Adblocking: the great data heist

Jack Smyth, Mindshare strategy and innovation manager
By Jack Smyth, Mindshare strategy and innovation manager | 7 October 2015
 

We’ve heard plenty from both sides of the adblocking debate. For publishers it’s a breach of the implicit contract for ad-funded content. For the ad-blockers it’s a well overdue correction in favour of consumers.

But lost in the hyperbole is the potential for something far more concerning. The uncomfortable economics of adblocking.

As more users allow blockers to filter their browsing we could see a new set of data cartels forming on the wild frontier of the web.

Some of the same services that preach privacy are only too happy to trade it for a profit. As the adblocking industry consolidates, the key players could harvest a treasure trove of personal data and preferences to rival Google and Facebook.

Through this accumulation of personal data some ad-blockers are consciously placing themselves at the centre of the marketplace they’re supposedly undermining.

My fear is that many users may be unaware of the connections some leading ad-blockers have to the ad industry. What appears to be a pro-privacy solution on the surface may simply be the same system of monetising personal data with new window dressing.

When we look at the behaviour of both sides of the adblocking debate - the blockers and the anti blockers - the temptation to monetise access is already taking over. Some of the most popular ad-blockers are just a digital version of the good old fashioned bait and switch: lure users in under the guise of privacy and then charge advertisers for access.

To see the scheme in motion we have to understand the key players.

The adblockers

To date no one has released a definitive figure on the use of ad-blockers in Australia. PageFair, a company that profits from publisher concern over adblocking, claims 3.7 million. Some industry experts see 1.1 million as more realistic. The lack of hard data shouldn’t surprise you – uncertainty allows the adblocking economy to thrive.
 
The first group of players are the ad blockers themselves. Some of the leading players are ostensibly pro-privacy but are already eyeing off potential profit. The godfather of adblocking, Eyeo GmBH’s Adblock Plus, is a prime example. Claiming over 300 million downloads it's also the dominant player.

Eyeo’s business model is equal parts parasite and vampire squid.

Its Acceptable Ads program is preinstalled in the popular blocker and allows Eyeo to charge advertisers for access to users. At least 70 companies - including Google - pay Eyeo to allow their ads to be shown as long as they adhere to Eyeo’s standards.

Not all companies involved in the program pay though, creating double standards for publishers willing to simplify their ads and be treated as ‘acceptable’.

Eyeo has recently announced that by early 2016 control of its Acceptable Ads whitelist and standards would be handled by an independent board. This is a direct response to criticism over its ransom tactics. Despite claiming publisher payments will then have no direct influence on access, Eyeo will appoint the board.

Eyeo’s influence extends beyond publishers too. A rival ad-blocker, AdBlock, has recently sold to an unnamed company and agreed to use the Acceptable Ads system. AdBlock claims 40 million downloads and Eyeo can now influence what ads they see.

Eyeo has already signed a deal with popular mobile blocker Crystal (currently the second most downloaded blocker in the App Store) to give paying customers access to the app’s users. More deals are being discussed. With the expansion into mobile Eyeo is in the box seat to form the first data cartel.

Another popular cross device blocker is Ghostery. Ghostery’s model is less direct than Eyeo. Through an opt-in service called GhostRank they aggregate information on which ads and tracking services are being blocked so companies can refine their targeting.

Both models show how ad blockers can charge for the access and information, just like the digital ad networks they’ve replaced.

The antiblockers

Of course the ad-blockers are not alone in putting a price tag on privacy. The anti-blocker business has all the markings of a lucrative digital protection racket.

Leading anti-blockers fuel the scaremongering around adblocking to raise demand for their services. By now we should be skeptical of PageFair’s shrill warnings about the $22 billion lost to adblocking - because it’s in its interests as an anti-blocker to inflate them.

PageFair’s service helps publishers deliver ads despite ad-blockers. In return they receive a clip from the ad revenue they protect.

PageFair’s method underlines the uncomfortable interdependence of adblocking. Because how can they beat the blockers? By paying Eyeo a fee and ensuring they meet their Acceptable Ads standards.

Publishers are essentially paying a middleman to deal with the blockers, with Eyeo fueling the problem it profits from.

Anti-blockers may be further muddying the waters by undermining the revenue from native content. Some attempt to hide ads as content, leading blockers to target native content. This arms race could ultimately undermine the more valuable - and engaging - native content that could have supplemented the lost display revenue.

Unintended Consequences

As blockers and anti-blockers simultaneously slug it out and feed off each other there will be broader consequences for the advertising industry.
 
One potential outcome is that Apple’s embrace of ‘content blockers’ could see publisher revenue through owned properties decline even faster and strengthen Apple’s own News service. Publishers can sell ads through their content in the News app - safely cordoned off from the ad-blockers. If they use the iAds network to sell their ads Apple takes 30% of the ad revenue.

Rather than heralding a new era of a free internet, adblocking could inadvertently consolidate the current giants' hold on what we see online.

What's next? Watch out for part two of the great adblocking heist.

Jack Smyth

Mindshare

Strategy and innovation manager 

 

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