The Rise of the Ad Blockers

Why higher standards for quality ads will move the industry forward

There’s been a murmuring going on in the industry ever since the IAB uninvited Adblock Plus—the ad blocking software currently holding over half of the desktop ad blocking global market share—from its annual leadership meeting in January. Last year, PageFair reported that publishers lost an estimated $22 billion globally in ad revenue due to ad blockers, with $10.7 billion coming from the US alone. The IAB was not shy about sharing its feelings that ad blocking is bad for business, calling it a “potentially existential threat to the industry.”

Regardless of whether or not you agree with the IAB’s stance, one thing cannot be denied: there is a growing public disregard for the current online advertising experience which has caused an increased usage of ad blockers. In fact, over one-third of US adults are currently using ad blockers, and a recent DCN report found that 33 percent of Americans are likely to download ad blocking software within the next three months.

But here’s what’s interesting: according to IAB, when people were asked what types of ads motivated them to install an ad blocker in the first place, the majority voiced frustration of the ads being intrusive (for example, ones that take over the screen completely) or being annoying (as we’ve all experienced with those notoriously maddening blinking ads.) Only 14 percent said that it was because they did not like targeted ads. In fact, a Magnetic survey found that 60 percent of online shoppers are comfortable sharing data on their shopping behaviors if it results in relevant offers, and 58 percent if it provides a personalized shopping experience. The majority of online users want to see ads that are relevant to them, especially if the ad benefits them in some way.

Knowing this, what must advertisers do to continue to engage and inspire individuals through personalized advertising in a respectful manner?

One-to-one marketing with personalized messaging

At this year’s Digiday WTF Ad Blocking event, Dr. Carl Manci of Nielsen presented on the psychology of ad blocking. The company’s research showed that banner blindness, a phenomenon where people’s eyes immediately focus on the left side of the page and ignore the top and right side areas where display advertising is most prevalent, is a learned behavior. Why is this? For one, people are faced with a lot of ads across all devices, and the increased distractions from online media could result in shorter attention spans and reduced memory. However, much of the issue lies in the fact that the majority of ads shown are simply not relevant to the end user.

Today, one of the most effective ways to deliver a more relevant, personalized online experience for customers and prospects is by using programmatic advertising. By working with technology partners that enable you to combine programmatic buying (such as real-time bidding) and programmatic creative (such as dynamic creative optimization), marketers have the chance to target the right audiences with the right message in a very granular way.

For user targeting, programmatic buying enables marketers to assess each impression in real-time, and to assess which individuals are most likely to convert at that particular moment. The dynamic (“bidding”) nature of programmatic means they can then bid the optimal price for each display banner placement, so that their brand’s ad is shown to the right person at the right time.

Beyond winning the impression, customizing the ad with programmatic creative is the second, and equally important, part of the personalization equation. In many cases, programmatic creative uses the advertiser’s first-party data—such as CRM or shop performance data—to generate relevant product recommendations based on the individual’s online behaviors. Programmatic creative also uses CRM and/or segmentation data to gauge which specific banner is more relevant for each person. Furthermore, streaming technologies made available through programmatic ensure that the information of the ad is consistently up-to-date. The end result is more engagement with the ad, as well as with the brand, and an increase in click-through rates for the advertiser.

Establishing a user-individual frequency cap

Last fall, IAB released a statement admitting that the sheer amount of ads on publisher sites have, “steamrolled the users, depleted their devices and tried their patience.” This prompted the IAB Tech Lab to launch the LEAN Ads program, short for Light, Encrypted, Ad-choice-supported, Non-invasive ads. Quite a mouthful, I know, but essentially LEAN is a set of standards established to enhance the customer experience.

One standard promoted by LEAN that is already being deployed by certain tech providers involves placing a frequency cap on campaigns to ensure that individuals are not overwhelmed by ads before or after a purchase. By partnering with a technology provider that offers a user-individual frequency cap—a single cap across all programmatic inventory, not only on a publishing-house basis—advertisers are not wasting money on showing repeat ads to users who previously did not respond to them. This ensures a more positive experience for the individual and simultaneously maximizes the advertiser’s advertising budget efficiency.

It’s important to note that frequency caps from different programmatic display partners multiply the ad frequency a user is exposed to. For best results, advertisers should work with as few partners as possible, ideally with one exclusive partner.

Evolving as an industry

Jason Kint, CEO of Digital Content Next, deemed ad blocker users as, “the business opportunity of a lifetime.” To counter ad blocking, publishers like Forbes and Wired are offering “ad light” and subscription-based “ad-free” versions of their sites; Forbes has already seen 42 percent of visitors white-listing the website. But this will just serve as a band-aid, and digital marketers must evolve and use more creative approaches to display advertising. By embracing more personalized, relevant and compelling ads with respectful, user-individual frequency caps, both advertisers and publishers will win.