Should retailers worry about ad blockers?
December 31, 2015 10:27 AM
45 million U.S. consumers, or 16% of the U.S. online population, took steps to block digital ads from loading on their screens in the second quarter of 2015, a 48% year-over-year increase, say analytics vendor PageFair Ltd. and Adobe Systems Inc. in their report “The cost of ad blocking.” The report estimates ad-blocking software that prevents visitors from seeing ads cost online publishers $10.7 billion in ad revenue last year. Digital ads are typically paid for based on the views served.
Ad blockers are plugs-in or apps that consumers install on their desktops or mobile devices that block advertising content consumers would otherwise see when they visit websites. While ad blockers are not new for desktops or Android mobile devices, Apple Inc.’s iOS 9 operating system update released on Sept. 16 allowed users with newer iPhones to install ad blockers for the first time on Safari, Apple’s default mobile web browser. That dramatically extended the reach of ad blockers given that 43.6% of smartphones at the time were iPhones, according to comScore Inc. In the week following the release of iOS 9, ad-blocking apps dominated the top paid apps consumers downloaded in the Apple App Store.
What consumers see on mobile devices is important for retailers because smartphones and tablets accounted for 38% of all web browsing in the second quarter, and Safari accounted for 52% of that mobile browsing, the PageFair/Adobe study says. Apple did not respond to a request for comment.
Ad blockers are popular because they can help consumers avoid ads while, at the same time, helping make web and mobile pages load quickly. Ad-free pages are lighter weight than those featuring ads, which enables them to render more quickly while transmitting less data—an important consideration for consumers on mobile plans that charge them more for exceeding data limits. That fact isn’t lost on the developers who have created ad blockers. In fact, Purify Blocker’s tagline is “No Ads. No Tracking. Lightning-fast Safari.”
Web performance vendor Catchpoint Systems Inc. ran a test of how fast mobile sites performed with and without the Pi-Hole ad blocker turned on and found that the average mobile page size decreased 18% and that mobile page load times fell 23% on average, says Dritan Suljoti, Catchpoint’s chief product officer and co-founder.
But the software can pose problems for digital marketers looking, for example, to show targeted display advertising to consumers who’ve browsed an e-retail site but left without purchasing. E-retailers are also finding that some ad blockers can misinterpret some non-advertising content as advertising and block it from loading. Crystal, which when it was first released was one of the most downloaded paid apps in Apple’s App Store, for example, has a default setting that prevents the display of content with tracking codes, such as suggested products.
“Ad blocking is a reality, and marketers should be worried about it,” says Neil O’Keefe, senior vice president of customer relationship management at the Direct Marketing Association, an industry trade group.
While e-retailers are no doubt aware of some shoppers using ad blockers, the effect on traffic to date has been minimal. Most say they are not ready to take significant actions to change their digital marketing approach. Those who have run into problems on their e-commerce sites, meanwhile, are finding workarounds to solve conflicts or are waiting for the problem to become a bigger issue worthy of the effort it takes to solve.
Richard Cohene, vice president of marketing for flash-sale e-retailer Beyond the Rack, is among those holding off making any changes to his marketing strategy because of ad blockers even though the retailer spends 20% of its overall digital marketing budget on mobile web ads.
“Those people that say, ‘I don’t want to get ads,’ that’s fine, they might not have been interested in my ad anyway. Let me save the impression,” Cohene says, referring to how the e-retailer would save money by not having to pay for an ad that isn’t shown.
He says the number of ads that are blocked “is not significant enough to say I’m tremendously concerned about it.” More than half, 51%, of Beyond the Rack’s 2015 web sales come from consumers on mobile devices, with 66% of those sales coming from smartphone users, according to Internet Retailer 2016 Mobile 500 estimates.
If consumer adoption of ad blockers reaches a double-digit percentage, or ad blockers begin taking away more than 10% of Beyond the Rack’s mobile traffic, Cohene says he’d be concerned and possibly take action.
In the week following the iOS 9 release Branding Brand, the mobile technology vendor with the most clients among Internet Retailer’s Top 1000, was unable to recognize 7.7% of iOS 9 users, which it attributed to the installation and use of ad blockers. However that percentage soon declined. In the fourth week after the release, the percentage dropped to 2.5% of all iOS 9 users, and eight weeks after the release, 1.1% of iOS 9 users were using an ad blocker.
“Ad blockers seem to be losing popularity [on iOS 9], but there is still a group of visitors who use them,” says Chris Mason, CEO of Branding Brand.
Part of that may be due to poor user reviews, Mason says, pointing to reviews where consumers say an ad blocker prevented video content or social media comments they wanted to see from loading. “Ad-blocker tools failed on their core benefit to provide a better site-browsing experience to collective customers,” he says.
ComScore estimated in September that ad blockers affected 0.1% of U.S. smartphone and tablet page views, however the market research firm does not have a measurement for after the iOS 9 rollout.
Besides having to keep an eye on how their ads are performing, ad blockers have also caused headaches for some retailers in how their mobile sites display on a smartphone.
