Will Google's Ad Blocker Hurt Its Advertising Business? (GOOG)

Google (GOOG) will launch a new ad-blocking tool early next year.

The announcement was made on its official blog yesterday, and publishers have even been provided with a new tool called “Ad Experience Reports” to help better prepare for its introduction. This tool will give publishers the opportunity to determine which ads are deemed offensive on their websites, so that they can iron out any potential issues before Google’s ad blocker goes live.

The filter, as Google is calling it, is expected to be switched on by default in desktop and mobile versions of Chrome in a bid to weed out ads that hinder user web-surfing experiences. Rather than block all unsuitable looking ads, the tool will focus specifically on webpages where annoying or intrusive commercial messages, including auto-playing large videos, pop up regularly. 

Google, which makes nearly 89 percent of its revenues from displaying ads and, together with Facebook (FB) accounted for 85 percent of internet ad spending growth last year. It that it won’t be responsible for determining which ads are unsuitable. This task will instead be given to the Coalition for Better Ads, an industry group that incidentally includes Google, as well as Facebook, News Corp (NWS) and The Washington Post, as members. The Senior Vice President of Ads and Commerce, Sridhar Ramaswamy, wrote in the blog post that even ads “owned or served by Google” will be blocked on pages that don’t meet Chrome’s guidelines.

A Good Move?

While it seems counterintuitive for a company that depends on advertising revenue to shun ads of an sort, the Wall Street Journal reported that familiar with Google’s plans argued that the move may be designed to give the tech giant an even more dominant position in the digital advertising market. Annoying commercial messages have led 26 percent of U.S. web users to install ad blocking software on their browsers, according to the Interactive Advertising Bureau. The Journal was told that that the search engine giant’s decision to launch an alternative could be part of a ploy to disrupt this growth and have more control over which ads get blocked.

"It’s far too common that people encounter annoying, intrusive ads on the web--like the kind that blare music unexpectedly, or force you to wait 10 seconds before you can see the content on the page," said Ramaswamy in his blog post. "These frustrating experiences can lead some people to block all ads--taking a big toll on the content creators, journalists, web developers and videographers who depend on ads to fund their content creation." He said this new policy is to improve the digital advertising ecosystem for everyone involved. It's safe to assume that includes Google.

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