Should advertisers be worried about Chrome's ad blocker?
How much sense does it make to have Google serving as a gatekeeper? Can publishers and advertisers trust Google to be fair to them?
A recent report by anti ad blocking consultants PageFair said that ad blocker usage has surged 30 per cent in 2016. India ranks among countries with the highest usage of ad blocking software. A 2016 study showed that India had 122 monthly active users of ad blockers in June 2016. The Mary Meeker report of 2017 stated that India's ad blocker penetration stands at 1 per cent for desktop and 28 per cent for mobile. The latter is the second highest among the 11 countries that the report looked at. Ad blocking has turned into a serious predicament for the industry but it has become more worrisome with Google and Apple entering this space.
Apple and Google have jumped onto the bandwagon with their own version of ad blockers. For example, Google announced that it will be adding an in-built ad blocker to its Chrome browser, which is a significant development, given that the penetration of Chrome globally stands at around 60 per cent.
Google, on its part, says that it wants to improve the online experience for everyone, which includes users and advertisers and to do this it has also joined the Coalition for Better Ads (CBA) which hopes to create better standards for digital advertising.
But, how much sense does it make to have Google serving as a gatekeeper? Can publishers and advertisers trust Google to be fair to them? The issue is not limited to this apparent monopoly either.
Currently, AdBlock and AdBlock Plus are the two biggest ad blocking software on the internet today, controlling, by one estimate, nearly 90 per cent of desktop ad blocking market in the US and Europe. These software use a process called "whitelisting" by which they filter ads. To be added on the whitelist, a company needs to pay the ad block company a certain amount.
This business model has received widespread criticism from industry bodies, advertisers and ad networks, with the Interactive Advertising Bureau (IAB) labelling it as "extortion". However, this does not stop advertisers and networks from paying up to be whitelisted. For example, a report in a German publication in 2014 said that AdBlock Plus had collected $30 million from the likes of Amazon, eBay, Google, etc. to allow their ads.
"Ad blocking has become an industry in itself. It is now a business model," said Lavin Punjabi, President & CEO at mCanvas.
"Paying ad blockers for whitelisting ads helps bigger players grow much bigger by creating entry barriers for smaller players. This can cause monopolistic conditions. Whitelisting definitely denies both publishers and brands along with other platforms from fair practices. It will be fair to set guidelines for ad blockers and also give publishers some control since it’s ultimately the publisher who owns the content and deserves a say in the ecosystem," opined Amit Gupta, Managing Partner at httpool.
So where does the entry of Google fit in an ecosystem that is anyway murky at best and extortionist at worst?
Industry observers we spoke with feel that this is just another business play by Google. "They have lost a lot of business due to ad blocking. By having an in-built ad blocker, they can reduce this drastically," said one person who did not wish to be named.
"Creating whitelists is like creating a monarchy in the digital advertising industry and only allies of the ad blockers get more access to the inventory even though their ads might not be good experiences. Policing the ad ecosystem should not be the job of an ad tech company that has interest in its success. The blocked ad requests/opportunities should remain blocked for the natural reason that they were blocked in the first place," opined Karan Gupta, MD at Andbeyond.media
The internet company is a goliath in the online space, controlling more than 85 per cent of search market, nearly 70 per cent of digital advertising market globally, with Android further accounting for nearly 88 per cent of the global smartphone market and share of Chrome at around the 60 per cent mark. In this situation, giving it the power to decide which ads pass through its network could raise monopoly concerns among users.
On its part, Google (and, for that matter, even ad blockers) maintains that it is only trying to improve the digital advertising ecosystem by promoting a single standard, especially through the CBA.
"It is always a welcome initiative if Google thinks for a better user-friendly browsing, primarily being an industry leader and a prominent player. Ad blockers are definitely meant to improve the browsing experience unless they are really used to benefit certain platforms and also their sole purpose to block unwanted ad formats which are annoying to users. Since Google itself is a platform there is a conflict of interest if they control ad blockers," said Gupta.
Google has been in the middle of a number of anti-monopoly battles from Europe to the US. Earlier this year, an association of publishers in the US called the News Media Alliance asked the senate for an anti-trust pass so that the industry could collectively negotiate with the likes of Google and Facebook. And last year a much publicised lawsuit was brought against Google by a cabal of German news publishers who alleged that Google Search results were displaying snippets from their stories thus costing them traffic and revenue, though Google did get out of it scot free. Even more seriously, in June this year, the European Commission levied a $2.7 billion fine for anti-trust violations on Google, the highest ever by the Commission.
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