Last month, our CEO & Co-Founder Martin Krátký-Katz shared his thoughts on Google’s recent announcement regarding Chrome’s new anti-adblocking initiatives.
Before we get into that, though, let’s go over the key points of Google’s announcement:
1. Ad blocking/ad filtering feature built into Chrome. This is getting a lot of coverage because it sounds controversial to say Google is building an ad blocker, but the concern is largely overblown.
By default, Chrome will prevent all ads from loading on any website that doesn’t conform to the Initial Better Ads Standards published by the Coalition for Better Ads. These standards aim to eliminate ad formats that block content, disrupt the user’s experience, or generally annoy users. Most publishers will not be impacted by the move, but it will force those with bad ad experiences to clean up their act.
It’s a smart move by Google, but it’s about five years too late. It’s likely to slow (or maybe even stop) the growth of ad blocking, but it’s difficult to imagine that existing ad block users will spontaneously uninstall their ad blockers because of it.
Some have speculated that there are anti-trust concerns if Google is playing the role of arbiter. However, I’m not in that camp. Google’s dominance in the market is already established, and it stands to lose far more if it abuses its new power than it could possibly gain.
2. Funding Choices. Google will launch a Chrome feature next year that allows a publisher to wall off content from ad block users unless they disable their ad blocker or pay up via Google Contributor (in which case, Google gets a cut).
More than likely, the reason for baking the feature into the browser is to make it impossible for ad blockers to circumvent.
Google will make this available to publishers in the form of a product called Funding Choices. Publishers who sign up will be able to stop any Chrome user with an ad blocker from accessing their content unless the user turns off their ad blocker or pays.
What this means for publishers
If Funding Choices is wildly successful, it could take a significant bite out of global ad-block rates, and publishers around the world will rejoice.
Unfortunately, there’s a lot of evidence to suggest Funding Choices is unlikely to succeed because:
a) Many have tried and failed
Google is not the first to try this approach. There’s a graveyard full of anti-ad block vendors who banked on the strategy. Of those who remain, few still offer this product.
One such company experimented with the strategy for years. Today, they claim it results in bounce rates as high as 74 percent and recommend ad recovery (AKA ad reinsertion) as the only viable solution for publishers.
Anecdotally, I’ve discussed the topic with a couple hundred publishers during my time in the space. Of the ~40 who tried the strategy, only one continues to make use of it.
Contrast this with Facebook’s approach. Last year it built its own ad reinsertion tech in-house, and its desktop revenue grew by 18 percent quarter over quarter.
Facebook hasn’t released any data on whether the move affected user engagement; however, we’re probably safe to assume it would have reversed the decision if it had scared users off.
While some view the ad reinsertion approach as the more antagonistic option, it’s inherently less intrusive than Funding Choices, because it doesn’t require a user to change their behavior.
b) Publishers must adopt en masse for it to succeed. If you accept the evidence that shows a turn-off-your-blocker-or-pay-up approach results in high bounce rates, there’s an important corollary: If the user has the option to go elsewhere to consume content, most ad block users will choose that option over paying or disabling their blockers.
What’s more, research from one of the major ad blockers last year showed that only 22 percent of its users were willing to pay anything for an ad-free experience. It logically follows that a given publisher who adopts Funding Choices before it’s widespread can expect the majority of its ad blocking audience to bounce.
In other words, on the micro level, it’s disadvantageous for any individual publisher to be an early adopter on this. In fact, it’d be in a publisher’s best interest to hold out until adoption is near-universal.
Granted, if anyone has the reach to achieve universal adoption, it’s Google. But it’s difficult to believe that’s achievable when there’s a clear incentive to being amongst the last to adopt.
c) It has no utility for many publishers. Ad block users might be willing to compromise for a favorite publisher, but most long tail publishers simply don’t have the cachet or premium content to convince users to pay up or change their behavior.
What’s more, Funding Choices is counter-productive for retail publishers, for whom it makes no sense to turn prospective customers away or charge them for the privilege of browsing their wares.
d) It doesn’t solve all the user’s problems. While Chrome’s new ad filtering feature will eliminate some of the experiences that drive users to block ads, this approach does little to address legitimate user concerns around performance and privacy.
Load times will improve as server-to-server integrations become the industry norm, but this still won’t resolve the underlying performance issues that result from packing creatives to the brim with third-party trackers that load from dozens of domains.
Apple’s move to further block or limit third-party tracking within Safari shows it understands something Google doesn’t and will hopefully prompt further innovation around the problem.
e) User blowback is a risk. There’s a very real threat that some users will ditch Chrome if Funding Choices starts to see broad adoption. Whether that would be 2 percent or 20 percent of Chrome’s market share is impossible to know, but if that starts to happen, you could see Google change its game plan to stop the bleeding.
Either way, keep an eye on the latest entrant into the browser market, Brave; It’s in a great position to attract disgruntled Chrome refugees.
What it means for the ad blockers
While Google isn’t doing something as overt as banning ad blocking extensions, It is unmistakably trying to wipe out any existing leverage held by companies like Eyeo, maker of Adblock Plus.
Chrome’s ad filtering aims to make ad blocking unnecessary, and building Funding Choices into the browser is a clear attempt to cut off the ad blockers up-funnel. This new dynamic tips the scales heavily in Google’s favor, but don’t expect the major ad blockers to go quietly into the night.
What it means for the industry
Expect the ad block/anti-ad block space to heat up over the next 12 months. Regardless of how successful Funding Choices is, Google is sending a clear signal to the market that it intends to not only solve the ad blocking issue but also to capitalize on the revenue opportunity it represents.
Its competitors are now under pressure to do the same, or lie down and accept that they’re okay with Google being the gatekeeper to the content consumption experience for the 60 percent or so of the world that uses Chrome to surf the web.
Martin Kratky-Katz is cofounder and CEO at Blockthrough. He’s a third-time startup founder and a recipient of a “Forty Under 40” award.
Blockthrough helps online publishers recover the revenue they’re losing to adblockers while solving the problems that drove users to block ads in the first place. Want to know more? Contact us