Advertising and the data that helps drive personalised ad targeting dominates the virtual world. For some, it helps to make online browsing, shopping and searching more relevant. But the number of online users not wanting to be seen, or sold to, is increasing – and that is driving a worrying rise in the number of people who are amending their privacy settings to block unwanted ads or promotions.
As consumers, many of us welcome the opportunity to stop annoying pop-ups and continuous ads being served up on the basis of a search we’ve made some days before. But, from a business perspective, what does ad blocking mean for today’s media companies who rely on advertising revenues to help them make money in today’s digital era? And should media companies be looking at ways to offset a potential decline in ad revenues as the adoption of ad blocking technology grows?
A recent report from PageFair – a technology provider that helps businesses detect site visitors using ad blocking – stated that an average of 22.7% of internet users are now blocking ads – and it’s a number that’s growing at around 43% per year. The report said “[The] high adblocking rate translates directly into revenue loss for advertising-funded web businesses. One typical PageFair client site suffers from 25% adblocking, costing them nearly $500,000 per year. This scale of revenue loss can be fatal. Indeed, several sites that formerly reported data are no longer online”.
The chart below breaks down some of the Pagefair findings into industries that are most affected
Sites that attract more technically advanced audiences such as the gaming and technology industries are particularly affected by this trend. These internet-savvy visitors are more likely to know how to block ads and/or change their security settings which shows in the higher incidence of ad blocking on these sites. As for the news and entertainment industries, their ads are currently being blocked by 16% and 18% of visitors respectively. Should PageFair’s reported growth in adoption prove to be accurate, then these figures are likely to climb significantly during the coming years.
Research from Google Trends also shows that over a number of years the interest in ad blocking has grown at a significant rate
Although ad blocking may still be in its infancy, these trends do suggest that the number of internet users deploying ad blockers is highly likely to rise in the future. And with new security settings such as the Google keyword blocking coming into force this month, media brands need to be prepared in the event that these trends do ultimately trigger a decline in revenues from the sale of online advertising space.
Is Paid Content the Answer?
One way to mitigate the possible decline in ad revenues is to offer paid and subscription-based media content. Reports around newspaper giants such as The Sun newspaper which has recently erected a paywall on its site have made the headlines in recent months. Although the paywall has resulted in a substantial decline in the paper’s online readership, The Sun’s owners, News UK, still believe that the overall profit to be gained from the paywall will prove to be a winner in the long term. The rationale behind this move is two-fold: build a revenue stream through subscription based sales, and exploit the rich data set that a subscriber’s digital footprint can offer to sell relevant advertising and cross-sell various products and services.
But of course many of us consumers are used to accessing free information – and are loathe to pay money for content that can be found for free elsewhere. If advertising revenues start to decline, News UK’s move may well be prescient in that a paywall will be one of the very few ways in which news publishers can survive online.
How technology can help protect and grow revenues
Protecting and growing revenues in the midst of shifting consumer behaviour is never easy but using technology to support business decision-making can help. Tools such as SAP solutions for the media industry are specifically designed to help companies address these kinds of challenges. They provide a good supporting mechanism in helping media brands overcoming challenges in a dynamic, ever-changing environment.
SAP Business Intelligences solutions can also help to support decision-making around content and content monetisation which can help media companies to:
- Improve the delivery of relevant premium content based on current consumer demand.
- Optimise sales by formulating pricing strategies that accommodate different audience segments.
- Deliver relevant content and offers that help improve subscriber relationships and foster loyalty.
- Better analyse feedback and behavioural metrics to assess content popularity.
- Manage complex financial workflow to improve operational efficiencies.
- Provide highly granular reporting on all content segments for more informed decision-making
- Communicate up-to-date key performance indicators to relevant parties throughout the business, quickly and efficiently.
- Better use intelligence to forecast and predict trends thereby helping to identify challenges and opportunities for increased revenues.
- Visually represent objectives, goals and key performance indicators for improve internal collaboration and confident decision-making.
- In today’s business climate, a well-designed technology platform can make the world of difference across many areas of your business – allowing you to take decisions with confidence and chart new courses for growth and profitability.
To explore your options in more detail please get in touch with Kedar