Job's Vulcan Nerve Pinch from the Grave: Ad Blocking

“I’m Going to Destroy Android, Because It's a Stolen Product” 

--Steve Jobs

Job’s statement was the plot heard around the world and Apple’s declaration of war on Google. Once good friends, Apple CEO Steve Jobs and Google CEO Eric Schmidt (a former Apple board member) became avowed enemies, causing a collective jaw-drop in the tech industry.

A brief history
The love was lost when Google’s continuing acquisitions (acquisitions for which Apple itself bid and lost to Google) along with the 2010 launch of the Android instigated the ensuing intergalactic wars. Android technology integrated touch screen with its devices, a feature that Apple said it singularly owned. This resulted in many lawsuits filed by Apple against Google, among numerous other corporations, for patent infringements and stealing intellectual property. These actions, buoyed by opposing business philosophies (Google campaigns for open-products while Apple leans heavily toward proprietorship.), became a tailspin with ramifications that will reach into 2016 and beyond. The lawsuits were settled (Apple got money; Android kept its touch screen.), but the war wages on.¹

What’s going on now?
One fall out of this war concerns an important factor of today’s e-commerce: Ad blocking. In fact, a recent report published by Adobe and PageFair stated that blockers would cost publishers nearly $22 billion in revenue in 2015.²  Here are some sobering findings:³

• Usage of desktop ad blockers in the United States grew by 48% during the past year.
• Desktop ad block usage in the United States resulted in an estimated $5.8B in blocked revenue during 2014; it is expected to cost $10.7B in 2015 and $20.3B in 2016.
• In Q2 2015, mobile accounted for 38% of all web browsing, yet only 1.6% of ad block traffic on the PageFair network in Q2 2015 was from mobile devices. 
• During Q2 2015, 40% of mobile ad blocking came from Firefox users who had installed an extension to block ads. That is about to change with ad blocking now available on iOS 9; mobile Safari represents 52% of the mobile browsing market (and 14% of total web browsing).
• At 50%, misuse of personal information was the primary reason given for enabling ad blocking overall.
• 57% of millennials cited an increase in the quantity of ads as their reason.

These stats should likely make advertisers rethink the ways they connect with their audience, which, in turn, could cost Internet readers access to a lot of free content as free is not really free...advertisers foot the bill.

While ad blocking has been around for awhile, Apple’s latest iOS 9 release has significantly upped the ante on ad blocking⁴, which could leave businesses eating stardust as users easily banish their banner ads, pop-ups, and autoplay videos once and for all. All those Google ads that companies purchased won’t be visible to Apple users who turn on this feature, and the feature is not selective at this time. This means that it blocks ALL ads, including quality ads of quality products that don’t implement tracking functions. This is bad news for Google’s business model (not to mention all those paying advertisers), which derives a large portion of its revenue from advertising sales. (Steve Job’s Vulcan nerve pinch from the grave.)

So, what’s an advertiser to do? Is the face of e-commerce changing...again?
You bet! But most experts in the industry think it’s a good opportunity to repair a system of intrusive, data-heavy ads that slow down the browsing experience and frustrate the consumer. Over time, experts believe that ad blockers will feature an option for a whitelist that will allow some ads through. One ad-technology company, Rubicon Project, said they were in the early stages of the development of this technology that they believe will offer the user a better experience while giving the advertiser more opportunities.²

Like most technological changes, the evolution of online advertising will be refined and, hopefully, elevated in terms of quality information and user experience. Accomplishing this feat will certainly add authenticity to a brand. But currently an advertiser must consider that Apple wins the web traffic market share in the United States at 52%,⁵ 84.6% of which come from users of the iPhone 5 and older iPhone models⁶. That’s a lot of phones when you consider that models back to the iPhone 4s can upgrade to iOS 9.⁷ Ultimately, advertisers will need to aggressively develop new tactics in order to connect with this massive challenge.

Sources:

1. The DailyTech: http://www.dailytech.com/Apple+vs+Google+War+Appears+to+be+Escalating/article17887.htm
2. New York Times: http://www.nytimes.com/2015/09/19/technology/apple-ios-9s-enabling-of-ad-blocking-prompts-backlash.html
3. "Ad Blocking’s Impact and the Future of Digital Marketing," a Tap Influence webcast by Dr. Johnny Ryan of PageFair: http://www.tapinfluence.com/ad-blocking-impact-on-digital-marketing/
4. Forbes: http://fortune.com/2015/09/22/ad-block-ios-android/
5. Venture Beat: http://venturebeat.com/2013/01/04/old-phones-and-new-users-are-key-reasons-apple-topped-50-u-s-smartphone-market-share/
6. Marketing Land: http://marketingland.com/state-iphone-2015-stats-marketers-need-know-116049
7. Apple: http://www.apple.com/ios/whats-new/