Ad blocking: The unnecessary internet apocalypse
The digital marketing and media industry regularly confronts fresh adversaries eager to intercept the flow of ad dollars, often to the disadvantage of consumer choice. Ad blocking is the latest crisis du jour, a potentially existential threat to the industry. To combat it effectively, it’s essential to distinguish ad blocking’s two sources — and their significance.
As abetted by for-profit technology companies, ad blocking is robbery, plain and simple — an extortionist scheme that exploits consumer disaffection and risks distorting the economics of democratic capitalism. When implemented by consumers, ad blocking is a crucial wakeup call to brands and all that serve them about their abuse of consumers’ good will.
Let’s take these challenges in order. Advertising (as everyone reading these words knows well) pays for the ability for nearly anyone around the world to type in any URL and have content of unimaginable variety appear on a screen. Advertising also subsidises the cost of apps, which can take hundreds of thousands of dollars to produce, but are often free or low-priced.
Without advertising, digital content and services either will vanish, or the cost for their production and distribution will come directly from consumers’ wallets.
Of even greater importance is the impact on the economy itself. Advertising represents US$350bn of the US gross national product, and consumers depend on it to help make $9tn of annual spending decisions. “Advertising helps the economy function smoothly,” said Nobel Laureate economists Kenneth Arrow and George Stigler. “It keeps prices low and facilitates the entry of new products and new firms into the market.”
Ad blocking disrupts this engine of competition. I wish I were crying wolf, but I’m not. Some websites, particularly those with millennial audiences, are already losing up to 40 per cent of their ad revenue because of ad blocking. Our own IAB research found at least 34 per cent of US adults use ad blockers.
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