"Behind the Scenes"
|January 2011||The monthly newsletter by Felgall Pty Ltd|
I have seen a number of situatons where web publishers have complained about the existance of ad blockers and suggested that such things be made illegal so as to force people to view ads on web pages. This approach on their part would achieve exactly the opposite effect to what they want to achieve by doing it and in any case would be impossible to implement.
There are usually four parties involved with regard to someone seeing ads on a web page so let's lstart by considering who these four parties are and how each benefits by the fact that such a thing as ad blockers exists.These four parties are - the advertiser who is advertising a product or service, the ad network which collects ads from advertisers and provides them to be published on web sites, the web site that publishes the ad, and the visitor to the site who sees the ad.Another thing to note is that only a very small percentage of web visitors actually block ads and they are the visitors who would be least likely to buy products or services based on seeing the ad in the first place.
The most obvious of these to benefit from the existance of ad blockers is the visitor so let's start with them. With web advertising unlike other forms of advertising it costs the visitor more to view a page with ads than it does to view one without ads. Unlike TV where you have a choice between free channels with ads and paid for channels without ads and unlike newspapers and magazines where they cost less because of the ads than they would if there were no ads, the person visiting a web page needs to use more bandwidth to view web pages with ads than they do if they view the page without ads and since most web visitors have to pay for the bandwidth they use they are paying to download the ads. Since just about anything that is available on web pages that have ads is also available on other web pages that do not have ads, there is no benefit to the visitor whatever in their being forced to pay to see ads when they could simply visit a different site and see equivalent content without ads. Of course there are some sites where you have to pay to access certain material but in those instances you are paying for the material it gives you access to and presumably equivalent material is not available free elsewhere. So blocking ads saves a web visitor money rather than costing them more as would apply with other media.
We'll now switch to the other end of the process and look at things from the advertiser's viewpoint. Their objective in advertising is to sell a product or service. The more products or services that they can sell for a given advertising spend the better off they are. They have three choices when it comes to how they will pay for web advertising. Their most expensive per unit option is to pay a commission per sale. When they choose this option they don't really care how many ads get displayed as long as some of those who see the ads buy. When someone does buy then the ad network (if there is one) and the publisher receive a commission for the sale. With those ads the ad network and publisher receive nothing for all the ads displayed that do not result in a sale. The next and perhaps currently most common option is for the advertiser to pay per click. Every time someone actually clicks on the ad to view the details of the product or service they pay a somewhat smaller commission to the ad network and publisher. In this instance their preference will be for the largest percentage possible of those who click to actually go on to buy. The smaller the percentage who buy the less the advertiser will be prepared to pay per click and so ideally they will not want people clicking on their ads who have no interest whatever in buying (remembering of course that a percentage of those who click on the ad and don't buy immediately will return later to buy). The third option is for the advertiser to pay an even smaller amount for each time that their ad is displayed. Again they only really benefit from those who also click and buy and so the fewer ad impressions they have to pay for that don't lead to a sale the better. So in each of these three cases the advertiser benefits from those with no interest whatever in buying actually blocking their ad so that their ads are directed more toward those people with a greater interest in actually buying. Admittedly they only directly benefit if they are paying per impression but they do also benefit indirectly with the other two as well as we will see when we consider things from the viewpoint of the ad network.
The ad network like the visitor pays for the bandwidth used to serve the ads. Therefore the more money they can make for the same amount of bandwidth used the better off they are.By having those visitors with no interest whatever in what the advertisers are selling block the ads the ad network saves on the bandwidth that would be used to serve the ads to those people. This increases the chances that the ads being served will be clicked on and a purchase made and so given the same payment offered by the advertiser means that the ad network has reduced its costs slightly for the same income since the ads it didn't serve wouldn't have made any money anyway (except with a pay per impression model where the advertiser would need to pay less because of a lower conversion rate making the ad network even worse off by serving the extra unwanted ads). The only way that the ad network could maintain their profit level if the ads were not able to be blocked would be to decrease their payments to publishers.
At first glance it looks like the publisher would be the one to benefit most by disallowing ad blockers. That's why some publishers suggest this in the first place. As you can see from the above this is far from the case though. By not allowing ads to be blocked the publisher would alienate their visitors. Those who prefer to block ads would probably leave never to return and they'd possibly suggest that their friends do the same. This would lead to ther being fewer visitors to the site who actually are viewing the ads. The fewer visitoras would mean a lower number of people viewing, clicking, and buying from your site and so you'd get a lower income from the ads. Also since you are displaying the ads to a larger number of people who have no interest in what is advertised the advertisers will be paying less to have their ads displayed and the ad network will be taking a far bigger cut meaning you'd be making even less money when people do take action.
In fact these impacts of the advertiser paying less and the ad network taking a bigger cut when sites don't allow ads to be blocked doesn't just affect the sites that refuse to allow ads to be blocked. They also reduce the income that sites that do allow the ads to be blocked can earn since the overall percentage of the ads served that leads to a sale will be lower because of the sites that force the ad to be served to those with no interest in it.
Fortunately the percentage of sites that block people using ad blockers is a much smaller percentage than the percentage of people who block ads and so currently does not have a significant effect on the earnings of other publishers. The extra visitors they get because those people have abandoned sites that disallwow ad blockers makes up for it. Obviously though if a significant number of sites started to disallow ad blockers then this would start to have an impact and the ad networks would then need to ban the disallowing of ad blockers in order to resolve the issue. Of course it is quite possible that the ad networks already have such a clause in their small print since preventing ad blockers does as much harm with respect to pay by impression ads as clicking on ads on your own site has on pay per click ads.
This situation would only change if a significant percentage of visitors were to start blocking ads and then we'd simply have the equivalent of what happened when a significant number of people started blocking popup ads where the web would simply shift to using a different advertising model that is acceptable to visitors and which would still provide sales for the advertiser and advertising income for the ad network and publishers.
It might not look like it but over the past month I have implemented what is perhaps the biggest change I have made to the site since I first started working on it. Almost all of the changes so far are on the back end where hopefully you don't even notice any difference. These back end changes were needed in order to make practical the other changes I intend to make in coming months. I am going to wait a while to make sure that the changes so far are all working properly before starting on the next lot of changes which will give me time to write a few more pages for the site.
The following links will take you to all of the various pages that have been added to the site or undergone major changes in the last month.