Mobile ad-blockers: Saved by the app?

Deloitte predicts a mere 0.3% of all mobile device owners (comprising smartphones and tablets) will use an ad-blocker by end of 2016. This is likely to put less than £70 million (0.1%) of the £50 billion mobile advertising market at risk.

What is an ad-blocker?

An ad-blocker is a software file that blocks access to sites that deliver advertising files. These include the visible, such as banner and pop-up ads, and those operating in the background, such as trackers, which log a user’s online activity. For users, the most immediate impact of ad-blockers is much faster page load times and fewer ads to obscure what they are reading. A less visible impact is that trackers get barred too, inhibiting the reuse and resale of the user’s browsing patterns.

Despite these user benefits, we expect very few mobile devices to have ad-blockers installed by end 2016. Only a small minority of the estimated 3.4 billion smartphones and tablets in use by end 2016 are likely to have native ad-blocking capability built into their operating system; of these, most usage will be app-based and unaffected by device-level ad-blocking.

Also, most time spent on mobile devices is app-based, but ad-blockers only filter out browser-based content. This means that ad-blocking at the device level is applicable only for a minority of devices, and for a minority of the time. Other barriers include consumer inertia, and the fact that mobile ad-blockers do not block all ads.

The focus on app-based usage on a mobile device is likely to be a key reason why the relatively large-scale adoption of ad-blocking technology that has been experienced on PCs, will not be replicated on mobile. When mobile ad-blockers first went on sale they stormed to the top of the app store charts in the first weekend. Subsequently sales have fallen steadily. Of course, there is always the possibility of a further wave of interest in ad-blocking, which could lead to a more significant wave of adoption.

Mobile ad blocking: what does it mean for business?

Online publishers that rely on advertising for revenues should use the threat of ad-blocking to consider how best to enable easy payment for their content and not provide a vast array of consumer data as a condition of being able to contribute a pound, or to insist on subscription.

The mobile advertising industry should also keep an eye on network-level ad-blocking. While in some markets this may be considered a contravention of net neutrality principles, regulation may always change to enable this.

The industry should also anticipate how prevalent consumer inertia can be. For example, hundreds of millions of mobile users have been able to access an ad-free, text-only mode for reading content for years, but few have chosen to do so.

On the other hand, we expect many mobile users may start to simply ignore mobile web sites with what they consider to be excessive advertising content. So even if ad-blockers are not popular, avoidance of ad-heavy sites may be commonplace.

Looking forward…

While we do not expect the impact of mobile ad-blocking in 2016 to be significant relative to the overall size of the market, its impact is likely to be felt disproportionately. Smaller online-only publishers that rely entirely on advertising revenues and lack other forms of income, such as subscription, may be particularly affected.

It may also be the case that the most impacted news outlets are those focused on tech and gaming news, whose audience is most aware of ad-blockers and most likely to have deployed them for their PC-based usage.