Ad Blockers Are Making Money Off Ads (And Tracking, Too)
Advertising pays for a lot of what you see on the Internet. This makes ad blockers a big deal. Readers are using them. Advertisers are panicking about them. Publishers are attempting to quash them. Meanwhile, ad blockers market themselves as a way to speed up web browsing while you skirt evil data collectors and attention-hungry advertisers. But ad blockers are running businesses too. And their business models aren’t too far off from the very ones that publishers and advertisers use to make money on the web.
Content industry anxiety spiked last year when Apple said ad blockers would begin working on iPhones. Since then, the advertising and publishing industries have been in a kind of endless panic, trying to work together to clean up the way they serve up content and ads. While there are no reliable estimates on how many people use ad blockers, the general consensus is that the number is growing.
One thing’s for sure: a veritable cottage industry of ad blockers has cropped up. Some have been around for years, while others were newly created for ad block-capable iPhones. This already bustling industry seems likely to continue to bustle, in part because there seems to be some real money to be made in blocking ads. As publishers and advertisers try to reinvent or at least refresh how they make money off of your attention, ad blockers are pushing just as hard to make money off of ending distraction.
The Business of Blocking
The ad-blocking industry can be broken down into a few major categories. Some of them don’t make any money at all. But many do, in sometimes surprising ways.
First, there are the ad blockers that block, well, nearly every ad and tracker. Privacy Badger, for example, is a nonprofit blocker operated by the Electronic Frontier Foundation that detects and blocks what it calls “non-consensual tracking,” or ads and trackers that follow you around from site to site, serving you up, say, an ad about sneakers in a banner after you browse the Nike site. In effect, if you use Privacy Badger, it prevents your browser from loading anything from third-parties that you haven’t agreed to see. The EFF accepts donations (and coding help), but the site itself operates as a nonprofit.
On the other hand, Adblock Plus—possibly the most popular ad blocker on the Internet—is a business. For you, the web user, it’s a free browser extension that blocks ads, banners, pop-ups, and video ads. It also disables tracking services. But for many in the publishing and ad industries, it’s the scourge of the web. And it takes advantage of that antagonism.
Adblock Plus doesn’t block all ads, but rather operates what it calls an “acceptable ads” program, where ads that meet its criteria for things like placement, size, and distinction, are “whitelisted”—that is, if the company displaying the ads is willing to split the revenue gained by whitelisting with Adblock Plus. Companies can apply to have their sites whitelisted, but Adblock Plus has also reached out to some to solicit their business. Other ad blockers, such as mobile app Crystal, take a similar whitelisting approach.
Ghostery, another popular ad blocker, operates under a different model. As a user, you don’t see ads and aren’t tracked by pesky data trackers. The company, however, makes money by collecting anonymized data that those trackers pick up. It repackages that data and resells it to publishers, websites, and other companies interested in what third-party data they’d otherwise track themselves, though Ghostery claims its tracking is better. (Ghostery users can choose whether or not they want their data to be shared.)
Mobile ad blockers such as Disconnect and 1Blocker operate under a “freemium” model, which allow you to download the service, but then charges for certain options like being able to block more than one irritant at a time. Apps like Purify, meanwhile, just charge you a few bucks when you download them on your phone.
The Future of Ads
To some in the publishing and ad industries, these business models are nothing less than extortion.
“The ad-block profiteers are building for-profit companies whose business models are premised on impeding the movement of commercial, political, and public-service communication between and among producers and consumers,” Randall Rothenberg, the president and CEO of advertising trade group Interactive Advertising Bureau, said in a speech earlier this year. “They offer to lift their toll gates for those wealthy enough to pay them off, or who submit to their demands that they constrict their freedom of speech to fit the shackles of their revenue schemes.”
Adblock Plus in particular has come under fire from some publishers and advertisers. Google, Microsoft, Amazon, and Taboola, for example, have all reportedly paid hefty fees to Adblock Plus to have their ads whitelisted, according to The Financial Times.
But Ben Williams, the founder of Adblock Plus, says his software is a way to help clean up the internet—to provide, as he says, “a scalpel rather than a baseball bat.”
“We realized it could kill the biggest form of advertisement on the web,” Williams says about Adblock Plus after it launched in 2006. “What ‘Acceptable Ads’ does is provide a fair way for publishers and advertisers to reach a previously lost audience.”
Blowing Up the System
Many publishers would likely argue that it’s lost that audience because of ad blockers themselves. But concern over ad-blocking has also spurred soul-searching in the industry, as well as aspirations to innovation, such as WIRED’s own ad-free subscription service, which launched last month. The trade group IAB released a report last year on how advertisers should change their digital ads to be cleaner and less intrusive.
Jason Kint, the head of Digital Context Next, a digital publishing industry trade group that represents publishers (including WIRED parent company Condé Nast), says that focusing on ad blockers’ business models is a “red herring.” The industry, he says, should be focused instead on serving its readers.
Or it could try the nuclear option: going to court. Benjamin Edelman, a Harvard Business School associate professor who studies online advertising, says publishers could try to shut down blockers with a copyright lawsuit. “You’ve modified our website for your business purposes… You’ve modified it in order to get us to pay you tribute, in order to get us to buy our ads back in. You claim it’s all about protecting consumers from bad ads, but actually you’re perfectly willing to certify our ads so long as we paid you,” he says publishers could argue. That line of argument might work, he says. In copyright fair use lawsuits, Edelman explains, the economic impact is the single most important factor, meaning money is taken into account when weighing the impact on the creator of the original work (in this case, publishers, whose works are their websites).
Meanwhile, advertisers themselves are looking to the future. Chris Tuff, the executive vice president and director of business development and partnerships at ad agency 22squared, calls the current dust-up over online ads a transition period. The advertising industry is already finding more value in a different kind of ad: so-called native advertising, which looks more like the content consumers are coming to websites to see in the first place. “People don’t mind advertising as long as it’s relevant,” Tuff says.
“Will there be banner ads in 10 years? Doubt it,” he says. “We’ll be moving to content. You have to blend in to stand out.”
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