The powerful Interactive Advertising Bureau (IAB), which represents the global online advertising industry, has admitted the industry lost sight of user needs and experience in its quest to fill its coffers. As a result the industry stands to lose US$21.8bn as users flock to ad-blocking software.
The IAB admitted the digital publishing industry has cared too much about revenues and not enough about user experience. Ads became distracting and invasive and users were doing everything to focus on accessing the content they wanted.
The IAB is launching a new effort called L.E.A.N. Ads, which means Light, Encrypted Ad-Choice-supported, Non-invasive ads.
A report in recent months by Irish start-up PageFair revealed the industry stands to lose US$21.8bn in revenue due to consumers installing ad-blocking software on their PCs, tablet computers and smartphones.
‘We messed up. As technologists, tasked with delivering content and services to users, we lost track of the user experience’
– SCOTT CUNNINGHAM, IAB
PageFair, which is led by DemonWare co-founder Sean Blanchfield, reported that in the US alone ad blocking costs the online advertising industry an estimated US$5.8bn and this is projected to hit US$10.7bn at the end of this year. It could actually grow to US$20.3bn in 2016.
The global cost of ad blocking is expected to cost the advertising ecosystem US$41.4bn by 2016 and this could hit online publishers the hardest, according to Blanchfield.
IAB issues ‘Mea Culpa’
“We messed up. As technologists, tasked with delivering content and services to users, we lost track of the user experience,” admitted Scott Cunningham, senior vice president of technology and ad operations at IAB.
“20 years ago we saw an explosion of websites, built by developers around the world, providing all forms of content. This was the beginning of an age of enlightenment, the intersection of content and technology. Many of us in the technical field felt compelled, and even empowered, to produce information as the distribution means for mass communication were no longer restricted by a high barrier to entry.
‘Looking back now, our scraping of dimes may have cost us dollars in consumer loyalty’
– SCOTT CUNNINGHAM, IAB
“In 2000, the dark ages came when the dot-com bubble burst. We were told that our start-ups were gone or that our divisions sustained by corporate parent companies needed to be in the black. It was a wake-up call that led to a renaissance age. Digital advertising became the foundation of an economic engine that, still now, sustains the free and democratic World Wide Web. In digital publishing, we strived to balance content, commerce, and technology. The content management systems and communication gateways we built to inform and entertain populations around the world disrupted markets and in some cases governments, informed communities of imminent danger, and liberated new forms of art and entertainment—all while creating a digital middle class of small businesses.
“We engineered not just the technical, but also the social and economic foundation that users around the world came to lean on for access to real-time information. And users came to expect this information whenever and wherever they needed it. And more often than not, for anybody with a connected device, it was free.
“This was choice—powered by digital advertising—and premised on user experience.
“But we messed up.”
The online ad industry’s Jerry Maguire moment
Cunningham said that through the digital publishing industry’s pursuit of further automation and maximising of profits, technologies were built to optimise the publisher’s yield of marketing budgets that had eroded in the last recession.
“Looking back now, our scraping of dimes may have cost us dollars in consumer loyalty. The fast, scalable systems of targeting users with ever heftier advertisements have slowed down the public internet and drained more than a few batteries. We were so clever and so good at it that we over-engineered the capabilities of the plumbing laid down by, well, ourselves. This steamrolled the users, depleted their devices, and tried their patience.”
Cunningham has admitted that the rise of ad-blocking poses a real threat to the internet and could potentially drive users to an enclosed platform world dominated by a few companies.
Essentially, this is already happening if you pay close attention to the rise of Facebook as its own internet, powerful advertising revenues and emphasis on creating news apps.
“The rise of ad blocking poses a threat to the internet and could potentially drive users to an enclosed platform world dominated by a few companies. We have let the fine equilibrium of content, commerce, and technology get out of balance in the open web.
“We had, and still do have, a responsibility to educate the business side, and in some cases to push back. We lost sight of our social and ethical responsibility to provide a safe, usable experience for anyone and everyone wanting to consume the content of their choice.
“We need to bring that back into alignment, starting right now,” Cunningham said.
Ad blocking image via Shutterstock