Some US$21.8bn in advertising revenues will be lost in 2015 due to ad blocking, mainly by millennials, according to a joint study by Adobe and Irish-based start-up PageFair, which has come up with a cunning plan to solve the problem.
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.
He said that ad blocking is on the rise, particularly among millennials, particularly those who use browsers like Google Chrome and Mozilla’s Firefox and are tech savvy enough to search out ways to block intrusive and annoying advertising.
PageFair’s technology is being used by 3,000 websites around the world, including a large number of the ComScore 50, to help website owners measure and recover revenue lost to ad blocking.
Blanchfield explained that in Ireland the rate of ad blocking is currently at around 17pc and that this has grown 40pc in the last year. In the UK, ad blocking has grown by 82pc in the last year, reaching 12m monthly active users in the second quarter.
Current ad formats are a turn-off for millennials
“People are switching off from ad formats that are dominating their screens. As publishers battle to increase digital revenues they have allowed advertising agencies to run riot and they are putting the creative over the practical.
“This is devaluing every ad on your screen and annoys the consumers who are reaching out to ad blocking software in their droves.
“What the publishers and the ad industry have done is pretty much annoy the user, the very person they are relying upon to pay the bills.”
In the US, ad blocking grew by 48pc between the second quarter of 2014 and the second quarter of 2015 to 45m active users, or 16pc of the US online population.
In Europe, ad blocking grew by 35pc during the same period to 77m monthly active users.
Blanchfield explained that after selling DemonWare, which he founded with Dylan Collins, to Activision for an estimated US$17m in 2007, he founded his own accelerator called the Scale Front.
One of the companies in the fund created text-based role-playing games that trafficked 30m hits a month. However, he noticed that ads were being seen by only 30pc of the audience, which he determined was because of ad blocking.
After raising €1.1m in funding from Tribal Ventures and Enterprise Ireland, Blanchfield formed PageFair to help publishers combat ad blocking in a civilised and helpful way.
“In the 1990s ads online were unobtrusive and actually helped sell products online. What we are doing is giving publishers tools to fight back without annoying their audience. Our technology installs a script that allows publishers and website owners to get a sense of the amount of ad blocking that occurs among their audiences and then create the conditions for the placement of respectful ad formats that won’t annoy visitors.”
Raiders of the lost ads
PageFair’s head of ecosystem, Johnny Ryan, the former chief innovation officer at the The Irish Times, said that the objective is to return online destinations and publishers to a position where they can sell inventory that won’t get blocked.
“Users can still block the new ad formats but this is still a one-last-chance in the entire cycle to get ads back in front of the person you are targeting.”
Ryan said that as ad blocking continues to grow, the online advertising industry is ironically strangling the online publishing industry by pushing out formats consumers find annoying.
“The demographics speak for themselves, the majority of internet users under 30 are using ad-blocking software,” Ryan said.
Blanchfield said that PageFair’s technology is being used by 16pc of companies in the ComScore 50 to recover lost revenue.
The company, which is headquartered in Ranelagh, has just opened a new office in New York and currently employs 14 people.
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