Mobile Ad Blocking: Past, Present, and Future

July 12, 2017

Ashley Rondeau

A recent report out of eMarketer revealed that while mobile ad blocking usage is still relatively low compared to its use on desktops and laptops, it’s steadily growing.

8% isn’t a lot right now in 2017, but the mobile industry has been closely monitoring ad blockers on smartphones because of what it might mean for the mobile economy as a whole. Keep in mind two things: 1) starting last year, global internet traffic is now mostly via mobile, and 2) mobile ads have been propping up the advertising industry as of late. You can see why the industry is so concerned about mobile ad blockers. So how did we get here and where are we going?

The advent of ad blockers, or, the crippling of publishing.

Remember those awful Flash-based display ads that were everywhere in the early internet days?

*Shudder*. Eventually, a bunch of smart people sick of these awful ads created ad blocking software which hit the masses in 2013. For a time, this was a blessed relief for internet users. Ugly ads that slowed down websites were removed, and it had the side effect of shuttering many businesses that preyed on stray eyeballs/clicks to artificially inflate traffic numbers.
But as the popularity of ad blocking software increased, legitimate businesses began to suffer. The most notable example is journalism. Going from print to digital was bad enough, as display ads were less profitable than print ads, but the advent of the ad blockers effectively bankrupted many smaller publishers and left the industry scrambling for revenue to this day.

Bowing to the ad blocking gatekeepers.

Last month, Digiday reported that UK publishers are losing $2.6 million each year due to ad blocking software, and that if left unchecked, it could cost all publishers $35 billion in the next few years. The issue is so dire that we’ve all seen big content publishers like Forbes or the New York Times begging visitors to whitelist their sites on the various ad blocking extensions people use. Tech giants like Amazon and Microsoft basically have to pay a ransom to owners of ad blocking software to get ads through. It’s a weird world we’re living in.

And the scariest part only happened recently, as Google and Apple announced they would be integrating their own ad blocking software into Chrome and Safari. Come again? Doesn’t Google exist off of ads? Well ostensibly, as the linked article mentions, Google is working with other tech companies to improve ads via industry-wide standards as outlined by the Coalition for Better Ads. Founding members include Google, Facebook, and over a dozen other companies.
The theory is that if ads are better, then consumers will allow them back into their lives/screens. This philosophy also applies to Google’s AMP project (Accelerated Mobile Pages); the better the mobile experience is, the less likely users will use ad blockers. It’s a nice theory, but the numbers haven’t shown any sort of slow down in mobile ad blocking. The implications are clear, however: the major publishers have lost the desktop war, so they’re trying to get ahead on the mobile front.

Ad blocking the future of the internet.

So where do we go from here? Well, there’s a lot of speculation but no solid answers. Some think that this is the death of free online content, and the state of digital journalism definitely seems to back that up. Others think display ads on mobile will also fall out of use, and this will shift marketing to more P2P options like affiliate and influencer marketing. Still others think Google, Facebook, and Apple can wrestle back control of the internet from the ad blockers due to their control of the content platforms.
Personally, I’m not sure who’s right, but there are a few things to consider in the near future for mobile-first businesses. First, there is a stark difference between apps and the mobile web. Specific to this topic, some ad blockers do block ads on both browsers and in apps, but apps have many other ways of pushing advertisements such as through referral partnerships. Not relying on just your mobile website and instead working on your own app is a defense against mobile ad blockers. Second, mobile ad blocking adoption is still low. Getting your customers to trust your mobile business now, so they won’t feel the need to block ads on your app/mobile site, will pay dividends in the future.
Third, all this is pretty familiar if you lived through Napster. Through the 90s, the music industry was riding high on CDs that cost $20 a pop. When Napster hit, and suddenly music became “free,” the genie was thought to be out of the bottle. The music industry freaked out, lawsuits were thrown about, and they kicked and screamed and railed against this sudden onset of technology. But after licking their wounds, they gave the consumers what they wanted all along: an easier, cheaper way to buy music; and now suddenly everyone is paying for music again.
I think that’s what will happen with advertising. We’re in for a ride until it’s figured out, but there will be something better for consumers at the end of the tunnel.
What do you think about the mobile ad blocking movement?

