A proxy war: Apple ad-blocking software scares publishers but rival Google is target
A proxy war: Apple ad-blocking software scares publishers
but rival Google is target
Apps that prevent ads making it to the screens of mobile
phones topped the charts this year. What will the consequences be in 2016?
By Alex Hern
Friday 1 January 2016 07.03 EST Last modified on Friday 1
January 2016 13.43 EST
When Apple revealed that its new operating system for
mobile phones, iOS 9, would feature what the company called “content-blocking
Safari extensions”, no one really blinked.
Tim Cook, Apple’s chief executive, didn’t even detail the
feature on stage at the lavish launch for iOS 9 in July.
Instead, details of the content-blocking extensions were
buried in technical documents, and an in-depth explanation was given only on
the fifth day of Apple’s worldwide developer conference in San Francisco.
Online publishers slowly realised that the feature, which
allows users to block ads in the Safari browser for the first time, could pose
a threat to their industry.
Sean Blanchfield, of PageFair, which provides information
to publishers about their audience’s use of ad blockers, described the software
as “the Napster of the advertising industry”. Music piracy altered a
generation’s attitude to music by creating an enduring perception that it
should be free, and opened the doors to streaming services such as Spotify to
rewrite the textbook on making money from music. Could ad blocking do the same
to online publishing?
Mobile advertising was the great hope for newspapers and
magazines, replacing revenues lost in the switch to digital from print. Earlier
this year the influential analyst Mary Meeker, of the venture capitalists
Kleiner Perkins, had pegged it as a $25bn opportunity in the US alone. Now the
hoped-for revenues are in peril, and publishers – and people who care about
free, independent news – are rightly worried.
How ad blockers work
Web ads are almost entirely sold “programmatically”,
meaning that an algorithm decides what ad goes where – and how much it costs.
Unlike print and broadcast advertising, where an advertiser pays a flat fee to
put a specific ad in a specific place, web ads are served to the user depending
on their browsing history. An advertiser might offer 15p for its ad to be shown
to 1,000 people on iPhones in west London. Websites compare this bid against
all others for the same audience and display the highest-bidding ad.
That model is applied partially so advertisers can
personalise ads, ensuring they advertise wedding dresses to brides-to-be,
mattresses to first-time buyers, and fast cars to insecure men, without wasting
money on groups unlikely to react well. Modern web advertising tracks its
audience – and tracking tools hog bandwidth, particularly on mobile, and slow
down devices. Ad blockers significantly improve the user experience by getting
rid of all that.
Ironically, one technology site came under fire for publishing
a 500-word piece about ad blocking that weighed in at 14mb, largely because it
was “bogged down by unnecessary tools”. More data to download means higher
mobile bills, a shorter battery life, and more time staring at loading bars.
Collateral damage
Though it may look as though online publishing has fallen
prey to a dastardly plot from Apple to attack its revenue at the source,
publishers aren’t really the targets at all. Newspapers and blogs are
collateral damage in the latest flare-up in the long-running cold war between
Apple and Google.
Google’s revenue from advertising came to $59bn in 2014,
almost 90% of its total revenue; $45bn came from ads on its own sites including
search and maps, while $14bn came from ads served by Google on other websites.
For all its diversification, from smartphone operating systems to self-driving
cars, Google is still primarily an online advertising company with a large
software company bolted on.
Ad blocking is a kind of war … with damage hitting both
sides
Marco Arment, software developer
Apple also has an advertising business. The iAd platform,
launched in 2010, lets developers embed ads into applications, with Apple
taking a 30% cut. But eMarketer estimated that, in 2014, iAds generated only
$487m in revenue – 0.3% of Apple’s annual income. And those iAds only appear in
apps, which are not affected by content blockers.
That discrepancy is something that Apple’s chief
executive has reiterated again and again. Apple is a hardware company; Google
is an advertising company. In fact, Google is an advertising company that makes
a significant chunk of its money advertising on Apple’s hardware: of the
$11.8bn that Google made from mobile search revenue in 2014, $9bn came from
iOS, according to Goldman Sachs.
Apple has scrupulously avoiding calling its new
functionality “ad blocking”, instead referring to “a fast and efficient way to
block cookies, images, resources, pop-ups, and other content”. But users are no
fools and, by the end of the first day on which iOS 9 was available, ad
blockers entered the top 10 downloaded apps worldwide.
War, not Peace
The ad-blocking app Peace took the No 1 slot in the UK
and US the day it was released. Marco Arment, its developer, wrote about “the
ethics of modern web ad blocking” after Apple’s announcement about content
blockers. “Publishers don’t have an easy job trying to stay in business today,
but that simply doesn’t justify the rampant abuse, privacy invasion,
sleaziness, and creepiness that many of them are forcing upon their readers,
regardless of whether the publishers feel they had much choice in the matter,”
he said.
But less than 48 hours after Peace went on sale, Arment
recanted, pulling it from the store and offering refunds to every user who had
bought it. “I still believe that ad blockers are necessary today,” he wrote on
his blog, “but I’ve learned over the last few crazy days that I don’t feel good
making one and being the arbiter of what’s blocked.
“Ad blocking is a kind of war – a first-world,
low-stakes, both-sides-are-fortunate-to-have-this-kind-of-problem war, but a
war nonetheless, with damage hitting both sides.”
Crystal, another ad-blocking app, became the bestselling
paid app on the Apple iTunes store.
Publishers have reacted in different ways to ad blockers.
Some, such as the Washington Post, have taken to blocking the blockers,
detecting when visitors are using an ad blocker and asking them to turn it off
before they can view content. Others, such as the Guardian, are taking a softer
tack, inviting users who choose to block ads to support the paper in another
way, by becoming paid-up members.
Others are turning to the legal system. The German media
group Axel Springer has been pursuing Eyeo, which makes one of the most popular
desktop ad blockers, through the courts by picking on an aspect of the
company’s business model that has always proved controversial, but is also
unusual: offering publishers the ability to pay to have their ads bypass the ad
blocker – its so-called “acceptable ads programme”.
Perhaps we have been here before. In 2005, broadcasters
feared the advent of technology that allowed viewers to fast-forward through ad
breaks, a “movement that started the moment the remote control became widely
available”, as Emily Bell wrote in the Guardian at the time. Bell quoted an
eminent futurologist who predicted that, by 2015, 100% of the programming on US
television networks would be paid for by product placement. Instead, UK TV ad
revenue hit a record £4.91bn in 2014, while the most expensive ad slot ever was
sold during the 2015 Super Bowl, for $4.5m.
Ad blocking has been around for almost as long as the
web, and yet most people still view most ads. If the sky is falling, it has taken
a long time to hit the ground.
Comments
Post a Comment