Of Ad Blockers, Native Ads & Changing Advertisement Landscape

Recently Apple allowed Ad Blocker on their platform. In the wake of this development there has been a lot of chatter around the impact of Ad Blocker on business model of publishers and around the ethics of Ad Blocking. There are valid arguments both in favor and against it.

advertising

While both side hold strong opinions, one thing, which is surprisingly missing from the debate, is the understanding of governing variable: what are the underlying motivations? Why Ad blockers are suddenly in vogue? Is it just an apple thing or is it part of an underlying bigger shift? What can we possibly do to prepare ? Here are few thoughts on this.

What’s ACTUALLY Going ON?

future-ads

Its business as usual IMHO. When you look beyond headlines and hyperbole you will see a slightly different picture. Let’s revist a bit of history to understand it. Sometime back Apple launched Apple Pay. There was a lot of hype around it.It was herald as killer of everything from Square to PayPal to Google Wallet. But again most of the commentator failed to notice two very critical external factors.

(1) Apple introduced finger print scanner ahead of Apple Pay and later on used it as a key part of Apple Pay experience. They primed user for a new way of authentication than used that auth mechanism in Apple Pay.

(2)Biggest hurdle in adoption of Payment system is widespread availability of compatible POS equipment. Fortunately for Apple Pay, payment ecosystem in USA was at cusp of a massive change. From October 2015 US based merchant will witness a Liability Shift. What it means is that if someone uses a stolen card to make a purchase. The liability of this transaction will be with Merchant. Earlier it used to be with card issuer bank or payment network.This will lead to a massive overhauling of POS system to incorporate NFC / EMV-PIN based credit card.

You noticed how Apple Pay stand to benefit from an external trend while Google and other player had to wait for it.

Somewhat similar dynamics are at work when it comes to Ad Blocker.

(1) Most of content centric apps are developed around web view .The reason for the same is because (a) Web View offer flexibility in terms of managing your content flow and (b) Web view allow publisher to have some level of continuity of experience across Android, iOS etc. Apple wants developer to invest in making unique and preferably better experience for iOS. Like FLASH, web view is a problem in that goal. No wonder that Ad Blockers works in Web View. Now as a publisher one way you can save yourself from the onslaught of Ad Blocker is by investing in a proper Native App thereby reinforcing Apple’s stronghold.

(2) Is it a mere co incidence that when Apple allowed Ad Blocker on their platform they also happened to launch Apple News? Apple would like you to think that these two development and unrelated but it will be naive to think they are.

(3) There is a broader shift happening in content ecosystem. From a destination centric world where consumer had a direct relationship with content creator, we are shifting to a world where we consume most of our content via intermediary platform like Facebook, Twitter, Medium, WeChat, LinkedIn and (hold your breath) SnapChat. Writing on the wall is clear: Your website is toast, Future of Internet is TV.

As content discovery becomes bigger and bigger of a problem, Balance of power will shift toward platforms. Apple is not alone, SnapChat stories are massive traffic driver, WeChat is big in China, Facebook is launching Instant article. Trust me when I say this, in scheme of things the real AD Blocker publisher should worry about is SnapChat stories and Facebook Instant article.

purists

Many folks in industry are reacting to Ad Blocker from a position of ideological servitude. Don’t do it because doing it is against the ethics of publishing. It’s hard to argue with rhetorics like that. They are not wrong they are just irrelevant. End user don’t care where they get their content from as long as they get their content. This is neither unexpected nor unprecedented.

Few years back some telco attempted doing something similar by using on the fly transcoding of web content via their WAP Gateway and tried to insert their own advertisement on the name of improving user experience. They offered some publisher to partner with them too, but it never really went anywhere because (I) Smartphone usages were not that massive back then and (ii) their product was crappy. This is not the case with the likes of Facebook, Medium, and SnapChat etc. They have a massive distribution power and they have nailed the user experience. Problem is real this time around.

