100m as ad-blocking continues to soar

Internet users' desire to block pop-up ads is having dramatic consequences - and the gaming industry is being worst hit

Published 13/08/2015 | 02:30

Sean Blanchfield founder of PageFair

Irish people are blocking ads on websites at an unprecedented rate, with 18pc of internet users now skipping banner and video ads online altogether.

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The figures, which show ad-blocking usage in Ireland doubling over the last two years, come from a new global report by software giant Adobe and Dublin-based tech company PageFair.

The research shows that 676,000 Irish people now use free ad-blocking software to hide ads from view. The phenomenon, which is part of a wider global trend, is set to cost Irish publishers and website owners an estimated €100m in revenue foregone this year, according to the report.

"Ad-block users are inadvertently inflicting multi-billion dollar losses on the very websites they most enjoy," said Sean Blanchfield,  founder of PageFair. "And there's an even bigger problem coming down the line for publishers with mobile ad-blocking which is lower than on desktops right now. That's about to change."

Next month, Apple's upgraded iOS9 operating system for iPhones and iPads will give users the option to block ads on smartphones and tablets.

"This could have a huge effect," said Blanchfield. "When you put that alongside the move to things like reader view on new browsers such as Microsoft's Edge on Windows 10, which is simply ad-blocking by another name, there's now an eminent threat that the business model that has supported the open web for two decades is going to collapse."

Globally, PageFair and Adobe estimates that $21.8bn (€19.8bn) in advertising revenues will be lost in 2015 due to ad-blocking, half of which will be in the US market.

The report, which tracks over a billion ad-blocking hits each month from millions of web users' internet use, found that the number of ad block users worldwide has increased by 41pc in the past 12 months. It says that there are now 198m active monthly ad-block users.

Ad-blocking is primarily used by downloading free software from an internet web browser's 'extensions' list. The two most popular products used are German-owned AdBlock and AdBlock Plus.

In Europe, ad-blocking has grown by 35pc to 77 million monthly active users over the last 12 months, according to the PageFair report. In the US, it grew by 48pc between to 45 million monthly active users in the same time period.

PageFair says that up to 27pc of websites' ad inventory is now lost to ad-blocking. The report also says that ad-blocking is now spreading to mobile in Asia.

The report lists, by industry, the website and publishing categories worst hit by ad-blocking. Gaming websites fare worst, with 27pc of this category's internet pages affected by ad-blocking software. Social networking services and sites are next at 19pc, followed by tech -focused websites, with 17pc hit by ad-blocking software. Education, sports and financial services all measure between 13pc and 17pc in ad-blocking activity, while cars and restaurants are at 11pc and 10pc, respectively.

Websites hit least by ad-blocking activity include charities (4.9pc), real estate (5pc) and dating services (5.2pc). Health websites also have a low incidence of ad-blocking activity at 5.4pc. "It's soon going to be very hard to advertise a movie or a video game online because those are the users, demographically, who use ad-blocking services most," said Blanchfield.

"Half of some categories of gaming websites are now affected by ad-blockers with the result that some games websites are now going out of business. Tech websites could be very vulnerable soon, too. We can basically now tell that certain types of websites may not be viable." The report shows that Greece has the highest incidence of ad-blocking in Europe with 37pc of internet users deploying ad-blocking software there. Poland is next, with 35pc of users there using the technology. 25pc of Germans user ad-blocking, while 20pc of UK internet users block ads.

According to web analytics firm Comscore, people who use ad-blocking software interact with content they see online 21pc more than non ad block users. And ad-blocking is most common among so-called 'millennials', with 23pc of all 18 to 24-year-olds and 14pc of all 25 to 34-year-olds now using ad-blocking software. This is a key age group that advertisers - and publishers - now want to reach.

The ad-blocking epidemic has also affected so-called 'YouTube stars', who make a living from broadcasting material on YouTube and rely on the ads to pay their bills.

Many now request that their readers disable ad-blocking software when watching their videos. "By working with PageFair, our goal with this research is to shed light on the effects of ad-blocking so the industry can develop better solutions for content publishers, advertisers and consumers alike," said Campbell Foster, director of product marketing at Adobe.

Google's Chrome internet browser, which is now the most used browser in the world, has the most ad-blocking users with 126m people deploying the technology, a 51pc increase on last year. Meanwhile, 48m Firefox users engage in ad-blocking, while 9m Apple Safari users block ads.

Other reports show the emergence of web browsers in Asia, such as UC, that have ad-blocking built in. UC claims to have 500m users.

"PageFair is working with thousands of publishers to securely display user-friendly advertising and keep free websites in business," said Blanchfield. "I hope this report will prompt more editors, website owners and publishers to combat the problem."

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