GDPR and adblocking – the unholy alliance

Regulation and technological advances threaten many industries: just ask high street bookmakers. But the simultaneous combination of GDPR and the promotion of ad-blocking technologies by the likes of Google and Microsoft is worrying for digital media businesses.

A helping hand

Most free (and many paid-for) content models have long relied on an implied consent from their users: “you get this stuff for free, if we are able to send relevant advertising your way based on your browsing behaviour.” However, the ability to track browsing wasn’t really made explicit until GDPR, which requires consent for publishers to use many of the tools that had developed to serve those ads. Notably, GDPR has required digital businesses to explain to consumers how cookies work (see our cookie policy here!): paranoia about privacy is on the rise, and it is likely that many more consumers will follow those mandatory “manage your ad preferences” buttons.

At the same time, ad-blocking has never truly gone away as an issue for publishers. It often gets swept aside by seemingly larger issues like the Duopoly or rampant fraud, but it’s always there in the background, eating into publishers’ digital revenue potential.

It’s come back into view over the past few days after Microsoft announced that its mobile Edge browser for iOS and Android would have an ad-blocker installed by default, perhaps anticipating that post-GDPR audiences will be more savvy about their digital rights. The Verge reports that the feature – currently in beta – is set to be made available more widely and, crucially, won’t require any extra downloads to be used. Microsoft are making it as easy as humanly possible for their users to block ads, using the existing infrastructure of Adblock Plus – and that’s got publishers worried.

If it were just Microsoft who were doing that, publishers might think they could safely ignore it. However, Google announced in June of last year that its Chrome browser would have a built-in ad-blocker in June of last year, citing its desire to improve the quality of the internet for its users as the primary cause.

Google’s move was immediately called out by, among others, Jason Kint of Digital Content Net, who pointed out that the company is already too powerful in the digital ad game: It is irrevocably involved in every part of the ad ecosystem from selling to delivery to creation.

So Google obviously has an interest in helping to define the digital advertising space, and by effectively enforcing its own ad formats and standards, it can keep control of that space. So why are Microsoft, and a host of other browser providers, now choosing to follow Google’s lead and allow customers to block ads by default?

If you believe much of the rhetoric which, like the tech they provide, is borrowed from Adblock Plus, it’s in service of enabling consumer choice, or protecting people from bad ad experiences. When Google announced their in-built ad-blocker, its vice-president for Chrome Rahul Roy-Chowdhury said:

“These ads are designed to be disruptive and often stand in the way of people using their browsers for their intended purpose — connecting them to content and information. It’s clear that annoying ads degrade what we all love about the web.”

Regardless of the reasons, giving customers ‘increased choice’ has a negative impact on publishers’ ability to monetise from digital ads, particularly as ad-blocking on mobile picks up the pace. A piece from Digiday earlier this month pointed out that while the amount of ads blocked on mobile is tiny compared to on desktop, it is a growing concern.

And overall, ad-blocking is reported to have cost individual publishers well over half a million in revenue every year. Another report from Digiday points out that:

“Across 14 members, the AOP calculated nearly £14 million ($18.6 million) in revenue was lost due to blocked ad impressions in 12 months. In 2016 this was £10.8 million ($14.4 million). The trade body estimated that the average publisher loses roughly £630,000 ($837,000) in annual revenue.”

Additionally the Association for Online Publishers has released a study using data from its members and has found nearly £14 million in ad revenue was lost due to blocking in the last 12 months across 14 members, compared to £10 million from the year before.

That’s far from small fry, and increases the pressure felt by publishers as they seek to transition more fully to digital publishing. While subscription revenue might be the focus for most digital publishers in the near future, losing such a vast amount in ad revenue limits the publishers’ ability to conduct the experiments and invest in the infrastructure required to take them to sustainability.

They are not being helped by the platforms and tech companies they rely on for distribution.

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Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work in the TMT (technology, media, and telecoms) space, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.