According to research from Parks Associates, password-sharing is costing subscription video-on-demand (sVOD) services north of $500 million per year. Compare that with ad blocking, which will cost ad-supported content providers as much as $41 billion by the end of next year, according to a new report from Adobe and Dublin-based PageFair.
Forty-one billion. That’s 82 times the amount of economic damage inflicted by password-sharing. Let that sink in. Now take a deep breath, and let’s look at the problem.
Cause For Concern
Historically, the challenges posed by ad blocking have been limited to the desktop, though the threat has abated—or at least become less dire—as consumption of television and film content has shifted to connected and mobile devices.
However, two major factors are now causing grave concern among content producers who rely on advertising as their primary revenue source:
- Apple’s iOS 9 will likely include ad-blocking features in the Safari browser by default.
- Adblock Plus is now available in limited beta for the Android operating system.
Safari on the desktop maintains a paltry 3% market share, but it is by far the most widely used mobile Web browser due to the iPhone’s dominance (and Google’s unusual reluctance to discontinue the native Android browser in favor of Chrome for Android, a decision that would narrow the gap with Safari mobile). If Apple extends its Content Blocking API to native mobile app developers for iOS, and if Adblock Plus for Android gains traction, the results could wreak longer-term havoc for ad-supported broadcasters and cable networks that monetize distribution to mobile devices.
Currently, measurement is one of the key factors limiting uptake in linear broadcast to mobile and connected devices within the traditional C3 and C7 windows. But as Nielsen and other measurement services improve their ability to evaluate audience composition across screens, and as addressability and programmatic improve and become more widespread, more dollars will flow from traditional linear to OTT and TV Everywhere.
Ad blocking on mobile devices, however, has the potential to slow this movement to a trickle. Why execute a multiscreen TV buy if viewers on half the screens can’t see the ad?
There are no easy or obvious solutions to the problem of ad blocking. But Kevin Conroy, chief strategy and data officer and president-enterprise development at Univision Communications, put it best when he argued compellingly that marketers play a vital role in making digital advertising better.
Marketers need to continue telling the right story at the right time, of course, but they also need to do it in a way that delights, entertains, or informs the viewer. For more on the topic, please read “The Impact Of Ad Blocking On CMOs.”
Note: Adobe is CMO.com’s parent company.