A handful of retailers, including the Walgreen Co. and Lululemon Athletica Inc., encountered problems, such as primary images and key functions of their mobile sites failing to display. A Walgreens spokeswoman says consumers that had the Crystal ad blocker may have encountered display issues, but the retailer subsequently fixed the appropriate pages. Walgreens declined to further comment. A Lululemon spokeswoman says the retailer is looking into the issue, but declined to comment further.
These problems occurred because some ad blockers, such as Crystal, have a default setting preventing the display of content with tracking codes or content from vendors that share data with advertising companies, such as Adobe Audience Manager. Ad blockers may misinterpret that content to be an ad or the app may filter content it sees as possibly tracking consumer activity. In fact, some ad blockers, such as Blockr, promote themselves as a way to protect privacy. Blockr’s tagline is “Privacy, Media and Ad Blocker for Safari,” and the app’s descriptions reads, “Blockr can protect your privacy by blocking almost every technique to collect data from you while browsing.” This can create major problems for online retailers, Branding Brand’s Mason says.
“If you think of a retailer’s website, up to 50% of that page experience is brought by third parties loading assets onto your site,” Mason says. Assets can be product recommendations, recently viewed products or customer reviews, all of which an ad blocker can disable.
He says a tracking tag, such as a cookie that stores browsing activity, can raise a red flag for the ad blocker. A vendor that feeds information to an advertising network might also trigger a block. Crystal did not respond to a request for a comment.
Ad blockers are causing e-retailer Diamond Candles to have problems with A/B tests it runs through technology vendor Optimizely, says CEO Justin Winter. The retailer tests alternative treatments of a page to see if consumers respond to one version better than the other, such as clicking more often on a blue Buy button versus a pink button. Once the retailer decides which treatment is better, it redirects 100% of the traffic to the winning page until the change can be hard coded into Diamond Candles’ e-commerce platform. Once the change is made, the retailer turns off the test.
But consumers using the Crystal ad blocker are not being redirected to the winning look and instead see an old version of the Diamond Candles mobile site that doesn’t convert as well as the newer site, Winter says. Even so, the retailer decided that the issue has not significantly impacted Diamond Candles’ bounce rate, conversion rate or sales, likely because only a small percentage of site visitors are using an ad blocker, Winter says.
“We have moved on, identified it is not affecting the business, and are not really doing anything about it now because it is a non-issue for us,” Winter says. An Optimizely spokeswoman says a small percentage of consumers adopting an ad blocker will likely not affect the outcome of the A/B test. “These types of applications have been available on modern desktop browsers for years and have not affected our customers’ ability to use Optimizely to achieve successful results,” she says.
Mobile ad blockers on iOS are preventing a couple of online marketplace Shop.com’s analytics tags from working properly, but they are having a very minimal effect on the e-retailer’s business, says Steve Ashley, vice president of mobile and social for Shop.com.
“It wasn’t a showstopper so we have not put any time or focus on a workaround,” Ashley says.
Branding Brand maintains a list of the vendor applications that it has found mobile ad blockers affect. Branding Brand researched top analytics packages, optimization tools and ad platforms, and visited sites using those tools with an iPhone. Branding Brand looked at each site with and without an ad blocker turned on to find which content the blocker prevented. Affected applications include Bing Ads, Crazy Egg, Coremetrics, Bazaarvoice, Ensighten, Google Analytics, Google Tag, Google Ad Services, Google Channel, New Relic, Omniture, Optimizely, MediaMath, OpenX, Oracle ATG Web and Qubit Digital Ltd.
“We are supportive and champion tools which provide consumers control over their data privacy,” McCarthy says.
Some ad blockers, such as Purify Blocker, are less aggressive in their default settings, and they should cause retailers few problems with content delivery, Mason says.
If a retailer’s mobile site is affected, Mason suggests retailers to reach out to all technology vendors that contribute to the site and work with them to change any coding that could flag their applications as advertising.
Catchpoint’s Suljoti recommends retailers also look at their code and change any file path names that contain words an ad blocker is likely to flag, such as ad, banner and skyscraper, the latter two being terms for display ad formats. For example, if the image at the top of a site is named “home page banner,” the ad blocker could completely take it out because banner is part of the name, Suljoti says.
At this time most ad blockers are limited to blocking ads served through web and mobile browsers, and don’t block ads that appear within apps. Further, consumers spend 85% of their overall smartphone time in an app, according to Forrester Research Inc., and digital ad dollars are following this movement, says Cathy Boyle, senior mobile analyst at market research firm eMarketer Inc.
In 2014, U.S. marketers spent $19.15 billion on smartphone and tablet advertisements. 71.4%, or $13.67 billion, was spent on in-app ads and 28.6%, or $5.47 billion, on mobile web ads, according to eMarketer. The market research firm predicts the breakdown of mobile ad spending in 2015 will shift slightly to 72.4% for apps and 27.6% for the mobile web.
So one way e-retailers can better ensure their mobile ads are seen is to advertise in apps.
“The majority of consumer time is spent in app, so ad dollars are following the eyeballs,” Boyle says.
For now, retailers have kept ad-blocking problems to a minimum. If site traffic has not fallen off, and sites are functioning properly for the majority of shoppers, e-retailers seem unfazed by ad blockers. If more consumers use ad blockers, however, retailers may need to rethink their strategy.