A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
iOS 9 Content Blockers: Impact Analysis and Mitigating Strategies Authored by: Ben Ilfeld, Lead Audience & Revenue Strategist, 10up Inc.
Jake Goldman, President & Founder, 10up Inc.
September 22, 2015
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
INTRODUCING iOS 9 CONTENT BLOCKERS Apple’s September 16th launch of iOS 9 included a suite of enhancements. But one feature has the content industry talking: content blocking. Less than one week in, a $0.99 ad blocker is the top paid app in the App Store, and $3.99 ad blocker is right behind it. Apple has opened the door for third party apps to extend its web rendering engine (based on WebKit) to selectively block content. Because Apple forbids third party rendering engines, these apps not only change the behavior of its default Safari browser, they also block content in alternative web browsers like Chrome for iOS and third party apps that use web views, like the ESPN app. Technically speaking, these content blocker extensions can include logic to block any content rendered by the browser. The clear and obvious targets are ads, analytics, and trackers. This is the first time that a browser has added an easy to use framework designed specifically for sophisticated, high performance web ad and tracker blocking. Desktop browsers have offered means to universally block general content types going back to image blockers in Netscape 1.0, and general browser extensions — which have been applied to ad blocking — have been popular for over a decade. This difference is subtle but important: where Firefox introduced an open extension framework that developers applied to ad blocking, Apple specifically engineered “content blocking” as a core feature. It’s the difference between a developer building a plugin designed to harvest personal data for an open platform like WordPress, and a closed platform like SquareSpace explicitly including a feature to integrate personal data gathering. Enabling blockers simply requires a consumer to install an app from the App Store, and enable the extension in Safari settings (much like the third party keyboards introduced in iOS 8). Under the hood, the app generates a file which contains logic rules directing Safari to block select content. Graphic courtesy iMore.com
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
THE CASE FOR BLOCKING This piece is focused on technical realities, practical implications, data informed predictions, and strategies publishers may use to address this new reality. That said, we’d be remiss not to touch on the arguments, by way of understanding the legitimate technical issues associated with the state of ads. The ethical implications of stripping the experience intended by a website is well trodden ground. Apple’s business reasons for suddenly supporting blockers are ultimately speculative, a virtual rorschach test for Apple’s most hyperbolic fans (“it’s a better consumer experience!” / “they want the web to change for the better!”) and detractors (“it’s designed to move content from an open web to a closed News App and App Store - where you can’t block ads” / “it’s an attack on competitor Google’s core business”), both of whom oversimplify Apple’s corporate agenda. In truth, it’s probably both: Tim Cook probably does care about privacy… and knows that this benefits Apple’s ecosystem at its biggest competitors’ expense. It’s unclear whether most consumers install blockers because of a host of legitimate moral and technical gripes about the state of web ads, or because they simply don’t want to “pay” for content if they can get away with it. If web ads became fast, clean, and safe, would we see a mass exodus from blockers? Frankly, we doubt it. It’s worth noting that early, popular iOS 9 blocking lists are not particularly selective about their sources, and we have yet to find a popular blocker which operates on an explicit opt out basis (i.e., blocking is “always on”, with an option to manually whitelist sites and/or sources; as opposed to “off by default” with an option to blacklist a site). With that said, let’s take a moment to recognize the technical merits behind the case for modern content blocking. The ad technology ecosystem has become: • Resource intensive and slow - in a recent test, pages from some major publishers loaded 3.9x faster with iOS blocking popular ad sources and trackers; • Labyrinthine: a glimmer into the complexity of modern ad technology is illustrated by this visual explanation of “header bidding”; • Susceptible to malware: rates tripled in the last year; • Often characterized by fairly invasive tracking and analysis of visitor behavior (a relatively new “Limit Ad Tracking” standard has barely made a dent).
