The Great Ad-block Shakedown

Sarah Cramer in Advertising

in Advertising

After a sixteen week trial, last month a German regional court determined that the ad-blocking services provided by AdBlock Plus are legal. Two German online publishers had challenged Eyeo, the software company behind the ad-blocking app, on the basis that its practices were anti-competitive.  Controversially, AdBlock Plus prevents users from viewing ads unless publishers pay to join a whitelist of “Acceptable Ads”.

How does AdBlock Plus work?

AdBlock Plus is the world’s most popular ad-blocking software. Users can set filter lists to stop advertising appearing when they visit a website, from display banners to pre-roll video ads. That is, with exception of those approved adverts on the service’s “Acceptable Ads” whitelist. In order to get onto the whitelist and ensure that ads are shown to users, advertisers must not only make ads to meet AdBlock Plus’s approved specifications (taking a form that it considers sufficiently unobtrusive), but also must pay the service a share of advertising revenue. It is this fee which has prompted particular criticism, with many publishers claiming that the service’s practices are tantamount to racketeering. As the service becomes more popular and eats into publishers’ advertising income, in asking publishers to pay to have their ads unblocked, is AdBlock Plus making an offer they can’t refuse?

The German judgment

Although the grounds of the judgment are yet to be published, it appears that the court denied an anti-competitive obstruction on the basis that AdBlock Plus did not specifically operate to block the claimants’ adverts in particular. AdBlock Plus merely provided users with a tool to independently determine which ads to allow and which to block.

The claimants may still appeal the judgment and there are two further trials pending before other German regional courts, raising the argument that the service’s whitelist constitutes an abuse of dominant position in the ad-blocking market. Several other German publishers are also considering legal action against AdBlock Plus.

Will this judgment be the first step towards legitimising this ad-blocking practice or is it only a matter of time before AdBlock Plus is successfully challenged elsewhere?

What can publishers do about ad-blocking?

Last year, it was estimated that over 140 million people, representing 5% of global online population, use some form of ad-blocking software. Use is particularly prevalent among “millennials”, younger consumers that advertisers typically struggle to reach.

In response to this challenge, some publishers are attempting to smuggle ads past ad-blocking barriers using newly developed ad-blocker subverting tools. A number of companies, like Yahoo owned Israeli start-up Clarity Ray, specialise in such workaround tools for publishers. Other tools, like that designed by Irish start-up PageFair, provide analytics showing publishers which users are blocking ads, offering a notification service to target those users and appeal to them to turn off the software.

Some publishers have taken a more robust anti-ad-blocking approach. Channel 4 and ITV have limited their respective streaming services to refuse to show content to viewers using ad-blocking software.

Analysis

PageFair have estimated that ad-blocking costs a large website, receiving around 10 million page views a day, roughly $20,000 a day. This is a significant problem for publishers and advertisers alike. Sneaking ads past the ad-blockers is a cat and mouse game and it won’t be long before the ad-blockers develop such that they can block these too. Perhaps the only long-term solution is for advertisers to focus on making better ads that are more engaging, more relevant and less intrusive, so that consumers are less inclined to use ad-blockers.

As for AdBlock Plus, the service’s “Acceptable Ads” whitelist seems like a patently unfair practice. It seems only a matter of time before the courts recognise this.

The Great Ad-block Shakedown was last modified: May 8th, 2015 by Sarah Cramer