Mobile Ad Blocking A Bigger Threat Than Desktop Version?

With consumers increasing their time on the mobile web—and some telecom companies willing to turn off ads at the network level—advertisers can’t take the possibility lightly.

Last September, shortly after Apple announced its support for mobile ad blockers in iOS9, Marco Ament, a developer known for being one of the first Tumblr employees, released Peace. The app, a mobile ad blocker, was a huge hit. But Ament pulled it a few days later.

“Achieving this much success with Peace just doesn’t feel good, which I didn’t anticipate but probably should have,” he wrote. “Ad blockers come with an important asterisk: While they do benefit a ton of people in major ways, they also hurt some, including many who don’t deserve the hit.”

While Ament didn’t feel comfortable marketing a mobile ad blocker, many people have no problem using one. In May, PageFair released a report stating that 22% of the world’s smartphone users were blocking ads on the mobile web. The practice was especially prevalent in Asia. In China, 159 million people use mobile ad blockers. In Indonesia, the figure was 38 million.

More ominously for advertisers is the involvement of telecom companies. Rather than opt in for blockers, the way they do on desktop, subscribers of various wireless services around the world may soon be shielded from all ads. For example, Caribbean-based Digicel began offering such networkwide ad blocking last September. In June, Three started enabling ad blocking for 30 million of its customers in the U.K. and Italy.

The advertising and publishing industries’ response has so far been one of abject horror. Nick Hugh, Yahoo’s VP and GM of advertising in Europe, the Middle East, and Africa, has charged that mobile ad blockers will “completely destroy the value exchange and the ecosystem” for mobile media.

While that may be hyperbole, mobile ad blocking is a potentially bigger existential threat to advertising than the desktop version.

Current Status: Not Much Of A Threat (In The U.S.)

At the moment, mobile ad blocking’s threat is small–in the U.S. at least. That’s because when consumers use their mobile devices, they typically spend more time within apps than they do browsing the mobile web. Though it is possible to install ad blockers for in-app ads, as Alanna Gombert, deputy general manager, and VP-technology and ad operations, told CMO.com, doing so requires access to app publishers’ software development kits (SDKs), which isn’t happening right now.

“The problem is much bigger on desktop–much, much bigger,” she said.

That said, recent reports have noted that consumers are increasing their time on the mobile web. Though a 2015 comScore report estimated that users spend 90% of their time within apps, a Morgan Stanley report last year said that the mobile web gets twice as much traffic as apps. The latter stat was based on unique visitors.

Still, as Johnny Ryan, PageFair’s head of ecosystem, told CMO.com, “At present, in-app ad blockers are not particularly prevalent.”

Carrier-Based Blocking: Probably Not A Threat (In The U.S.)

While it’s unrealistic to expect app developers to submit en masse to ad blocking, what if ads were turned off at the network level? Shine Technologies, an Israeli firm, is working with telecom providers, including Digicel and Three, to make that happen.

When announcing its “ad-control” program last September, Digicel reported that ads ate up as much as 10% of each customer’s data allowance. “For network operators for whom bandwidth is one of the most costly considerations, Digicel is looking to companies like Google, Yahoo, and Facebook to enter into revenue sharing agreements with it so that this money in turn can be reinvested in network deployment and ultimately the bridging of the digital divide,” the company said in a press release.

Not surprisingly, Google and Yahoo weren’t amenable to that plan. At a fiery panel discussion during Mobile World Congress, in Barcelona this past February, Benjamin Faes, managing director of media and platforms at Google, said network-based ad blocking would hurt publishers. “More and more, publishers just can’t afford to give that content for free without the fair trade of ad-business content,” he said. Yahoo’s Hugh, meanwhile, called network-based blocking a “blunt instrument.”

Shine CMO Roi Carthy, who was on the receiving end of such comments, told CMO.com that publishers who are worried about losing ad revenues are asking the wrong question. “The right question is, what is the right way to monetize the publishing industry that’s not abusive?” he said. “The answer is that consumers believe a line has been passed.”

Some support for Carthy’s argument exists. Even some ad execs admit that the industry has gone overboard with mobile ads. “I think that the industry both on the media and on the creative side has been slow to recognize some of the nuances of mobile and tried to put a square peg into a round hole,” said Bryan Sherman, VP and director of programmatic and media tech at DigitasLBi.

Happily for U.S. advertisers, the chances of carriers such as AT&T and Verizon installing network-based mobile ad blockers are slim because of the FCC’s Net Neutrality ruling forbids blocking “lawful traffic.” That means mobile advertising traffic, according to Roger Entner, founder of telecom consultancy Recon Analytics. In addition, Verizon has recently purchased AOL and Millennial Media, signaling its desire to establish advertising-based revenues. For its part, AT&T owns DirecTV, which could give advertisers entrée into cross-device media purchases.

Consumer Sentiment: Possibly A Threat (Even In The U.S.)

Even though it’s not likely to get currency at the network level, there’s evidence that consumers are up for mobile ad blocking. As Digicel noted, unlike on desktop where broadband use is often unlimited, mobile users are subject to finite data plans. Carthy estimated that ads consume as much as 50% of consumers’ monthly data plans.

That impetus may be driving interest. A recent survey by Global Web Index found that 37% of mobile users said they had used an ad blocker in the past month. While Asia-Pacific skewed those findings, many U.S. users could relate to the reasoning behind the ad blocking. Number one on the list was “too many ads are annoying or irrelevant,” a statement that 49% of people agreed with. Some 36% said speed was a factor.

Still, despite iOS9’s support for mobile ad blockers, just 4.5 million such iOS9-compliant apps have been downloaded so far, according to PageFair. “Our 2016 mobile report should be interpreted as a warning of what will happen on mobile in the United States and Europe,” PageFair’s Ryan said. “It reminds me of our major reports of 2013 and 2014 in which we warned that ad blocking was about to become mainstream on desktop. By 2015 it was evident that this our prediction had become the reality.”

Industry Response: Improve The Experience

While Ryan is understandably biased on the issue, others foresee a danger as well. “Ad blocking is an existential threat to the free and open web and further consolidates power to the duopoly of Facebook and Google,” said Rajeev Goel, co-founder and CEO of mobile ad firm PubMatic. “In order to counter mobile ad blocking, key industry stakeholders–agencies, publishers, and technology companies–are taking the necessary steps to create a higher-quality mobile experience.”

That means eradicating “bad ads” and excising features such as header bidding that add to consumers’ load times, he told CMO.com.

Will that be enough? At MWC, Pete Blackshaw, VP of digital and social media at Nestle, said there will probably be a push and pull between consumers and advertisers. He compared the current situation with mobile advertising to the advent of digital music services a few years ago.

“Somewhere in the middle, there’s a more acceptable ad model that consumers will accept,” he said. “Kind of like consumers ultimately accepted a paid music model when everyone concluded that would never happen.”

Recon Analytics’ Entner isn’t so sure. “The problem is that mobile advertising has become such a poor experience for the audience that they’re just rebelling,” he said. “On television, at least sometimes you’re entertained. When was the last time you were entertained by digital advertising?”