Today, annual U.S. digital advertising revenue exceeds $60 billion and is broadly projected in the US to surpass total television revenue in the next year or so, making digital the largest segment in the ad industry.
Yet even as the industry crosses this historic milestone, there are signs of a potentially life-threatening issue that needs to be resolved to keep digital on its upward trajectory.
It’s hard for an advertiser to reach someone who is no longer there to see an ads.
The use of mobile and desktop ad blocking software grew 41% worldwide and 48% in the U.S. between 2014 and 2015; and 45 million Americans were using ad blockers as of 2015. And it’s only projected to get worse: by the end of 2016, 69.8 million Americans will use an ad blocker, a jump of 34.4% over last year. Next year, that figure will grow another 24.0% to 86.6 million people. Potentially, one out of every four Americans will be blocking ads come 2017.
Initial Industry response to ad blocking has been nothing short of hysterical, and heavy on blaming the companies who provide ad-blocking services, the consumers who use them, or both. More recently, mea culpas have been the order of the day as organizations like the IAB attempt to deploy new ad units that are less damaging to the user experience.
It’s key to view ad blocking as a symptom not a problem. Consumers have had the option to block ads, in one form or another, since the late 1990s. But it has never seen such adoption before. So what’s changed this time around? Ad blocking’s current popularity is driven by unfortunate confluence of key factors, including:
1. Endemic Over-Messaging: Research has for some time been noting the unchecked rise in marketing messages shot at consumers. By one popular estimate, a person 30 years ago saw up to 2,000 ad messages a day, compared with up to 5,000 or more exposures today. As ads have continue to proliferate, especially in digital channels, we have begun to see some signs of the long anticipated “message fatigue” setting in, as consumers begin to try and reduce their exposure to such missives.
2. Target Failure: Not only are consumers being over messaged, but they are often being bombarded with the wrong message at the wrong time. While targeting has become increasingly the norm on digital channels, key practices like programmatic are still new, and the mobile device opens a whole set of ways that targeting can not work. If we were truly delivering the right ad to the right person, would one in four consumers choose to block it?
3. Low Tolerance: As digital has increasingly evolved to be a channel focused on reaching Millennials, it is important to note that this cohort is much more likely than any other to block ad, with nearly two in three already doing so.
If there is a silver lining here, it’s that to date in the US ad blocking has largely been a desktop phenomenon although it has had a tangible impact on mobile already: an analysis of big box retailers in L2’s 2016 Mobile report saw mobile ad impressions relative to desktop drop from a high of 25 percent to just 70 percent following the implementation of native iOS ad blocking. Still, the digital advertising business has time to get its advertising value proposition right for the mobile first world. The simple truth is that , as an industry, we are not as good at this digital advertising thing as we thought — and our ads and targeting aren’t quite as awesome as we would like to believe. The reality is that we need to get better at engaging consumers with digital marketing or even more of them will be tuning out.