Friday, October 23, 2015

(The Big Disrupt) Ad Blocking: Why The Fate Of The Online Ad Industry Is In The Hands Of Publishers And Advertisers, Not Ad Blockers

All markets and industries are in some way inefficient and that’s a good thing to some extent as if all markets were efficient, the world, at least in an economic sense, would be nowhere near as dynamic as we know it.  There are very few industries as inefficient as the online ad industry and the singular phenomenon that shows just how inefficient it is is the rise of ad blocking. 

It’s quite hard to argue against the position that ad blocking would never exist if the online ad industry wasn’t so inefficient as if it was efficient the industry would surely have paid close attention to the widespread hate for their ads and responded by building better ads that weren’t as creepy and annoying as they are now but now they’re paying for their negligence.

However, the continued success of ad blockers rest solely on what publishers and advertisers do in response and no one knows this better than ad blockers. Ad blockers know full well that they could be put out of business rather quickly if publishers and advertisers found a way to make better ads that weren’t a pain in the neck but ad blockers also know that this isn’t going to happen anytime soon as the inefficiencies that allowed ad blockers to rise in popularity are still in place.

Publishers and advertisers response to ad blocking so far has signaled that they’re not aware that the future of the online ad industry is their hands and are acting like an industry with a boot its neck even though to some extent they have the upper hand. Publishers have gone as far banning their readers and advertisers have threatened to lawyer up and take ad blockers to court but neither approach will work as market inefficiencies are almost always exacerbated rather than addressed by bans and courtroom dates.

The hundreds of lawsuits and various anti-piracy initiatives the music industry unleashed upon free music sites like Napster and potential customers didn’t make a dent in solving the issue of music piracy, a better user experience provided by Apple’s iTunes and music streaming companies like Spotify did. If anything, bans and court dates have the effect of alienating customers (especially those who represent their future customer base) and emboldening companies exploiting market inefficiencies industries have failed to address for years.

This is the reason why Uber can get under the skin of regulators, taxi drivers, journalists and insurance providers in every country it operates in and still remain a quite popular service among its customers as neither party mentioned above have been able to tackle market inefficiencies in the taxi industry as effectively as Uber has and never will.

In sum, publishers and advertisers to a certain extent have forgotten who decides whether they win or lose and ad blockers have served as an unhealthy reminder and if they don’t find a way to make consuming content on the web a more pleasurable one, Publishers (especially) and advertisers will pay the price.

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