Via AdOps Insider
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
IMPLICATIONS FOR A “FAT MIDDLE” The business implications are wide ranging, running the gamut from solo full time bloggers to the Financial Times and CNNs of the world. With that said, we think the “fat middle” is at the epicenter of this change: “medium” sized publishers with dedicated staff who rely on the web for distribution and carry the costs of a small business. These business are typically characterized by thin margins (a 15% dip can be the difference between success and collapse) and little runway. Many depend on the aggregated demand and lowered costs achieved by the economies of scale offered by modern ad exchanges (simply put, building an independent ad sales infrastructure is untenable). I spoke with Seth Weintraub, a former senior contributor to major publications Fortune and now the owner of the popular 9to5 sites (a 10up client) about the new challenges:
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Something has to give. If many/most readers use blanket ad blocking, medium sized publications will see significant revenue drops and will be forced to change models or decrease size/go out of business. We're hoping a mix of native/and whitelist appeals will let us continue to expand and, of course, as a last resort, we'd look at “blocker blockers.” In the end, it is a cat and mouse game and no one, consumers of writing or publishers, get a free ride.
So what can the Seth’s of the world expect?
LOOKING AT OTHER PLATFORMS FOR CLUES The “Desktop” Virtually all desktop browsers include extension frameworks that enable third party blockers, and their adoption has grown significantly over time. According to PageFair, ad blockers use jumped by 41% this year, and United States adoption reached 15%. Use varies greatly by country. Is 15% a ceiling we can expect on mobile? Will penetration take as long as it has on the desktop? We’d guess not. Consumer adoption (and one might assume
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
awareness or even IT policy allowance) of desktop browser extensions is far smaller than the consumer embrace of mobile apps. The average iOS device owner has about 25 apps installed. Data on browser extension adoption is less available, but a 2011 study of Chrome users suggested about a third of users installed even a single extension - and Chrome is arguably the browser of the more technically savvy (as its not installed by default, outside of ChromeOS’s small market share). Add the media frenzy of iOS coverage, and prominent placement atop an oft visited App Store, and the stage seems to be set for significant and swift adoption. Additionally, mobile constraints on battery life, data use, screen real estate, and performance all but encourage adoption among even the most conscientious savvy consumer. So while the desktop spike forebodes increasing consumer adoption, the parallels are weak and likely understate the shape of the adoption curve. However, the response to meaningful desktop adoption can suggest industry reaction on mobile. As clear winners like Adblock Plus emerged, large media companies paid to be whitelisted. It certainly suggests another moral dimension that favors dominant and high scale players, and muddies the ethical argument for blockers. Android Android’s default browser supports third party blocking, but in 2013 Google disallowed distribution through the its iOS App Store corollary Play Store (a controversial step even opposed by the EFF). Blockers can still be sideloaded (on supported devices); an unpopular, complicated process that has prevented meaningful adoption. As a workaround, Adblock Plus released a full browser available in the Play Store, which has totaled less than 500,000 downloads (let alone active installs) thus far. Third party browsers with ad blocking have also been available on iOS, with presumably even more limited success (given iOS forces Safari as the default browser). In short, high barriers to entry (sideloading or changing your browser) have made adoption on Android negligible to date, offering few lessons.
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
FACTS & FIGURES: THE LANDSCAPE Impact on Industry revenue Recently, PageFair estimated that over $20 billion will be lost due to ad blockers this year. To put that number in context, worldwide spending on online advertising is expected to hit $170 billion this year. It’s unlikely that $20 billion fewer dollars will be spent. On a macro level, we can expect ad spend to move to paid social, search ads, video, and native ads or content marketing (e.g., HubSpot, email service providers, microsites), which are trickier or nearly impossible to block (especially if search engines further obfuscate the “fingerprints” of their native ads). The demand for brand awareness and marketing is still high. Historically, ad spend roughly tracks with GDP. Blocking is unlikely to derail that relationship; it simply recalibrates the paths between brands and consumers, just as the web itself reallocated spend. It is at least worth considering whether total advertising spend may drop among small businesses with lean budgets; online exchanges and their granular control over impressions enabled high scale small advertising investments - drips of maybe $50 or $500 each month - that more traditional outlets (say, site wide takeovers or magazine ads) never afforded, with unclear alternative paths for investment. Within the mobile banner advertising niche, iOS 9 ad blocking creates a shock to the supply of ads. For “fat middle” publishers who rely on banner ads, especially from large ad exchanges, the loss of inventory could be immense. By way of example, a publisher who generates 20 million banner ad impressions a month can reasonably survive on the revenue generated by ad exchanges. Reinforcing our earlier points, the margin is often insufficient to justify investments in new revenue generating models that could entirely replace the current model. Simply put, a significant drop in exchange ad inventory would be a tough pill to swallow. Could the price of an ad impression rise with a more constrained supply, just like those supply/demand graphs from Economics 101? First, let’s clarify some terminology here: in the advertising space, supply refers to the total number of ad impressions available for sale in the market (e.g., there are 2 trillion mobile ad page views who want to offer banners). Demand refers to the aggregate budget of advertisers buying those impressions (e.g., advertisers want to spend $100 billion on mobile ads). There is actually a glut of mobile ad supply; which is to say, there are plenty of ad impressions available, and comparatively little budget to fill them. Put simply, it’s a buyer’s market: advertisers get more impressions for their dollar than on desktop, and publishers earn comparatively little from mobile visitors.
