As Google and Apple Take Aim At Ad Experiences, Revenue Opportunities Emerge for Publishers

By Jeff Lichtenfeld, IBB Consulting

More than 200 million people around the world are using ad-blockers to take back control of their web browsing experiences. This growing trend, which sees 18% desktop penetration in the US alone, has publishers working diligently to make improvements to the browser ad experience. They’ll have to please not only consumers, but also tech titans like Google and Apple, which have taken a recent stand against ads that they say hurts the user experience.

For publishers, this creates an opportunity to further increase the value of premium inventory.

Google

Google recently announced plans to include its own ad blocker, which it calls a “filter,” as a default setting in the Chrome web browsers across desktop and mobile in 2018. The filter will block ads on sites that Google has deemed to have a certain level of unacceptable ads as determined by the Coalition for Better Ads. This seemingly counterintuitive strategy by a company that depends on online advertising revenue, is a defensive one that will give Google more control over which ads get blocked. The hope is that consumers will be less inclined to seek third-party ad-blockers, which block all ads, once they experience a more regulated ad experience.

To obtain even greater control over the consumer ad experience, Google is taking on third-party ad blockers by releasing a tool called “Funding Choices” that can prevent users from viewing content without ads unless they agree to pay the publisher directly for the content or disable their ad-blocker. However, before publishers can participate, they must become compliant with the standards set forth by the Coalition for Better Ads.

Google’s New Ad Experience Framework:

  1. Google is giving publishers at least six months to review the ad formats in use on their sites and comply with the acceptable formats identified by the Coalition for Better Ads. Google provides an Ad Experience Report tool to help publishers identify non-compliance on their sites.
  2. When the ad filter is launched in 2018, it will be the default setting for all Chrome users. Sites that do not yet comply with the new standards will see all ads blocked for Chrome users. Chrome currently has 58.1% market share.
  3. Once publishers are compliant with Google’s ad standards, they can enlist the Funding Choices tool to combat third-party ad blockers. Users will not be able to access content unless they agree to view ads or pay for an ad-free experience.

Apple

Apple will include in its Safari web browser a feature that blocks only autoplay videos, a subset of the ad types deemed unacceptable by Google, as well as Intelligent Tracking Prevention, a security innovation that uses machine learning to dynamically tame cross-site tracking. These moves help Apple strengthen its relationship with consumers, especially those with privacy concerns. Safari currently has 14.9% market share.

What do Google’s and Apple’s Strategies Mean for Publishers and Advertisers?

Publishers:

Many publishers are already working to counter the ad blocker trend by improving the user experience in multiple ways. They are reducing page load times and cleaning up inventory to increase the impact and value of their ads. The changes by Google and Apple actually play into publishers’ current priorities and provide timely opportunities for improvement. It is important for publishers to scrub their inventory to maximize CPMs for ads that provide a positive customer experience. During this process, it will be beneficial to review site load times and identify any ads that may be slowing down page loads. This is also an opportunity to collect additional audience data due to improved ad experiences and apply it to improve segmentation, targeting and measurement across channels.

From a publisher’s perspective, the new ad blocker reduces the variety of inventory that can be sold, at least for pageviews originating from Chrome and Safari. Publishers need to decide whether it is worth continuing to serve more intrusive ads to users of other browsers.

While ad blockers may adversely impact publisher ad revenue in the short term as they react and adapt ad formats to meet the standard, it can provide early adopters with a competitive advantage. Advertisers will be more inclined to purchase inventory from a compliant publisher because even if they are careful to only serve compliant ads, any non-compliant ads on the site could trigger the ad blocker to block all ads. Therefore, compliance becomes a significant selling point for publishers, especially in 2018 around the ad blocker launch date.

The Funding Choices tool is advantageous for publishers. It gives them an opportunity to get paid directly for their content or require users to view ads in order to consume content. The potential downside here is that users may decide to look elsewhere when presented with these options.

If publishers decide to enlist the Funding Choices tool, it will be critical that the prompt they display to ad blocking users does not appear accusatory. Instead, they must carefully craft a message that emphasizes how important ads are for quality content creation. It needs to incentivize consumers and make them aware that ad blockers mean publishers make less money and can’t produce the content consumers have become accustomed to. Respecting all visitors will give publishers the best opportunity for conversion.

As an example to illustrate the choices publishers are likely to face with these changes, assume a premium publisher is currently running a prestitial count-down ad on their site. The publisher has a few options to maintain or replace that revenue given the upcoming changes:

  1. Do nothing and keep the ad running as is, knowing it will be blocked in Chrome but will still run in other browsers.
  2. Use the Funding Choices tool to monetize third-party ad blocker users.
  3. Increase ad load and/or raise floor CPMs for other ads running on the site.
  4. Any combination of the above options.

Advertisers:

From an advertiser’s perspective, these moves by Google and Apple could be seen as limiting. The more intrusive an ad is, the more likely it is to have eyes on it. Pop-up ads, prestitial ads with countdowns, and auto-playing video ads with sound, for instance.

Advertisers will need to determine a suitable strategy to balance campaign goals against the consumer user experience. This could mean a revamp of any non-compliant ads or a more complex strategy where non-compliant ads are still served in other browsers, with redesigned ads displayed only within Chrome and Safari.

Additionally, the Funding Choices tool can be seen as a direct threat if consumers become more comfortable with paying for their content. This is likely to appeal to consumers who block ads due to privacy concerns. Also, new concerns might arise in terms of how publishers would fulfill advertisers’ goals such as brand awareness. But the tool may well have a positive effect as it will discourage consumers from using ad blockers, resulting in greater potential reach for their ads.

How Can Publishers and Advertisers Prepare?

Publishers:

  1. Review Google’s free Ad Experience Report to determine if any sites are violating standards
  2. Review Google’s free Ad Experience Report to determine if any sites are violating standards
  3. Eliminate any non-compliant ad formats
  4. Establish new procedures to maintain compliance going forward
  5. Collaboratively work with advertisers to inform them of new standards and impact on the contracts and campaigns, renegotiate impacted ad sales if necessary

Advertisers:

  1. Review all existing ad formats and identify any non-compliant formats currently in use
  2. Redesign non-compliant ads to be compliant at least when displayed in Chrome and Safari
  3. Understand the revenue split if the consumer agrees to pay for the content to the publisher

Conclusion:

As Google and Apple announce new browser-integrated features to improve the consumer ad experience, publishers and advertisers will need to ensure that the ads they are serving are compliant to maximize reach. These changes will be an opportunity for publishers to differentiate on a premium ad experience.

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