Tuesday, March 09, 2010

Does Ad-blocking Hurt Websites?

Ars Technica writes:
There is an oft-stated misconception that if a user never clicks on ads, then blocking them won't hurt a site financially. This is wrong. Most sites, at least sites the size of ours, are paid on a per view basis. If you have an ad blocker running, and you load 10 pages on the site, you consume resources from us (bandwidth being only one of them), but provide us with no revenue. Because we are a technology site, we have a very large base of ad blockers. Imagine running a restaurant where 40% of the people who came and ate didn't pay. In a way, that's what ad blocking is doing to us.

I'm not convinced. What's wrong with the following reasoning: Advertisers are paying for the chance to increase sales. They'll pay for ads when the expected benefit exceeds the cost. But, just as the incidence of 'click fraud' (clicking an ad link just to drive up advertising costs, without any intention to buy the product) causes advertisers to pay less per click than they otherwise would, so the incidence of what we might call 'dud views' (i.e. page loads where the ads won't be clicked or even attended to) reduce the price that advertisers will be willing to pay per pageview. If ad-blocking users have a prior disposition to ignore ads anyway, then convincing these users to disable their adblockers will simply serve to increase the number of 'dud views'. It does nothing to increase the expected sales for advertisers, and hence they won't be willing to pay for these extra views. They'll just react* by cutting the price they pay per view, to keep their expenses commensurate with the expected benefit.

* = [Advertisers' insensitivity to small changes shouldn't alter the expected outcome here -- see my previous post on chunky impacts.]

Maybe ad-blocking users wouldn't just ignore the ads after all. Maybe some would click, and others would at least attend to the ad, and be indirectly influenced to buy the product later (as with television adverts). In either case, the choice to disable our adblockers is not cost-free: it can only be expected to benefit the site-owners if it can also be expected to cause us to buy things from the advertisers. There ain't no such thing as a free lunch. Ars Technica doesn't just need more ad views. They need more readers to transfer cash to their advertisers.

(Cf. Holden on gimmicky charity efforts: "If someone tells you you can make a difference without either giving up anything valuable or doing anything useful, they are wrong.")

2 comments:

  1. People creating websites based on the model of providing an interesting platform for showing ads don't realize that ads are currency. Consumers of TV, radio or websites pay for the content they are shown by receiving ads. On TV and radio the show is interrupted to play the ad. On a website the ad is placed beside the content or in a dreaded popup. The brisk sale of TiVo and other DVR devices show that many people think that the TV providers have gone too far. The price in ads to view in exchange for content has gotten too high. The same goes for iPods and radio. Ad blockers are people's way of saying that they think the price of ad views on websites is too high.

    I really enjoy Google Fast Flip. Reading the first couple paragraphs of posts on various news and entertainment sites a great way to get a quick overview of what is happening in the world without a large investment in time. Occasionally I see an article I want to read more of and click on it to open the original. MANY times an ad, or survey, or request to buy a subscription will popup over the article. At that point the cost of that article just exceeded what I was willing to pay. I close the window and move onto the next article on Fast Flip...

    I've pretty much stopped watching TV or listening to the radio and I run an ad blocker in my browser. Not because I don't want to see or hear the content, but because I am not willing to pay the currency of ads for the content provided. I'll read a book instead. Preferably a Philosophy book. :)

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  2. As I installed an ad blocker today in Chrome, I had mixed feelings about it. I run a couple forums that I've put thousands of dollars into and spend about $50 a month to maintain. I run minimal ads at this point, but as my traffic grows, ads are really the only way I have to make any income or have any chance of recouping my investment in the sites. So from this point of view, it makes me think about my choice to block all ads.

    Then I look at the reason I choose to block ads in the first place, was it because of a site like my forums or my blog? No. It's because of sites that take ads way too far. An Example; A popular gardening site started displaying an ad that caused you to have to find the spot in the page you wanted to read 3 separate times because it moved the page around. With ad's like that, I'm either going to avoid the site or find a way to block it, since I know people on the site, I prefer not to avoid it, thus I install an ad blocker and all ads are gone everywhere.

    Perhaps we need an annoyance meter. Small sites with a couple tame non-annoying ads get allowed, but the sites that make stupid obnoxious ads get blocked. This way we would not be depriving sites of revenue that deserve it, i.e. sites that are respectful of your time and screen space.

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