According to research from Parks Associates, password-sharing is costing subscription video-on-demand sVOD services north of $500MM per year. Compare that with adblocking, which is costing ad-supported content providers $18B a year according to a new report from Adobe and Dublin-based PageFair.
$18B. With a “B.” That’s 36x the amount of economic damage inflicted by password-sharing. Let that sink in. Now take a deep breath, and let’s look at the problem.
Cause for Concern
Historically, the challenges posed by adblocking have been limited to the desktop. However, as consumption of television and film content have shifted to connected and mobile devices, the threat of adblocking has abated, or at least become less dire. Two major factors are now causing grave concern among content producers who rely on advertising as their primary revenue source:
- Apple’s iOS 9 will likely include adblocking features in Safari by default.
- Adblock plus is now available in limited beta for Android.
Safari on desktop maintains a paltry 3% market share, but it is by far the most widely used mobile web browser due the iPhone’s dominance (and Google’s unusual reluctance to end-of-life the native Android browser in favor of Chrome for Android, a decision that would narrow the gap with Safari mobile). If Apple extends its Content Blocking API to native mobile app developers for iOS, and if Adblock Plus for Android gains traction, the results could wreak longer-term havoc for ad-supported broadcasters and cable networks who monetize distribution to mobile devices.
Currently, measurement is one of the key factors limiting uptake in linear broadcast to mobile and connected devices within the traditional C3 and C7 windows. But as Nielsen and other measurement services improve their ability to evaluate audience composition across screens, and as addressability and programmatic improve and become more widespread, more dollars will flow from traditional linear to OTT and TV Everywhere. Adblocking on mobile devices, however, has the potential to slow this movement to a trickle. Why execute a multiscreen TV buy if viewers on half the screens can’t see the ad?
The Way Forward
There are no easy or obvious solutions to the problem of adblocking. We agree with Univision’s Kevin Conroy, who argued compellingly that marketers play a vital role in making digital advertising better. Marketers need to continue telling the right story to the right person at the right time, of course, but they also need to do it in a way that delights, or entertains, or informs the viewer.
For agencies and advertisers, Adobe offers Creative Cloud, a complete suite of tools for effective storytelling, and Adobe Marketing cloud, a solution that delivers the message. And for broadcasters, cable networks and distributors who sell advertising, we offer Adobe Primetime, a multiscreen TV solution for creating and monetizing live, linear and VOD programming in both over-the-top (OTT) and TV Everywhere services. Our goal is to help customers leverage these solutions to deliver better consumer experiences and obviate the consumer desire to install adblockers in the first place.
This post was originally published on CMO.com, August 10, 2015.