Ad execs aren't taking the threat of ad-blocking software seriously and that's a mistake, says this LinkedIn executive.
"It's a little bit like, is the Albanian army going to take over the world? I don't think so."
– Time Warner CEO Jeff Bewkes in 2010 on Netflix's prospects
The ad industry has always been nimble when it comes to adapting to disruptions in media consumption, but we haven't been applying that same critical thinking to our own business now that we're in crisis.
Yes, I'm talking about ad blocking. It's as seismic a shift as the rise of streaming video, and it truly represents a crisis. If we don't treat it seriously as an industry, you'll find quotes from ad executives dismissing it as a fad in the pantheon of misguided predictions about technology, like the one above.
However, you wouldn't know it if you've recently attended an industry event like Advertising Week, where you might have heard that the issue is being blown out of proportion. The prevailing notion is that digital content consumption is rapidly shifting over to mobile — and mobile apps in particular, where ad-blocking software doesn't work — and publishers are going to be insulated. So we shouldn't fix what isn't seriously broken, and we don't have to rethink the ad experience from the ground up.
I think that's wrong on a couple of levels. First, no publisher can afford to be complacent given the pace of technological change. Just because inventory in mobile apps is largely unaffected by ad blocking now doesn't mean that will always be so. Second, something bigger is clearly happening. Users are looking for a very different experience from the one that many publishers, undeterred by sharp increases in ad-blocker adoption, are still intent on delivering in an effort to squeeze every dime out of their ad inventory.
The problem has been framed in terms of a lack of understanding on the part of the user, but I think that's misguided. Here's how that thinking goes: If people better understood the economics of the web and that viewing ads is part of a transaction that supports content creation, they would stop installing ad blockers. Thus, one answer to the ad industry's problem is a consumer awareness campaign.
It's nice in theory, but I think it would fall flat in practice. The reality is that many people already feel like they're paying for web content when they look at their monthly bill from Verizon Fios or Comcast . They're not about to feel sorry for publishers, especially when they're being bombarded by invasive ads.
As the ad-blocking phenomenon continues to play out and gain momentum, there are going to be winners and losers. And not every publisher will survive. The most vulnerable have commodity content, lacking in a distinctive voice, that's supported by low-quality, contextually irrelevant ads.
Those who win are going to have to put user experience front and center, but it's not the same as waving a magic wand to make the ad-blocking problem disappear. The lucky ones have content so valuable and unique that consumers will be willing to pay for it, and I think we're going to start seeing an increasing number of them put up paywalls.
However, the less fortunate survivors may experience a difficult transition. They might have to start leaving revenue on the table, at least in the short to middle term, in the interest of a better user experience. Supply and demand curves can make up for some of the shortfall, since less inventory in service of a cleaner, more user-friendly experience may boost ad prices, but many will still feel pain as they move toward a more sustainable business model.
Ultimately, ad formats are going to have to be less interruptive, and I think we're going to see more and more publishers adopt native. However, it's imperative that this is done in a contextually relevant way. A piece of content about cars, sponsored by an automotive brand and served programmatically, is unlikely to resonate with an audience that came to a particular site to read about gardening, for example. The web currently abounds with too many examples like this.
There's precedent of a company taking a counter-intuitive approach and inventing a wildly successful format in the process. Look at what Google did with AdWords at a time when all the money was in display. Many people dismissed AdWords for being too much like the phone book, and agencies were reluctant to work with Google. But, as history shows us, they came around.
What we've lost as an industry in the last decade is a focus on context, which used to be everything in the advertising business. Advertisers of all stripes – from soap to retail to automotive brands — used to be supremely concerned with the nature of the TV, print and radio content they were paying to insert themselves into, but context began to take a back seat with the rise of ad-tech. The ability to target specific audiences based on their attributes and interests became more important than the context you were reaching them in.
So, while the rise of ad blocking should be taken seriously for the crisis that it is, it should also be recognized as an opportunity to correct an imbalance. Context and people's mindset when they come to your site matter just as much as who they are, and the publishers who get that right are going to be wildly successful.
Commentary by Penry Price, the vice president of marketing solutions at LinkedIn. Previously, he was president at ad-tech firm Dstillery and held several sales positions at Google. Follow him on Twitter @PenryPrice.