In the ongoing ad blocking war, Facebook Inc. (NASDAQ:FB) is apparently making the right moves to please its users as well as safeguard its revenue arm. But at what cost?
Facebook is introducing a new feature in their ad preferences; wherein users can turn off ads whose subject or content might be disruptive or distressing to them. According to AdvertisingAge, for the first time, people will be able to turn off ads from alcohol companies and ads related to parenting.
Parenting ads would be distressing to parents who have experienced the loss of a child. Alcohol ad blocks will prevent underage children from learning about alcoholic products, as well safeguard recovering alcoholics and depressed individuals from their addiction.
Facebook is also willing to include more topics under this feature if users would deem them to be distressing.
Further, Facebook is all set to revamp its ad preferences section, allowing users to utilise it more easily. With ad preferences, users can select the ads that are more relevant to them and opt out of ad subject they don’t want to see.
The new look, reportedly, provides the same usage but with a better visual experience. There will be no changes in a user’s existing preferences. The current settings will be incorporated with the new look.
But what has ‘forced‘ Facebook allow users to strain the company’s revenue arm? The answer lies in the ongoing tug of war between the social media giant and Ad Blocker companies.
War Against Ad Blockers:
The rise of ads has seen the rise of ad blockers. And users everywhere are utilizing these blockers to relieve themselves of disruptive ads, albeit this is not much of a problem with paid content websites. But for free content and social media sites, this could be a major setback, seeing as ads are their only revenue source. To understand this problem better, we need to understand the user mindset and publishers situation.
User Ad Preferences:
Today, there are more than 3.5 billion Internet users in the world, who regularly access websites and content on the internet. These people regularly access sites that offer free content, and as a result, they come face-to-face with online ads. And their response was to install Adblock software, so as to enjoy ad-free surfing.
A survey by HubSpot shows that online pop-up ads are the most disliked type of ads by users, followed by ads on mobiles, video ads and banner ads. Nearly 73% of the surveyed user said that they do not like to see pop up ads.
Further, 91% of these users agree that ads today are much more intrusive than a couple of years ago. 87% agreed there are more ads in general. However, nearly 77% preferred ad-filtering as opposed to ad-blocking. Surprisingly, only half of the users felt that people with ad blockers need to pay for content in another way.
According to IAB, nearly 26% and 15% of desktop and mobile users, globally, employ ad blockers, as of June 2016. When asked why people use ad blockers, 64% felt that ads were intrusive and 54% felt they were disruptive. Further, nearly 24% of users in the US have adopted ad blocker software, according to Digiday.
All the above stats clearly depict that Ad Blockers are evolving as the saviour of clean and non-distracted experience for the Internet users.
Global Ad Revenue Losses:
Globally, ad revenue has already seen a decline, with huge losses to the advertising market. Thanks to the ad blockers, overall ad revenue has declined. In 2015 the advertising industry saw a loss of $21.8 billion due to ad blocks. And if forecasts are right, online publishers and brands could stand to lose more than $27 billion by 2020, almost 10% digital advertising market, due to the growing adoption of ad blockers.
Now we know what users want and why they use ad blockers. We’ve also got an idea of how these ad blockers are affecting ad revenue. Next, let’s try to understand why Facebook cannot do away with ads.
Facebook Ads and Revenue:
Facebook offers a free platform for users to connect with each other. They do not incur any charges as such on the users for utilizing their site. Advertising is the major source of revenue for them, as is for all other social media sites and free content publishers on the internet. Facebook is estimated to garner 12% of global digital advertising market in 2016.
Interestingly, despite the use of ad blockers, 47% of users find social media ads useful to them, according to Hubspot. But when users make use of ad blocking, Facebook stands to lose a sizable chunk of its revenue. It can’t do away with ads completely and allow ad blockers, but it also cannot afford to make users uncomfortable by bombarding them with ads. Ultimately, no user want to have an ad-full experience of an internet property, as proven in the previous section.
Facebook’s Coping Methods
Cleverly, Facebook decided to focus on making the ad experience beneficial to users, instead. While this is not a 100% solution for users who want to do away with ads completely, it is mediocre enough to satisfy both sides.
Seeing as Facebook’s monthly active user base is at 1.79 billion, it needs to satisfy every user’s ad preferences. Therefore, in August, Facebook announced ad preferences, which allowed users to opt-out of ads they don’t want to see.
This update was a smart move on Facebook’s part, as it allowed users to filter ads they don’t want to see. It doesn’t completely eliminate ads, unfortunately, but it forms a sort of middle ground for both user experience and ad revenue.
Adblock vs. Facebook:
In keeping up with ad preferences, Facebook also announced that it would be circumventing around anti-blocking softwares like Adblock Plus on their desktop site.
“Some ad blocking companies accept money in exchange for showing ads that they previously blocked — a practice that is at best confusing to people and that reduces the funding needed to support the journalism and other free services that we enjoy on the web.”
Then ensued the cat-and-mouse game between Facebook and Adblock Plus. After this announcement, Adblock accused Facebook of being ‘anti-user’.
Barely 48 hours later, Adblock re-blocked Facebook’s ad-blocking tool, rendering it useless. But Facebook managed to update its code, thus nullifying the Adblock workaround. Since then, Facebook’s ad have been slipping past Adblock’s tools. Adblock is clearly frustrated, seeing as it made Google, Microsoft, and Amazon pay huge fees for unblocking their ads.
Funnily enough, Adblock has its own Facebook page where it ‘advertises’ its uses. Ironic, maybe?
Conclusively, Facebook allows the user full control over what ads they want to see. And as the news says, some topics can be turned off. Thus, Facebook has optimised the ad experience on Facebook up to a limit. Its revenue is bound to take some hits, but on the whole, it is much lesser than if ad blockers were up and running successfully on the site. And the move is also like icing on the cake as it will help Facebook to win back the confidence of advertisers after the report of inflated metrics.
By handling over control to users on ads, Facebook is trying to play a master’s stroke. The company wants to end the ongoing tussle with ad block companies once and for all. How far, however, Facebook will succeed in it, it depends on how well-educated users are about the new feature and its benefits.