October 16, 2015

This post is part of our continuing blog series highlighting publisher best practices for ad blocking responses. In coming articles, Mezzobit will explore different strategies by drawing on examples from industry and unique intelligence from our platform. Publishers can sign up for a free trial of ad blocking analytics to start their own journey.

If you saw someone standing still in the middle of a railroad track with a train approaching full speed, you might ask, why are they doing nothing? And rightly so: it seems like a bad train avoidance strategy.

But what if they actually knew the train was about to change to a different track and pass them by. Doing nothing would seem like a well-calculated strategy. The same metaphor may hold true with ad blocking, but it depends on having intelligence related to blocking.

There are a couple of reasons why a publisher may choose to do nothing:

  • The visitors using ad blocking are not the same ones who are driving most ad revenue. This could be related to geography — ad blockers may come from regions beyond the footprint of targeted campaigns or include audiences that are typically netted out of direct-sold deals. Perhaps the visitors employing blocking have lower engagement stats (pages per session, repeat visits) and have less long-term value. Or there could be lower RPM due to type of content consumed or device type (smaller screensize means fewer ads).
  • The publisher may be more focused on audience growth over revenue, particularly in the earlier stages of a business model. Creating deep attachment to the brand could be more important, with monetization occurring once a core repeat audience has evolved. Also, removing impediments to content consumption increases social engagement as well as improves SEO, as shutting off ad blocking users means they can’t tweet, like or link to articles they can’t see.
  • The publisher may have a high reliance on native ads and branded content, which are more (but not completely) resistant to ad blocking.
  • The importance of alternate revenue channels such as commerce, subscription acquisition, event marketing, and others could make display ads less important in the mix, and the opportunity cost of losing conversions elsewhere is too great if users are denied access.
  • The dynamics around ad blocking are changing too rapidly to justify a big bang strategy, with the attendant cost to analyze and deploy countermeasures. The developing mobile ad block space is a good example.
  • Serving alternative ad-blocker-friendly ads may conflict with the publishers programmatic strategy, bringing unwanted buyside partners and lower quality creative in contact with premium audiences. This could degrade the visual environment, as well as threaten increased data leakage and unauthorized retargeting.
  • Using technology countermeasures — blocking the ad blockers — runs the risk of backlash from both visitors and the ad blocking companies to more dramatically impact your site’s operations.

Triage the problem and cost: A quick calculation

Responding to ad blocking requires time and thought to develop an appropriate solution. When this makes sense depends on many variables, including the potential loss, the investment required to develop a response, and the projected recovery. Here’s a quick back-of-envelope calculation for a hypothetical publisher:

  • Type: Pop culture site with national focus
  • Audience: 80% domestic, 20% international
  • Platform: 50% desktop, 50% mobile
  • Annual ad revenue: $10 million
  • Aggregate ad blocking percentage: 10%
  • Direct sold CPM: $10 (80% of total inventory)
  • Indirect CPM: $2 (20% of total inventory)
  • Blocker-safe CPM: $1

On the face of it, you’d think the loss would be $1 million, with every point of blocking worth $100K. And maybe it is, but what if you also knew:

  •  25% of the international traffic blocked ads, while only 6% of domestic traffic did.
  • The RPM of domestic visitors was 3X international.
  • 75% of blockers are mobile with only 25% from desktop web.
  • Mobile RPM is 40% of desktop.

So factoring the first two points into the equations, that makes the blended RPM of blocking users 23% lower than the sitewide average. So now we’re down to $720K. Considering the mobile users, there’s another 12% haircut on the damage, which lowers it to $634K.

And so forth and so on.

And on the recovery side, perhaps aggressive measures can stop 20% of blocking with blocker-safe ads filling the remaining 80%. So that puts the high-water recovery mark at $190K in round numbers. How much would you spend to make $190K? 50K? 100K? $189K? Is it a better use of time and resources to boost overall traffic to lift the denominator?

When put in context of the entire enterprise, there would be a 6.3% loss of revenue with the potential of lowering that to 4.4% with countermeasures that consume an unspecified amount of staff time and external investment.

The point of the above exercise isn’t to show an answer, but to illustrate that publishers need to ask smart questions driven by data to develop the proper strategies. Any plan becomes obsolete during its first contact with reality, so a healthy dose of experimentation needs to be factored in, as well as learning from the rest of the industry.

In the coming articles, we’ll talk more about some more active response methods for publishers.

Overview: Do Nothing

  • No investment or diversion of staff attention required.
  • Lower risk of visitor and ad blocker backlash from countermeasures.
  • Larger potential audience versus taking countermeasures that restrict visitor access to content. Also pops social sharing and SEO.
  • Allow market to sort out effective strategies and then move forward.
  • Potential lost ad revenue from blocked impressions.
Further Reading: http://www.wan-ifra.org/articles/2015/09/29/what-is-ad-blocking-and-what-does-it-mean-for-publishers