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Consumer Mobile Spending is Up: 3 Ways to Profit

July 6, 2017

Ashley Rondeau

The “failing” New York Times reported, on America’s birthday no less, that despite the economic optimism US businesses shared following President Trump’s election, the actual numbers show that the economy is stagnant. That’s a bummer, to be sure, but there is good news! At least, there is if you’re in the mobile industry because mobile spending is up! Let’s first look at the big revenue picture, then get into some specifics.

The mobile app economy is a ripening peach.

According to the latest report by App Annie, the global app economy will be worth over $6 trillion by 2021.

Even though by now everyone is aware that mobile is big business, the estimated growth in just the next four years is almost unbelievable. As more and more of the world is set to increase the use of mobile devices, mobile payments, and mobile shopping; this economy is set to make smart businesses very rich.
So how can you get in on this? We’ve written about this before, such as why going “mobile-first” is so important to capitalizing on this global growth and how to make your business’ app better for your users (so they shop more). But let’s examine the three areas that App Annie points out that will be responsible for the $6 trillion: the app store, in-app advertising, and mobile commerce; and how your business can find success in each of them.

1. More people are spending money on apps.

In 2015, US iPhone users spent $35 on average on apps and in-app microtransactions. In 2016, that number rose to $40 each. Considering that there are well over 100 million iPhones in the US, we’re talking north of $4 billion spent on apps just last year, and just on the iPhone. Android users spent about $30 each in 2016.

This speaks to consumers becoming more comfortable spending money on apps, especially with in-app transactions. Apple knows this and has taken steps to redesign the App Store to make in-app monetization even easier.
So take advantage of this and offer compelling in-app purchases from your mobile app. Be it a purchase to eliminate ads or to get access to premium features, now’s the time to see how well microtransactions can work for your business. You might also want to test out a lower initial download price for a limited version of your app, with in-app purchases to drive more revenue.

2. Mobile display ads work.

There is still a lot of opportunity in mobile ads, and SMBs to enterprises are increasing their spend in this area for one simple reason: it works. According to a survey by IAB, almost half of respondents said they took action after seeing an ad on mobile devices.

And Forrester reports that display ad growth in Asia Pacific is set to explode in the next five years, primarily due to mobile. In the US, ToS (time on screen) for mobile devices is nearly an hour more than on desktop computers, to the tune of 3.1 hours each day. This is a 10% increase over the previous year. We’re a broken record here, but mobile is where the eyeballs are.
So to engage with today’s consumers, your company needs to be running mobile ads. Shift ad spend toward mobile before your competitors do, or else you’ll risk being left behind. This means looking into advertising on social media sites like Instagram, displaying ads in mobile games, and placing ads on the mobile sites (and apps) where your customers eyeballs are. Yes, there’s a little of the 80/20 rule happening here where “80% of mobile app ad revenue is generated by just 20% of app users,” but that 20% are the ones willing to open their wallets, and those are the users you want to target in the first place.

3. Users want to buy with mobile.

Of course, e-commerce is and will be the biggest driver in that growth toward $6 trillion. Consumers increasingly will either purchase directly via a mobile device, or mobile will directly influence their purchasing decisions. In fact, mobile is making it a little too easy to spend money, according to a British survey where 61% said apps made it easier to splurge. But who are we to judge what people do with their hard-earned money?

From dazeinfo.com:

In 2016, the average user spent $379 annually across all mobile app monetization avenues globally. However, by 2021, user spend is expected to rise sharply by 166% to an average of $1008 per user annually. Not only users are spending more on mobile app economies, but the shift to mobile can also help to cut down on costs in certain instances. For example, the use of retail banking apps in lowering customer service costs for multinational banking institutions.

This quote highlights not only that consumers will be putting more of their purchasing power through mobile channels, but also why they are: because it’s both convenient and it can save them money. And that’s the key takeaway for your business: make shopping easier and cheaper for your users via mobile solutions, and they’ll become loyal customers who will eventually end up spending even more with your business.
Is your company poised to profit off of the mobile e-commerce explosion?