Cost of mobile ad-blocking will only be $1 billion, research firm says
There’s been a lot of angst in the media and advertising industries about the potential effects of ad-blocking software, which appear to be increasing in popularity, in part because Apple’s new operating system includes support for such programs. A recent study estimated that ad blockers could lead to more than $20 billion in lost advertising sales on the desktop. But brokerage firm UBS Securities doesn’t think Apple’s new feature will have anywhere near that kind of effect on mobile advertising.
In a research note it published on Tuesday, UBS said that it doesn’t think mobile ad-blocking will become a mainstream activity, and therefore it expects that the impact on actual advertising sales is going to be much smaller. At most, the industry might lose $1 billion or so in revenue, the firm estimates, or 0.5% of what it pulls in every year.
Last month, Adobe and Pagefair — a firm that offers software to help publishers detect and evade ad-blockers — came out with a report on the impact of ad-blocking. The study said the use of ad-blocking programs had increased by more than 40%, and that this would likely cost advertisers and publishers more than $20 billion in 2015, a number that the report projected would increase to $40 billion by 2016.
The report has come under fire from a number of critics, who argue that — among other things — it is talking about theoretical future ad sales that might never have occurred even if ad blocking didn’t exist. PageFair also notes that its report was mostly about the impact desktop ad-blocking, although it did discuss the potential effects of iOS 9 on mobile ad blocking (which it said might be “a game changer”).
For its part, UBS says in its research note that its scepticism about the adoption of mobile ad-blocking is based on a number of factors, including:
Ads in apps aren’t blocked: The brokerage firm points out that iOS ad-blocking apps only block advertising that comes via Apple’s mobile Safari browser, but the vast majority of mobile users spend most of their time inside apps, which also generate the bulk of advertising revenue.
Safari isn’t a big player: Since only ads in Safari are blocked by default, UBS says, it’s worth looking at the browser’s market share, which is relatively small — just 22% of web traffic globally comes via Apple’s browser. So not likely to have a huge effect, even if Safari is the default browser on iOS.
Most users won’t do it: The brokerage firm points out that while iOS 9 supports ad blocking, users who want to implement it have to do some setup — they have to download an ad blocker and then go into their device’s settings panel to let that app communicate with Safari. Many people likely won’t bother, UBS says.
Ad blocking is iOS 9 only: Ad blocking will probably be curtailed even further by the fact that support for such apps is tied to iOS 9, which only works on Apple’s more recent, 64-bit devices. It won’t work on every iPhone or every iPad, and so it won’t affect established users of older devices.
In a nutshell, ad blocking is likely to appeal mostly to tech-savvy users who have the latest phones or devices, UBS says, and therefore is likely to hit websites that focus on technology news the most. But it isn’t going to trigger a massive advertising apocalypse, the firm suggests — although that news probably isn’t going to stop the debate about whether using such software is inherently unethical.
Note: This post has been updated to reflect the fact that the Adobe and Pagefair report was primarily about the effects of desktop ad-blocking software, while the UBS estimate referred to mobile ad-blocking software.