In 2016, consumers spend significantly more time on mobile devices than on desktop or laptop computers. Venture capital firm Kleiner Perkins Caufield & Byers released studies revealing that U.S. adult users spend approximately 2.8 hours a day accessing digital media on a mobile device, compared to 2.4 hours using traditional internet devices, such as desktop or laptop computers. This is a stark contrast to a half-hour of mobile usage and 2.2 hours of desktop usage in 2008. Mobile devices are used for everything from staying connected on social media to conducting commerce online. Advertisers are continually devising content to take advantage of the growing number of people who are online due to mobile devices. This has resulted in a substantial increase in the use of ad blockers.
What Are Ad Blockers
Ad blockers, commonly referred to as content blockers, simply do what their name suggests – they block advertising material on websites. Ad blockers are readily available on major web browsers, including Chrome, Firefox, Opera, Safari and Microsoft Edge. Mobile users primarily choose ad blockers to enhance the online experience. However, they are popular with privacy-sensitive users as well. Ad-blocking software is also beneficial to users who are concerned about data usage and page-loading speeds. PageFair, an industry-leading anti-ad-blocking authority, conducted research that suggests 22% of global smartphone users have some form of ad-blocking software on their device, with many ad-blocking technologies preinstalled into default browsers.
Ad Blocker's Impact on Advertisers
Advertising is commonly used to generate revenue on websites. This typically involves the website providing free quality information in exchange for advertising content. The rise of ad-blocking software on mobile devices is challenging the feasibility of this model. Using advertising to generate income is considered somewhat controversial. Advertisers have a knack of placing online advertising content in prominent positions on websites, which attract the attention of site visitors. It has been argued that advertising is often placed in contentious locations that bait a user into clicking on it. Advertisers argue that websites provide quality content, which in turn should allow revenue to be generated through online advertising.
In 2015, Apple Inc. (NASDAQ: AAPL) announced that its iOS9 mobile operating system, which controls iPhones and iPads, would support ad-blocking technology. Many advertisers are disenchanted by Apple’s decision, as they believe that it is likely to have a substantial impact on online advertising revenue. PageFair research estimates that ad blocking may cost advertisers approximately $41 billion in 2016, up from approximately $12 billion in 2014. If the majority of online advertising revenue is substantially reduced by ad-block software, websites are likely to look for alternative ways to generate income, such as paywalls and subscription-based options. The Wall Street Journal, owned by Rupert Murdoch’s News Corp. (NASDAQ: NWS), is an example of a subscription-based service.
Ad Blocking Geographically
It may come as a surprise that emerging markets, such as China and India, are the largest users of ad-blocking software on mobile devices, with a combined total of approximately 281 million people undisturbed by online advertising. Two-thirds of Indonesian users have ad-blocking technology on their mobile devices. This compares to roughly 4.3 million American users who enjoy advertising-free websites. Globally, it is estimated that approximately 419 million mobile users have some form of ad-blocking software on their devices.
Ad Blocker's Impact on Advertising Techniques
The rise in prominence of ad blockers has resulted in advertisers thinking outside the square and devising innovative adaptions of traditional online advertising to reach prospective customers on websites. As of 2015, consumers spend 85% of their time in applications while using their smartphones. This is not surprising, given the popularity of social media. Consumers predominantly use social media from companies such as Facebook Inc. (NASDAQ: FB), Twitter Inc. (NYSE: TWTR) and LinkedIn Corp. (NYSE: LNKD) through applications on their smartphones. This presents advertisers with an opportunity, as ad-blockers typically don’t affect application functionality.
Additionally, these companies provide advertisers with a platform that allows them to be more direct, reaching specific target markets and audiences. Ad-blocking technology may increase the use of native advertising. This form of advertising blends into the web page, giving the impression of genuine content, which is likely to avoid the majority of ad-blocking software. Advertisers must remain nimble and keep adapting advertising techniques that generate revenue, despite the rise of ad-blocking technology.