Ads have been around since the beginning of the internet. Part and parcel of what makes this vast amount of information free and accessible to all lies in the fact that we pay for the information we consume through the ads that we see. So, when Apple Inc. (NASDAQ:AAPL) decides on providing a way for their users to experience an ad-free version of the Internet, it’s disruptive and has the potential to typically change how we look at internet information consumption forever!
So what are the consequences of this move? Well, for starters, growing use of ad blockers on the Internet is a primary cause of the decline of ad-based revenue; to the tune of $22 billion in fact. And while a majority of the media consumption in the modern world is done on smartphones and handheld devices, only a fraction of that market was had access to ad blockers. Now, having Apple, a major hardware manufacturer deciding to offer their users an ad-free experience, that number quoted above is more than likely to increase. While it may lead to a better surfing experience for users, the ripples of this wave may be more far reaching that just affecting content creators who live off of advertisements. Just how big are these ripples? Well, that’s what we intend to find out!
What Apple Did and Why
Apple has handled ad blocking in the recently launched iOS9 deviously well. While they’re famous for being very restrictive in their approach to iOS, they have done quite the opposite thing with ad blocking. Instead of rolling out a system app that handles all of the ad blocks, they have instead ingrained support via system APIs so that iOS 9 can support ad blocking via 3rd party software downloadable from the App Store. While the proverbial stone kills two birds, there are quite a few birds that have been fallen by this move from Apple.
The reasons why Apple did this might be slow to reveal as we are not yet sure of the extent this is going to affect the world wide web yet, but here are a few of the reasons why Apple tread this path
- Apple is not just a hardware manufacturer. They plan to make money off their software as well. And what better way than to take a cut off the Ads that a developer can display to the user. Apple is pushing iAds – the company’s own advertising system – down developers throats and forcing them to share a part of their web income by killing off the traditional web-based Ads.
- They also are pushing the content creators towards their Apple News App. While stock apps aren’t always the strongest suit of the iOS eco-system, Apple is ready to change the way its users consume news and information as more and more publishers board the Apple News bandwagon.
- Google earns 90% of its revenue from Ads. As the makers of Android and a primary competitor to Apple, this is one move where Apple has hit them where it hurts most. Ad sense is Google’s cash cow and Apple blocking ads on Safari are likely to affect Google in a big way.
- It’s no secret that mobile internet is the next wave of growth. Consequently, almost every business wants to mark its presence on mobile. Both, Google and Apple are aware of the fact and leaving no stone unturned to grab a sizable chunk of the mobile market pie. As stated earlier nearly 90% of Google’s total revenue has come from ads and mobile has been instrumental in this. But, what is interesting here is that Apple iOS drives 75% of Google’s mobile advertising revenue. Tis has probably caught the eyeballs of Tim Cook and team.
What Does it Mean for the Rest of Us?
Let’s sum it up in two words. Bad News.
No, this is not an attempt to sensationalize a piece of news but admitting that what Apple has done could be a problem if the entire web doesn’t sit up and take notice against it like they did with Microsoft and their tryst with no follow in Internet Explorer.
The only company that has somewhat a lesser reason to be worried is Facebook Inc. (NASDAQ:FB). 43.9% of Facebook’s monthly active users access the network only through mobile, majority of them through their apps. Mobile app based means that their primary source of ad revenue will remain unaffected as Apple is not allowing any app that can block ad content on 3rd party apps and their native apps except Safari. Also, Facebook’s clever implementation of ads in the newsfeed means it’s difficult for any ad blocker to weed them out.
However, the primary concern is for the ad-tech based companies like AppNexus and of course Google. This concern is also mirrored by analysts one of whom has been quoted as saying
“In a worst case scenario, this is Apple against the entire mobile publisher and advertiser ecosystem.”
On the wake of this news, 7% has been wiped off the value of stock in Criteo, one of the major web advertising providers, according to Fortune. Google is already losing some big money over ad blockers, and reports estimate that the number is close to $6.6 billion. However, Google though isn’t one to lay low, and they have struck back with a workaround so that developers can still show their ads. The workaround though requires a nonsecure connection something that may end up making Apple apps more vulnerable and backfire on them instead.
Not only are the big companies and ad networks under the pump, but small businesses and websites and blogs that rely on ad sales are scrambling to somehow figure out another source of income. It isn’t easy though because the subscription based models don’t work well on the Internet and not many people like themselves being strong-armed into iAds by Apple.
The Internet Could Strike Back
The rest of the internet’s content creators are fuming at Apple. While we don’t expect lawsuits, we expect the Internet to retaliate.
There are a few options available for content creators at the moment
- Safari is the choice of browser for nearly 16.15% of the population opting to use it to browse ads. If websites start to refusing to optimize sites to work with Safari, then Apple would have a tough time on their hands selling the new feature to their users who value the iPhones and iPads for the seamless experience.
- They also can create content that becomes unviewable if ads not allowed to be viewed. Setting up a subscription paywall for ad block users also might be a valid option.
- The shift to more app-centric ads that are ingrained within the content much like Facebook and their newsfeed is also on the cards.
The internet is still reacting, and the long lasting effects of this step by Apple is not yet apparent. Will it change the way we consume our content forever? Maybe! Will it lead to better and possibly less intrusive and more contextual ads on the Internet? Probably. Will it spark a feud between the Advertising Giants like Google and Apple? Definitely!
All that remains to be seen is who comes out the winner, although taking on the entire Internet; Apple may just have bitten off more than they can chew!