But is It REALLY all that BAD?

stupidity

I don’t think so. I don’t think that moving from a website based content distribution model to a platform based model is such a bad thing for any of the involved parties. Let me elaborate.

Today every time you visit web site of any popular news site your browser loads anywhere between 10–16 sinppets of java script just so that they can server proper advertisement. This increases page load time and create a suboptimal user experience. Still publisher need to do this because in absense of these scrpts they can serve targeted advertisement. Enter Facebook. They have your identity and interest graph. They can do a better job of targeting without compromising on user experience. This is where being a platform helps. As a publisher you now need to split your ad revenue with Facebook and not with third party ad network. I assume that most publisher would be fine with it because revenue number won’t change that much.Our friends at Ad Networks were not particularly generous in sharing the ad revenue.

Another thing that works against old fashined Ad Networks is the fact that they have no incentive to ensure a good user experience (exhibit 1: Full screen interstitial banner Ads) where as Facebook want to ensure best user experience because they want user to come back to them.

This brings me to my two (totally speculative) hypothesis about Facebook Instant article.

(1) This marks a start of a shift toward Native Advertisement: Here advertisement adapts itself around content. No Flashy Punch the monkey Banner adds but curated, in stream advertisement, which looks very much like content. Facebook is hardly the first one to attempt it. Buzzfeed is doing it along with some other publishers. Some do it in a manner where content is undifferentiated from Advertisement while other make this distinction very clear. If Facebook enters this game than it will bring much needed legitimacy for the format and yield from advertisement will be higher.

(2) I believe that Facebook Instant Article is pre cursor to FB’s version of off domain-syndicated advertisement. I.e. An FB equivalent of Google AdSense. Once Facebook refine their engine by serving native advertisements around your content its only a matter of time when they flip the switch and start serving similar advertisements on your domain too. This will be an interesting battle to see.

Balance of Power

As a publisher its only natural for you to be concerned about loss of control over your audience. Its natural to think that if Facebook or Medium acts as gatekeeper for access than you will reduce to a mere content factory at the bottom of food chain. While I am all for being cautious but I would rather err on the side of cautious experimentation than resort to a paranoid denial. It’s in vested interest of these platforms to ensure that the right content gets surfaced.

This is not the first time it’s happening. We delegated the control of discovery to Google Page Rank algorithm and in the long term it has worked out well for everyone.

In my opinion change in content consumption will not be in the form of switching loyalty from publisher but It will be more around atomicity of consumption unit. We will have loyalty on per post /article basis not on publication. Like what happened to music consumption by iTunes: we moved to consuming singles instead of buying CDs. This will be painful in short term but better in long term.

Interestingly this will also make room for products offering a neutral third party native advertisement and service discovery mechanism. Like what Spotify is to music we will see products which will enable service discovery and native advertisements in a platform neutral way. There will be balance of power. What companies like InMobi are attempting to do with their Miip platform is a sign of things to come. InMobi is not alone there are many who think this is the way of future .

So game is not rigged in the favour for incumbent behemoths. At least not at the outset. There is a room for third parties to participate. I am confident that companies like InMobi , Cyanogen and others will be a serious contender in this space.

What’s inevitable is the shift to new form of advertisement and a significantly better user experience. It will be interesting to see how this play out in next few years.

Pic Credit: Hugh Macleod.

[Prashant is Co Founder of Shifu, a start up in the space of context aware computing.Prior to starting Shifu, he was part of  Spice Labs where he was part of the team which build a portfolio of 20 apps with more than 50 million downloads and developed a profitable revenue stream. A hard core mobile enthusiast (addict as he often calls it) Prashant is founder of the Delhi Chapter of Mobile Monday, a Global community of mobile developers. When he is not thinking about mobile apps he loves to travel, write poems, cook and read.He lives in Noida with a Macbook, an iPad, an iPhone and Two Android devices. You can follow him on Twitter @pacificleo. This post was originally published on his medium page.]

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  1. Interesting article – however the author should really improve his English grammar – its painful to read the article.

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