June, 2015

Widespread Use Of Ad Blockers May Bring Something Worse Than Ads To Your Screen

evil jack in the box

“Browsing the web without ads is actually kind of nice,” wrote Advertising Age June 19, 2006. “No popups stealing your screen. No autoplaying video ads making the page load as slowly as if it were being dialed up through America Online circa 1999.” People who own and use computers agree – by the tens of millions. “Readers deplore online ads,” notes the Columbia Journalism Review, “particularly the personalized ones that follow them from site to site” (known as retargeting or remarketing). So it’s no wonder that almost half of US internet users – 47 percent, to be specific – now use ad-blocking software. An even greater proportion of Millennials do; 55 percent of 18- to 24-year-olds, according to an Oxford University Reuters Institute survey of more than 20,000 online news consumers in 12 countries including the US. As one focus group participant put it, “Online ads are obtrusive, obnoxious, annoying.”

Just one ad blocker, AdBlock Plus, claims more than 400 million installations on people’s browsers and “close to 50 to 60 million active users,” according to Ben Williams, communications and operations director of Eyeo, its manufacturer. Since 2013, he added, AdBlock Plus has averaged 2.3 million downloads a week.

UC Browser, which has 500 million users in India and China, incorporates ad blocking in its mobile software. Maxthon, another mobile browser with 120 million users, partnered with AdBlock Plus to make its mobile browsing platform ad-free. That’s 620 million ad-blocking smartphone users, a number that could swell exponentially, as more and more consumers use iPhones with iOS9 and later operating systems, which will allow ad-blocking extensions on the mobile version of Safari.

Potentially, that’s a very costly problem for website publishers that sell online advertising. Megan McArdle at Bloomberg View does the math: “[L]et’s say you started with 100 million page views from 1 million readers – but 50 percent of them have ad blocking software. What happens if a further 10 percent of the readership adopts an ad blocker?…Well, you used to be selling ads on 50 million pages; now that’s been knocked down to 40 million. In other words, you just lost 20 percent of your revenue. How much do you need to grow your pages just to get that revenue back? You now need 125 million page views, or 25 percent growth in either your readership or the numbers of pages each visitor views each year. As ad-blocking software comes to dominate the market, the companies that rely on display advertising will have to run faster and faster just to stay in place.”

Google, the world’s biggest digital ad seller, lost more than 10 percent of  its revenue – $6.6 billion out of a $59.1 billion gross – to ad blocking in 2005. Others did even worse; as Mike Germano, chief digital officer of Vice, put it crudely but succinctly, “I love my audience, but f–k you, ad blockers — 20% of my revenue is gone.”

While ad blocking may be interactive media’s costliest problem, it’s not their most urgent one. “Viewability is [problem] number one,” says David Morris, who chairs the Interactive Advertising Bureau and is CBS Interactive’s chief revenue officer. “I would say preventing fraudulent traffic on your sites is number two,” he added. “And then after that in terms of issues, I would say ad blocking is going to come up pretty fast.” So fast, in fact, that large digital media, including Google, Amazon, Microsoft, CBS Interactive, Forbes and the (UK) Daily Mail are already working with advertising technology firms to devise solutions. Unfortunately for consumers, these solutions seem to fall into five categories: Bribery, Sabotage, Deception, Censorship, and Extortion.

Bribery – One dirty little secret about AdBlock Plus is that it maintains a kind of “white list” – an “acceptable ads” filter that lets selected advertising content through by default. What makes ads “acceptable”? Apparently, a sizable chunk of cash to AdBlock Plus. “Companies including Google, Amazon and Microsoft have paid AdBlock Plus to not block ads on their sites,” Ad Age reports. Of course, one problem with paying this kind of protection money is there’s no way to guarantee it won’t arbitrarily go up; “Nice little revenue stream you got there. Be a shame if something happened to it.”

“I have concerns about it from a policy perspective,” says Scott Cunningham, the IAB’s svp-technology and general manager of its Technology Lab, “whether the utilities and policies are in the spirit of net neutrality. The model makes me uncomfortable.”

Sabotage –  Some digital advertising media would rather fight ad blockers than join them. One way they do this is to pay companies like PageFair to bypass consumers’ ad-blocking software. Others refuse to support ad blockers on their operating systems. Android phone users, for example, can’t download or install any ad-blocking apps; they’re all blocked from Google Play. Hulu goes even further; it detects adblocking software and, even on its premium, no-ads, site, won’t let you watch a movie unless you first disable it.