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
Consumer attention is already there in mobile, but advertisers are just beginning to buy up mobile inventory. This follows a historic lagging trend where consumer technology moves more quickly than institutional buyers. In this mobile ad market, the demand and supply curves are also very flat; the key takeaway being that a shock to supply (a sudden reduction in available inventory due to, say, ads being blocked en masse) will likely not have a meaningful impact on prices. Simply put, the loss from a dramatic reduction in volume of impressions will not be made up by modest increases in price. It is likely that we will also see a corresponding shock to demand (advertiser appetite). In advertising, money follows consumer attention. A perceived loss of supply brought about by media coverage can trigger a sudden rush to move spending to substitutes. We saw this in print mediums when the public conversation about “the death of print” triggered a spending dip. This could, in fact, depress prices further, even with lower supply. So while total online marketing spend is likely to continue to grow as consumers continue to spend more time online, revenue for the individual publisher reliant on bulk banner ad sales is likely to suffer. Let’s try to make some educated predictions. Mobile Growth Mobile visitors now make up a larger audience and proportion of attention (graphs 1 and 2) than desktop; average time spent per day is a whopping 2.8 hours. Despite the lag in advertiser spending, eMarketer projects mobile ad spend will eclipse the desktop in the United States this year, with $30.45 billion in spend. That mobile spend isn’t all focused on the web, where iOS 9 content blockers are most relevant. Today, mobile spend is split between apps (62%) and the mobile web (38%). The split has been converging, with growth in mobile web spend.
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
We would predict a slowing in the convergence, even followed by a re-widening of the gap. Growth in the overall market could keep total mobile web spend increasing, even as its proportion dips. Insider View: Mobile Ad Revenue Many publishers supported by 10up see roughly 30% of ad exchange revenue from mobile web. Outliers are as high as 60% and as low as 5%. Publishers often see eCPM (prices) 30-55% lower on mobile than for the same content on desktop. In effect, if publishers traded “print dollars for digital dimes” (still relatively true), they’re now seeing mobile nickles. iOS ad revenue Although Android consumes a majority of United States smartphone market share (at 52.4% to iOS’s 42.6%), iOS actually accounts for a disproportionately large share of United States mobile operating system web traffic: 61.4% compared to Android’s 37.5% (the iPad’s domestic tablet dominance bolsters iOS). International datasets paint the same picture: Android is overwhelmingly dominant in device share, but leads marginally in web traffic. No matter how the data is shaped, changes to iOS (like content blockers) disproportionately impact the mobile web. iOS’s outsized share of web traffic is magnified by data suggesting higher disposable income, or at least a greater propensity to spend money on the mobile web. A report from Custora suggesting 78% of 2014 Christmas sales on mobile devices were made on iOS is stunning. While we found little reliable public data comparing relative website ad prices and revenue for iOS and Android, the informing data clearly points to iOS having an outsized revenue coefficient. The data is opaque in part because Google does not reveal data about explicit device-based targeting (ads can be explicitly set to target certain devices and operating systems) and in part because ad targeting is informed by sophisticated, less direct techniques based on criteria including past visitor behavior (e.g. all of those Christmas buying habits). But clues supporting this hypothesis abound: mobile ad exchange Smaato indicated that iOS in-app ad prices were 65% higher than Android; 75% of Google’s mobile search ad revenue in 2014 came from iOS. The key point being, owners of iOS devices drive significant demand for mobile advertising. Anecdotally, many of the publishers supported by 10up have outsized iOS audiences. Several see 40% of their total traffic drawn from iOS devices; one even sees 50% of their traffic coming from iOS. To the extent 10up tends to support a premium clientele who presumably attracts a wealthier audience, perhaps this shouldn’t come as a surprise. For these publishers, the impact will be even greater.
