A proxy war: Apple ad-blocking software scares publishers but rival Google is target
When Apple revealed that its new operating system for mobile phones, iOS 9, would feature what the company called “content-blocking Safari extensions”, no one really blinked.
Tim Cook, Apple’s chief executive, didn’t even detail the feature on stage at the lavish launch for iOS 9 in July.
Instead, details of the content-blocking extensions were buried in technical documents, and an in-depth explanation was given only on the fifth day ofApple’s worldwide developer conference in San Francisco.
Online publishers slowly realised that the feature, which allows users to block ads in the Safari browser for the first time, could pose a threat to their industry.
Sean Blanchfield, of PageFair, which provides information to publishers about their audience’s use of ad blockers, described the software as “the Napster of the advertising industry”. Music piracy altered a generation’s attitude to music by creating an enduring perception that it should be free, and opened the doors to streaming services such as Spotify to rewrite the textbook on making money from music. Could ad blocking do the same to online publishing?
Mobile advertising was the great hope for newspapers and magazines, replacing revenues lost in the switch to digital from print. Earlier this year the influential analyst Mary Meeker, of the venture capitalists Kleiner Perkins, had pegged it as a$25bn opportunity in the US alone. Now the hoped-for revenues are in peril, and publishers – and people who care about free, independent news – are rightly worried.
How ad blockers work
Web ads are almost entirely sold “programmatically”, meaning that an algorithm decides what ad goes where – and how much it costs. Unlike print and broadcast advertising, where an advertiser pays a flat fee to put a specific ad in a specific place, web ads are served to the user depending on their browsing history. An advertiser might offer 15p for its ad to be shown to 1,000 people on iPhones in west London. Websites compare this bid against all others for the same audience and display the highest-bidding ad.
That model is applied partially so advertisers can personalise ads, ensuring they advertise wedding dresses to brides-to-be, mattresses to first-time buyers, and fast cars to insecure men, without wasting money on groups unlikely to react well. Modern web advertising tracks its audience – and tracking tools hog bandwidth, particularly on mobile, and slow down devices. Ad blockers significantly improve the user experience by getting rid of all that.
Ironically, one technology site came under fire for publishing a 500-word piece about ad blocking that weighed in at 14mb, largely because it was “bogged down by unnecessary tools”. More data to download means higher mobile bills, a shorter battery life, and more time staring at loading bars.
Though it may look as though online publishing has fallen prey to a dastardly plot from Apple to attack its revenue at the source, publishers aren’t really the targets at all. Newspapers and blogs are collateral damage in the latest flare-up in the long-running cold war between Apple and Google.
Google’s revenue from advertising came to $59bn in 2014, almost 90% of its total revenue; $45bn came from ads on its own sites including search and maps, while $14bn came from ads served by Google on other websites. For all its diversification, from smartphone operating systems to self-driving cars, Google is still primarily an online advertising company with a large software company bolted on.
Apple also has an advertising business. The iAd platform, launched in 2010, lets developers embed ads into applications, with Apple taking a 30% cut. But eMarketer estimated that, in 2014, iAds generated only $487m in revenue – 0.3% of Apple’s annual income. And those iAds only appear in apps, which are not affected by content blockers.
That discrepancy is something that Apple’s chief executive has reiterated again and again. Apple is a hardware company; Google is an advertising company. In fact, Google is an advertising company that makes a significant chunk of its money advertising on Apple’s hardware: of the $11.8bn that Google made from mobile search revenue in 2014, $9bn came from iOS, according to Goldman Sachs.
Apple has scrupulously avoiding calling its new functionality “ad blocking”, instead referring to “a fast and efficient way to block cookies, images, resources, pop-ups, and other content”. But users are no fools and, by the end of the first day on which iOS 9 was available, ad blockers entered the top 10 downloaded apps worldwide.
War, not Peace
The ad-blocking app Peace took the No 1 slot in the UK and US the day it was released. Marco Arment, its developer, wrote about “the ethics of modern web ad blocking” after Apple’s announcement about content blockers. “Publishers don’t have an easy job trying to stay in business today, but that simply doesn’t justify the rampant abuse, privacy invasion, sleaziness, and creepiness that many of them are forcing upon their readers, regardless of whether the publishers feel they had much choice in the matter,” he said.
But less than 48 hours after Peace went on sale, Arment recanted, pulling it from the store and offering refunds to every user who had bought it. “I still believe that ad blockers are necessary today,” he wrote on his blog, “but I’ve learned over the last few crazy days that I don’t feel good making one and being the arbiter of what’s blocked.
“Add blocking is a kind of war – a first-world, low-stakes, both-sides-are-fortunate-to-have-this-kind-of-problem war, but a war nonetheless, with damage hitting both sides.”
Crystal, another ad-blocking app, became the bestselling paid app on theApple iTunes store.
Publishers have reacted in different ways to ad blockers. Some, such as the Washington Post, have taken to blocking the blockers, detecting when visitors are using an ad blocker and asking them to turn it off before they can view content. Others, such as the Guardian, are taking a softer tack, inviting users who choose to block ads to support the paper in another way, by becoming paid-up members.
Others are turning to the legal system. The German media group Axel Springer has been pursuing Eyeo, which makes one of the most popular desktop ad blockers, through the courts by picking on an aspect of the company’s business model that has always proved controversial, but is also unusual: offering publishers the ability to pay to have their ads bypass the ad blocker – its so-called “acceptable ads programme”.
Perhaps we have been here before. In 2005, broadcasters feared the advent of technology that allowed viewers to fast-forward through ad breaks, a “movement that started the moment the remote control became widely available”, as Emily Bell wrote in the Guardian at the time. Bell quoted an eminent futurologist who predicted that, by 2015, 100% of the programming on US television networks would be paid for by product placement. Instead, UK TV ad revenue hit a record £4.91bn in 2014, while the most expensive ad slot ever was sold during the 2015 Super Bowl, for $4.5m.