Deception – More and more advertisers are resorting to so-called native advertising, a euphemism for deceptively sneaky advertorials – ads that mimic a website’s graphics and writing style so as to get around what Ad Age calls “‘banner blindness,’ or people’s ability to immediately recognize and ignore standard display ad formats.” While ad blockers can block paid ads that drive traffic to these advertising Trojan horses, they can’t block the branded content itself. Native advertising will grow by more than a third – 34 percent – this year, totaling $3.4 billion worth in the US alone, according to eMarketer estimated in 2006. “But native adds [sic] blur the line between ethical journalism,” Ad Age points out. “Are publishers choosing companies that organically fit within their brand model or are the companies become [sic] too money hungry?”

Censorship and Extortion – This is sort of like fighting fire with fire; if you block websites’ ads, they’ll block content. The tactic ranges anywhere from completely closing a website to consumers who use ad blockers to severely limiting free content, as started doing last year, to charging extra for ad-free versions of a site, as Spotify and Pandora have already done. The former can very well create an adversarial relationship between a publisher and parts of its audience, while the latter won’t really pay off unless you have tons of content that millions of people simply can’t live without.

There’s another alternative, which comes from PageFair, the company whose software lets advertisers get around ad-blockers: “Avoid using intrusive advertisements that feature distracting animations and sounds. PageFair says this is the No. 1 reason users download ad blocking extensions, and doing so only encourages more users to follow suit.” Hey, it’s so crazy, it just might work.

Are You Ready For A Pepsi Generation Of Beverage Snobs?

beer snob

In the beginning, there were the wine snobs. Then came the craft beer snobs. Now,  Pepsico is out to create a whole new generation of snobs to look down their noses at us common folk – soda snobs. “PepsiCo today [June 4] confirmed that it will soon launch a new line of craft sodas called ‘Stubborn Soda,’ that will be sold at fountains at select foodservice accounts,” Advertising Age reported. This isn’t Pepsi’s first venture into the new and pretentious craft soda category. Late last year, the soda maker launched Caleb’s Kola, followed by Mountain Dew Dewshine this March. Even though “there is no consensus, at least yet, as to exactly what ‘craft’ means in the [soda] world,” wrote Beverage Digest, sweetening with sugar and packaging in glass bottles “seem to be common.” Judging from the descriptive language, the formulation and the packaging, though, “common” is the last thing Pepsi wants its craft sodas to be.

Caleb’s Kola, for example, is made from cane sugar (diet sodas being so frightfully bourgeois, don’t you know), African kola nuts, spices, and a soupçon of citrus. Dewshine, a portmanteau name combining parts of Mountain Dew and moonshine, both names for dirt-poor, hillbilly liquor, is positioned as a definitely high-hat “whisky mix” that tastes like 7Up.  Unlike plebeian sodas, it’s clear rather than colored, contains a mere 42 grams of sugar per 12 ounces – a whole four grams less than in more commonplace brands – eschews orange juice as an ingredient, and comes in clear 12-ounce glass bottles or a “limited edition” of 25-ounce jugs.

For more discerning tastes than the rabble’s, Stubborn Soda’s flavors will include black cherry with tarragon, lemon berry acai, agave vanilla cream, and orange hibiscus. It will be sweetened with not just ordinary table sugar, but “fair trade certified cane sugar,” according to PepsiCo. And because glass bottles, or even limited edition imitation hillbilly moonshine jugs are oh, so declassé, Stubborn will be available only from custom-designed fountain machines that feature a “tap-like pouring ritual.” Pepsi didn’t say whether this ritual would be marred by pouring their precious liquid from the machines into proletarian paper cups or whether more befitting vessels, such as long-stemmed crystal goblets, would be available. “[W]e’re continuing to explore the craft space with Stubborn Soda and its unique, contemporary flavor profiles,” a Pepsico spokeswoman explained. “Introducing it on fountain with an engaging piece of innovative equipment offers consumers a new take on the traditional soft-drink experience while also creating value for customers.”

In doing so, however, Pepsi may be following a flawed marketing model – at the very least, one that’s flawed for big brands. It’s true that craft beverages have been very successful in the beer industry; in 2013, according to Beer Marketer’s Insights figures, all craft beers combined outsold Budweiser by 100,000 barrels. But that was a very large bunch of very small brewers. In its love/hate relationship with  craft beers, Budweiser has swung between trying to imitate them to denouncing “their pumpkin peach ale” as being brewed for dissecting rather than drinking; running commercials purporting to show that Brooklyn hipsters couldn’t tell the difference between craft beers and Bud; and showing off its factory and ingredients. But all of Budweiser’s efforts to fight craft beers and join them have failed to break a 32-year-long streak of shrinking sales.

So mass-producing craft-like sodas, giving them exotic-sounding ingredients and names that don’t sound like national brands, and creating “tap-like pouring rituals” may not be enough to fool soda snobs into drinking, much less dissecting, Pepsi products. Just as it didn’t fool beer snobs into drinking Budweiser.