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
Further, iOS content blocking might induce more support for and interest in ad blocking on other platforms, much as Firefox forced an rennaisance in browser extensions. Google may reverse their 2013 Google Play policy. iOS users may be led to actively seek blocking solutions on their desktops. We don’t think these cascading effects will be felt quickly. iOS Upgrade Adoption Not all iOS devices have the immediate capacity to install a blocker. While we’ll discount locked down corporate devices for the time being (due to lack of good data), it’s worth considering upgrade adoption. There’s little good news here for publishers, particularly if we look out one year: iOS sees stunning upgrade adoption. One year in, iOS 8 had a ~92% install base, and we might see better adoption of iOS 9, as it is available for all devices which supported iOS 8 (unlike iOS 8, which dropped iOS 7’s support for the iPhone 4). Less than one week in, Apple is claiming 52% adoption of iOS 9. While adoption among the remaining ~48% may ease the pace of blocker uptick, it is safe to assume that within 1-2 years virtually all relevant iOS devices will support the iOS 9 content blocker framework. There’s also a case to be made that early upgrade adopters are also the most likely to install a content blocker; so we may see a nonlinear early surge in adoption. It’s also safe to suggest that the most active iOS users (who spend time browsing the mobile web) are most likely to upgrade early. Simply put, we don’t think the adoption curve plays a meaningful role in our predictions, other than to suggest a slightly delayed effect. Early content blocker adoption clues Less than a week in, are there clues pointing to content blocker adoption? Maybe. Quartz reported that Marco Arment sold 12,000 copies of Peace (which skyrocketed to the top of the App Store before being pulled) in less than one day. One week in, Crystal, the atop the App Store, has over 1,000 reviews. For what it’s worth, superstar Angry Birds accumulated over 850,000 after 5 years. Google Maps has 120,000 ratings, and Horace Dediu predicts 90 million installs; if we apply its 750x multiplier, we could really reach and speculate 750,000 installs for Crystal. Make it a paid app, assume passionate early adopters, and Marco’s smaller numbers… and that doesn’t seem to compute. Simply put, the data is too early and too opaque. It’s clear that ad blockers have skyrocketed to the top of the store, but it’s also clear we’re talking about a small fraction of iOS users, and with no great free options available yet, at that.
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
PREDICTIONS How much might publishers stand to lose? To make some predictions, we invented a hypothetical mid-size publisher based in the United States and reliant on exchange banner ads with 2 million visitors and 20 million impressions per month, and a relatively standard ad integration. For the sake of this exercise, let’s assume they aren’t changing strategy. We’re using a mix of private data from a variety of sources that roughly fit this scenario, as well as the industry data we’ve reviewed above. Consistent with the industry, let’s assume smartphone impressions account for 30% of total web ad revenue and tablet impressions account for 5%. With iOS accounting for 67% of smartphone revenue and 86% of tablet revenue (consistent with higher engagement and prices for iOS), iOS devices cumulatively account for 24% of total web ad revenue. Let’s further assume we’re 8 months out from the release of iOS 9, and that it has essentially achieved saturation with 90% adoption. Finally, let’s assume that our prediction that price per impression inconsequentially changes even with the drop in supply. Scenario 1: If we predict iOS ad blocking mirrors the desktop (~15% penetration), albeit within those 8 months, our hypothetical publisher sees a revenue drop of 3.7%. Scenario 2: If we predict that top App Store rankings and media attention drive higher rapid adoption among iOS device owners who actually drive impressions (your aunt who owns an iPhone but never opens Safari isn’t relevant), to the tune of an astonishing 3x the desktop adoption rate, revenue drops
Assumptions Smartphone
Mobile revenue share
iOS share of mobile
iOS share of revenue
30.0%
67.0%
20.1%
5.0%
86.0%
4.3%
Tablet Total
24.4%
by 11%. A potentially severe setback for businesses with thin margins. SCENARIOS
iOS revenue share Visitor blocker penetration
Revenue loss
Lower prediction
24.4%
15.0%
3.7%
Higher prediction
24.4%
45.0%
11.0%
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
The long term impact may be more dramatic without a change in strategy, since mobile web banners represented growth, even with today’s low prices compared to desktop. Indirect effects Blocked content can include analytics, tracking code, and a wide range of services; many early blockers even block social media buttons and comment systems. This can make good A/B testing more difficult, and engagement data less accurate, resulting in less informed editorial, user experience and business decisions, which theoretically reduces “consumer happiness.” These change might also push publishers to host native integrations, especially for analytics or advertising. This fragmentation can degrade the web experience, as useful, cross-site visitor experiences like Disqus are replaced with native comments, and consistent, single-sign on social sharing buttons are replaced with home grown alternatives. We asked 10up’s Director of Systems Engineering, Zach Brown, to comment on how content blockers might impact self hosted platforms, like Piwik’s open source analytics software.
