Location Data Insights

The Ad Blocking Wake-Up Call

September 22, 2015
Romet Kallas
Account Executive

The advertising industry is worried about decreasing audiences, as advertisers are struggling to keep the ads relevant. Advertising is often pointed to representing “a bad consumer experience — from an annoyance perspective, a privacy perspective, a usability perspective.”, including Harry Kargman, founder and CEO of mobile ad company Kargo. Marketers, publishers, and adtech firms, being the main players in the ecosystem, are now looking to evaluate their strategies.

Marketers do have a choice - become relevant

PageFair and Adobe released an eye-opening Report in Q2 2015 on ad blocking, where the global usage of ad blockers is stated to have quadrupled from 50 million to nearly 200 million users in 2013 to 2015. In other words, the fact that 7 percent of the 2.8 billion people online use adblock, is an indication that traditional online advertising needs to evolve and fast. People are tired of the non relevant marketing clutter. So how do we position ourselves towards the rapidly growing usage of ad blocking?

Ad blocking on mobile is yet to be a factor

Only 1.6% of adblock traffic comes from mobile devices today. Mobile accounts for 38% of all web browsing, and it is only a matter of time when it will surpass desktop. However, adblock is now part of iOS 9 and according to Adweek three of the Apple App Store's top paid apps in the U.S. were ad blockers, including the famous/infamous Peace, before it was pulled by its creator. CEO of Apple, Tim Cook has criticized Internet companies in the past for intruding on people’s privacy to boost ad revenue. “They’re gobbling up everything they can learn about you and trying to monetize it, we think that’s wrong.”

We are yet to see the adblock traffic from mobile devices, but before we all sound the alarm, iOS devices make up less than 20 percent of the mobile market share and customers have to turn it on manually. So is it actually a bad thing, that people have the option to opt-out?

Why ad blocking? And why now?

Adblock companies say they are giving people a way to fight back against online marketers, which are increasingly more and more intrusive on customers privacy without a consent. It was due time for customers to have a say in this matter. According to Techcrunch The number one reason why people use Adblock is that they feel their personal data is being misused. Followed by ads that take ages to load and are rarely relevant. So can we actually blame people for protecting their privacy? No, instead we have to look at ourselves in the mirror. “For years we have bombarded people with irrelevant messages. It’s horrible.”, as Frank Iqbal, RAPP USA’s chief creative officer, so directly puts it in Digiday.

Consequences of ad blocking

Ironically marketers are not the ones who suffer the most. When a customer blocks an ad, it goes unserved and doesn’t cost marketers monetarily. Their ability to market their products are of course diminished, but it is the publishers who really suffer, as their main source of revenue is derived from ads. Meredith Kopit Levien, the chief revenue officer at the New York Times, was quoted by Bloomberg that ad blocking is “a real issue for the ecosystem, and we, like everybody else, are trying to understand what impact it will have on our supply.” She said the effects haven’t been “material”, but that the addition of mobile devices could make it “a bigger issue.” On the one hand, you’ve got publishers saying there’s an agreement that in return for free content, customers have to put up with ads. Users of adblock are breaking the agreement.

But if marketers struggle to provide relevant content, by increasingly being invasive, can we blame the customers who turn to adblock?

So, is this it for online ads?

As Eric Chemi demonstrated in an article, regardless of the technological shifts, the U.S. advertising industry has been about one percent of U.S. GDP for the last 100 years.

So ads will not disappear, but rather evolve and take on new forms, like native advertising or Apple’s own News app. Some, like the Washington Post and the U.K.’s top broadcaster ITV, have started to block content for users who use adblock. The question is if we want to focus on finding new ways how to show the same irrelevant ads to customers who have already chosen to opt-out? Or rather learn from it and start working towards an ecosystem where customers actually want to receive ads. The lesson learned is that we as an industry need to build future ad products FOR the end user.

The customer is always right

The best way to reverse the growing trend of ad blocking is to pivot in how we generate and display ads. Marketing campaigns cannot be driven by revenue and quantity alone any longer. It is all about relevancy and privacy. In other words, understanding the needs and wants of the customer. In 2014 a study by IBM stated, 34% of customers were willing to share their location data, which was double compared to previous year. In 2015 a study by Zebra Technology states that, already 51% of customers agree to share their location data for deals and benefits. Customers are willing to give advertising a chance, as they understand that in order to receive you have to give. So how can marketers use that location as a contextual tool?

Connecting mobile and location is the secret to relevancy

Nowadays we take our mobiles everywhere we go. 90% of the sales happen still in the physical location, and if we want to understand the customer, we have to treat the physical location as a gateway to context. That is possible by connecting proximity technologies to mobile, that help to complement location with context. Proxbook, the industry directory of location based services, already features several successful proximity marketing use cases, added by different proximity solution providers. Showing, the drastic increase in ROI and engagement rates of proximity campaigns compared to typical marketing campaigns.

Location and location control

It doesn’t matter how good or relevant your ads are if you have no one to show them to. We should have learned by now, that when customers are not in control and not aware what their data is being used for, they leave without looking back. Meaning that before we start benefiting from proximity in large scale we need to win the trust of the customers. Achieving that is possible by re-building the industry on transparency and trust. Location Control, is such an initiative, where customers can see exactly the data which has been registered by interactions with proximity technologies and opt-out from specific or all future interactions. We believe that by giving customers control over personal data, there are fewer reasons for using ad blocking tools.

Ad blocking is of course not the end of digital advertising, far from it. But if we don’t change the course, think of those 7% who use adblock quadrupling within the next two years.

We have a chance to learn from our mistakes and redeem the ill repute of non relevant advertising. The opportunity is represented by connecting mobile and technologies like proximity solutions, to understand the customer.

And, by giving the customers control over their data, we build trust and transparency which reduces the threat of intrusiveness. This is however the end of traditional marketing, but if we act and learn from our mistakes, we are able to re-build an industry where ads matter. In Unacast we have a saying: The only difference between advertising and communication, is relevance. Let’s start communicating with our customers!