Ad Blocking and Publisher Finances: Is There a Chance?

In 2017, according to eMarketer, 86.6 million users worldwide will use software that blocks ads, a 6 percentage point increase compared to 2016. Despite this, there is a chance they will block fewer online ads.

The German association representing digital economy stakeholders, Bundesverband Digitale Wirtschaft (BVDW), reported that in the third quarter of 2016, compared to the previous year, the share of online ads blocked on desktop devices fell — from 21.2% to 19.1%. Many indicators suggest this trend will continue in the next quarter.

"Users are beginning to understand that free internet content they consume is funded by advertising. We also see changes on the other side. Publishers are approaching ad quality more consciously. It's crucial to treat the ad blocking issue as a business problem, not an emotional one, and to apply business solutions — such as legal regulations, technical measures, dialogue with users, or ultimately, real improvements in quality that consider audience feedback," says Oliver von Wersch, chairman of Online-Vermarkterkreis within BVDW.

How Germany is Fighting Ad Blockers

Germany is a significant market in terms of ad blocker usage. Legal proceedings are underway in German courts against companies offering such software. So far, judges have ruled that the business model of such companies does not violate legal order. The rulings are not final — cases have been appealed to higher courts. Meanwhile, German website publishers are experimenting with various ways to combat ad blocking.

- Polish publishers can use the same methods, believes Jacek Tkaczyk from Yieldbird, a company optimizing online advertising surfaces in Poland and abroad. - Some have started asking users to whitelist their sites, meaning to add them to the list of websites allowed to display ads. Others, such as the American Forbes, have gone a step further and completely blocked site content for users with active ad-blocking software. According to Google's analysis, an open dialogue with users — for example, a message explaining that ads fund the content being viewed — is one of the most effective ways to educate the market. However, users expect that disabling ad blockers won’t lead to invasive ad formats. Therefore, benefits must be mutual, says Jacek Tkaczyk. And then there are advertisers. Their challenge is accepting that high CTRs, often driven by accidental clicks, are no longer the best indicator of campaign effectiveness.

Relevance over content

Personalization Instead of Intrusiveness

Another effective method is targeting ads to users who are genuinely interested. In this case, leveraging various data sources about users is key. Programmatic advertising has become the standard, allowing precise and real-time personalization of messaging. This leads to better campaign results, even when using less intrusive and cheaper ad formats.

Advertising Spend is Rising

Ad Blocking in Germany: Dialogue Instead of Conflict

According to Magna’s “Global Advertising Forecast” report, advertising spending in Germany grew by 2.6% in 2016, and in the following year, spending in Western Europe is expected to rise by 2.4%. In Central and Eastern Europe, advertising spend was 6.0% higher than the previous year, exceeding forecasts. In 2017, it is expected to grow by another 5.7%. Online advertising remains the fastest-growing element in marketing budgets, with marketers globally planning to allocate as much as 33% of their budgets to it next year.

Summary

The decline in the share of blocked ads on desktops in Germany from 21.2% to 19.1% in the third quarter of 2016 shows that the battle against ad blockers is not lost. Experts from BVDW and Yieldbird argue that business-oriented methods — dialogue with users, whitelisting, legal regulations, and improved ad quality — are effective. Programmatic advertising is gaining increasing importance, allowing brands to reach the right audiences with less intrusive formats.

The market context favors publishers — globally, marketers will allocate 33% of their budgets to online advertising in 2017, while advertising spend in Central and Eastern Europe is expected to grow by 5.7%.