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The main way to filter ads is by URL matching, so the served files must be matched by some sort of signature. While I could see these blockers going so far as to block specific Piwik files, these trackers have so many legitimate uses outside of nefariously collecting data that it seems dangerous and degrading to the web experience to just block these wholesale. Additionally, modern websites often pull in resources (fonts, styles, video, CDN assets) from 3rd parties, so blocking everything not loaded from the primary domain (another way to possibly filter for ads) is not realistic either. Well-known 3rd party ad networks or trackers are the vulnerable ones here as creating an ad blocker to block these networks is now trivial.
Simply put, while blockers can still track the fingerprints of a native solution (e.g., blocking all elements with a class including the word “advertisement” or “piwik”), it is considerably more tricky to maintain and scale, and easier to circumvent. Expect a resurgence of native solutions, including self hosted / open platforms like Piwik, or at least, solutions that mask their origin and appear to be served locally.
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
Lessons from the video content industry? One could make the case that the video content industry is already well into this transition. Cable and broadcast television has been fighting “ad blocking” since at least the DVR, if not the VCR. Is the trend away from commercial breaks as the primary revenue stream in favor of product placement not this industry’s own form of “native advertising”? We’ve also seen technical innovations from Hulu, YouTube, and on demand cable solutions that make ad blocking difficult to detect and circumvent in exchange for convenience. And of course, we’ve seen more gated content emerge and produced more cost effectively from the likes of Netflix and Amazon, built on the Internet’s comparatively low distribution costs (which have, in part, triggered net neutrality debates). We’ve also seen far fewer new players in the traditional cable network space, and even a fundamental shift in the value proposition of content producers, gobbled up to differentiate and diversify cash flush telecoms whose core revenue streams are built on physical infrastructure. All of which might suggest that seamlessly integrated advertising, technological innovation, more traditional payment gateways, fewer start up players modeled after traditional written content organizations, and less independent ownership may be consequences. With that said, looking to a medium with comparatively high costs of production may yield limited lessons.
SHIFTING STRATEGIES A trend toward native advertising is certain to continue and accelerate. Ad blocking is rarely effective when the fingerprints of an ad integration are unique to individual sites. Publishers are already investing in infrastructure, including technology and content “studios” to grow this revenue stream. That said, many publishers still rely on third party systems to serve “native” ads, which would continue to be vulnerable to blockers (from a user experience point of view, the content appears seamlessly integrated, but is technically served remotely). To survive, these systems will have to evolve their business and integration models to eliminate their blockable fingerprints by, for instance, integrating natively with the CMS, or attempting to corrupt blocker whitelists (as larger exchanges have on the desktop). A noteworthy alternative strategy is suggested by The Next Web’s canvas ad. These are units that may render an ad or valued content, like compelling artwork. Bringing content into the ad space was designed to fight banner blindness, but may flip native advertising on its head: rather than making native content into an ad, it makes an ad into native content.
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
As advertisers buy into native ads, they will expect better analytics and distribution, both of which could be harmed by content blocking. So while native is a sure bet, enabling technologies will have to evolve. We might just predict that, in this industry, the Software as a Service (SaaS) model that favors remote hosting could tilt in favor of self hosted and open source solutions. Expect pre-roll video and in-content audio ads (like podcast ads) to continue their ascendence. Technology often makes these more difficult to block, and publishers are already looking to video for higher prices. Producing sponsored video content can be tough to pull off for smaller operations, and achieving actual engagement within a predominantly and traditionally text-heavy site can be more challenging than it may initially appear. Direct revenue strategies built on paywalls, crowdfunding, and membership programs will grow. An early trend toward paywall adoption was driven by print publications looking to curb revenue declines brought on by a collapse in more lucrative print distribution. Paywalls provided an economic means to incentivize consumers into bundling digital and print subscriptions, where the publishers not only earned direct revenue, but buoyed distribution for their more lucrative print ad supply. Today, direct revenue generating strategies (consumer directly to publisher) are more diverse, and no longer the sole province of embattled print operations. Publishers of all stripes can leverage alternatives like crowdfunding and “supplemental content” gateways to establish stronger relationships with their most voracious readers and fans. To that end, we asked Jonas Rideout, Global Director Business Development for the prominent paywall vendor Piano.io, to share his thoughts on a potential surge in ad blocking:
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We think it's critical to respect that someone with an ad blocker doesn't want to see ads. Publishers can present these readers with alternatives that actually generate more revenue than ad views--like engaging with a 30-second brand experience for 72 hours of ad-free access. They can grant access in exchange for signing up for a newsletter or other premium service. Or they can ask those readers to pay a nominal fee for access for the day or week. What's important to realize is that one solution won't appeal to everybody who's got an ad blocker.
Direct e-commerce and affiliate programs will gain ground. Some publishers, especially in niche verticals like travel, fashion and technology, may choose to sell products to readers through their website. We see growth in first party options that integrated with
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
dominant content management systems (like WooCommerce, a WordPress integration recently acquired by Automattic), as well as branded e-commerce storefronts hosted and managed by a third party like StackCommerce that take a share of the revenue in exchange for managing the store (not unlike the benefits of ad exchanges). Many content creators will increase affiliate link adoption, referencing recommended products within editorial content. Again, third party providers like Viglink will need to gravitate toward first party CMS integrations to avoid being blocked. Selling goods to the consumer isn’t redirection or distraction like an ad. In fact, for many publishers, marketplaces like classified ads have long been part of their DNA. Influencer marketing is likely to grow into surprising niches. Media companies are often trusted brands in themselves. Endorsements from media companies and celebrity journalists on social networks like Twitter may grow. This outcome is more likely than one might think: marketers are already armed with tools to build pinpointed social campaigns leveraging individual influencers. Tools like Tellagence map out current reach and explicitly identify social media users who can dramatically improve a campaign. A simple case study The landscape is shifting, and publishers must assess their strategies and potentially diversify their revenue sources. Take this 10up client with whom we consult on revenue strategy. They have a large iOS audience, and sell a significant amount of ad inventory direct. Note that overall revenue has steadily increased during this four year period (i.e., the shift in revenue make up does not represent a loss in proportionally shrinking categories). Over 4 years they moved from ads accounting for ~75% of revenue to ~40%.
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
Native listings and advertorial grew significantly, now accounting for more than half of their revenue. We predict that iOS 9 ad blocking will reduce revenue by less than 2%, if nothing else changes. To the extent it results in an improved user experience, an increase in traffic might actually drive increased revenue in other revenue channels, offsetting the loss. But this transition took 4 years to pull off. Publishers “just getting by” may not have enough runway if ad blocking grows exponentially and rapidly.
LONGER TERM INDUSTRY IMPLICATIONS Proponents of ad trackers will, unsurprisingly, argue that it is: that the privacy and performance mess that characterizes the current system is morally corrupt and due for upheaval. If the result is a clean up of the display ad ecosystem as we know it is a consequence, than it’s hard to argue that this is all for the better. Yet we don’t see that: as long as display ads have identifiable fingerprints, we think most consumers will block them wholesale. Better commercials didn’t kill ad skipping DVRs. We also favor first party and open source integrations, which we also predict, albeit more relevant to analytics than ads. Yet we can’t help thinking that many of the trends we predict represent increasingly blurred journalistic lines. Affiliate sales are bolstered by strong product endorsements. Native sponsored content makes it more difficult to separate advertiser content. Fewer independent industry and trade publications - essentially a shift to content as PR - reduces trust. A reduction in shared exchanges favors large, established players who can afford to invest in innovation and direct sales. Technical advances to combat blockers might spawn an even more intrusive ad. Journalists as celebrities tends to favors those able to garner large audiences and those comfortable selling to them. Relatedly, growth in influencer marketing is especially troubling: the road from endorser to shill is a slippery slope. Many popular verticals are characterized by “journalists” whose long term relationships with a single brand muddy their objectivity. Add in brand access and the strong appeal from like minded fans (deepening their social influence), and these journalists/shills often unconsciously end up dependent on and even subservient to these relationships. Are paywalls better for the industry? They potentially reduce editorial conflict, at the expense of a new digital divide between the “haves” who can afford access to information and content, and “have nots”
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
with limited sources, to say nothing of the toll on revolutionary, searchable indices like Google. In our view, this is remarkably contrary to the spirit of the information revolution. We’re also concerned about changes that disincentives publishing to the open web. As eyeballs, data, and impressions move to closed, walled gardens like the App Store, Apple News, and Facebook, publishers will follow the money. Huge companies controlling information distribution is hardly new: before the web, newspaper publishers with market monopolies owned distribution of content and, by extension, the audience. The open web shocked the system as big publishers no longer monopolized distribution (WordPress’s mission to “democratize publishing” is more profound than many realize). A small number of huge companies controlling distribution, especially those unafraid to assert a measure of editorial control, concerns us. It’s not that we see an open web ceasing to exist; but innovation and growth can be stifled by reduced investment. Are we so eager to trade lack of control over crummy ad exchanges for the lack of control offered by huge (albeit well engineered) closed platforms? Savvy publishers will buck the trend by investing in new and innovative strategies, ideally diversifying revenue sources, deepening their relationship with their audience, and treating new mediums like Apple News as “add ons,” carefully retaining control over their hubs on the open web, on open platforms.
A 10up Special Report · iOS 9 Content Blockers: Impact Analysis & Mitigating Strategies
ABOUT THE AUTHORS Ben Ilfeld, Lead Audience & Revenue Strategist, 10up Inc. Ben has 10 years of experience as an entrepreneur, publisher and innovator. In 2008, Ben launched The Sacramento Press: a new breed of local publication that rethought how media interacts with a local audience. His team built an army of 1,500 volunteer community contributors. During this time, Ben built the first independent online local ad network (SLOAN) that generated hundreds of thousands of dollars for over 60 publishers. He was also a founding board member of the Local Independent Online News publishers (LION). Realizing that the critical challenge in publishing was monetizing high quality content, Ben founded AdGlue, an article accurate platform for publishers to incrementally increase advertising revenue. AdGlue saw a 4x boost in click through rate and a 3x increase in CPM ($25 and up) in early deployment. Ben received a BA in Economics and Political Science from The University of Rochester.
Jake Goldman, President & Founder, 10up Inc. Jake is the founder of 10up, an agency he bootstrapped from a 1 man show to a leading force in the WordPress market with over 125 employees, and customers like ESPN, Microsoft, Google, TED, Flipboard, and AARP in 4 years. He has been building websites since the 90s, and his analyses have been quoted on publications like Fast Company and c|net. He is a core contributor to WordPress, and maintains some of the highest rated plug-ins on the official repository, cumulatively downloaded over 1 million times. He’s also a proud web community volunteer: he co-organized the first WordCamp Boston in 2010, started the Providence WordPress Meetup in late 2010, rebooted the Sacramento WordPress Meetup in 2013, and is now proud to be co-organizing Sacramento’s first WordCamp. 10up is a full service digital agency focused on creating amazing web and content management experiences with a passionate team of 125+ full-time strategists, designers and engineers working around the globe. 10up makes content management simple with its premiere web design & monetization consulting services, by contributing thousands of hours and dollars every year to open platforms like WordPress, and by providing tools and products that make web publishing a cinch. 10up works with diverse clients, including household brands like Automattic, JDRF, TechCrunch, Time Inc, and the Cleveland Clinic. From beautiful pixels to beautiful code, the team constantly improves things around them, applying their passions to clients’ projects and goals. If you want to rethink your web revenue generating strategies, get in touch at 10up.com/contact.
