{"id":89936,"date":"2015-06-07T16:00:35","date_gmt":"2015-06-07T14:00:35","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=89936"},"modified":"2015-06-05T18:30:17","modified_gmt":"2015-06-05T16:30:17","slug":"blocking-ads-will-force-online-publishing-to-change","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/internet\/89936\/blocking-ads-will-force-online-publishing-to-change\/","title":{"rendered":"Blocking ads will force online publishing to change"},"content":{"rendered":"

The recent court ruling in Germany that determined AdBlock Plus is legal<\/a> is part of a long-running war of wits between advertisers and the established websites that use them and software developers who\u2019d rather see an ad-free internet.<\/p>\n

Despite claims of a \u201ccustomised browsing experience\u201d that many sites claim to offer in their cookie policy statement<\/a> there\u2019s really very little personalisation of the websites we browse, irrespective of whether we are on a laptop, tablet or mobile.<\/p>\n

Programmers know the weakness of these claims well enough and can easily write code that removes web advertisements from the pages for a cleaner, less distracting read.<\/p>\n

But while removing ads may please consumers, it\u2019s to the detriment of free websites \u2013 the vast majority of the web, in fact \u2013 that rely on advertising revenue.<\/p>\n

There are two business models on the web, either advertising or subscription-based. The German court decision effectively finds in favour of subscription over advertising.<\/p>\n

Who pays, and how?<\/h3>\n

In some European jurisdictions hacking into a website, such as The Sun newspaper, has resulted in a prison sentence<\/a>.<\/p>\n

While the work of hacking groups such as Lulzsec and Anonymous is politically motivated it seems quite implausible that any court anywhere would condone software that circumvented paywalls used by subscription websites.<\/p>\n

In a rather curious twist, two years ago observer.com (home of the New York Observer) website published an article explaining how to avoid the paywall of (its rival) the New York Times. But as observer.com was at the time also a subscription-based site, many of techniques the article described could be employed against its own site.<\/p>\n

Another model is the freemium<\/a> approach, which has become the dominant trend in the market for apps for mobile devices. The concept of combining free downloads with paid-for additions is a variant on earlier software business models including shareware and try-before-you-buy schemes.<\/p>\n

But the number of people making purchases through this model only amount to 2% of the total number<\/a> who download the free app.<\/p>\n

Combined with figures<\/a> that suggest many apps barely make 1,000 downloads in their first year, that means barely 20 people might be taking up the premium part of the freemium offer.<\/p>\n

Yet because a small number of apps become massively successful, such as Angry Birds<\/a> with revenues in excess of \u00a3100m annually, this encourages developers to continue trying their luck at the perverse lottery of the freemium business model.<\/p>\n

Follow the money<\/h3>\n

However, the German court\u2019s decision giving ad-blocking software legitimacy may ultimately be of little consequence given the untapped market for online advertising. As mobile and internet use continues to grow worldwide many advertisers remain wedded to traditional media.<\/p>\n

The risk-aversion of traditional advertisers<\/a> creates a $US50 billion opportunity for online media. If advertisers can be convinced to balance the proportion<\/a> of time spent using online media and the proportion of advertising directed at them, then the prospects for online and mobile advertising are rosy.<\/p>\n

As one free browser for mobile and tablets among many, or as a browser plug-in, AdBlock Plus is not going to make a major dent in the advertising business model of large websites with multinational brand advertising.<\/p>\n

A new approach?<\/h3>\n

What\u2019s more, in the background AdBlock Plus has very quietly introduced a different advertising approach. By allowing \u201cnon-intrusive\u201d ads that meet AdBlock Plus\u2019s criteria for acceptability<\/a> \u2013 in effect, a throwback to online advertising circa 1999 \u2013 and charging \u201clarger properties\u201d in order to be whitelisted<\/a> (and their ads not blocked), its free software relies upon a sponsorship or patronage business model.<\/p>\n

Patronage of course isn\u2019t new, but it does introduce reciprocal obligations and expectations on AdBlock Plus.<\/p>\n

The nature of ad acceptability is prescriptively defined<\/a> but also continuously evolving. The site claims this is primarily to improve user experience, but it\u2019s impossible to ask for who else the list might be improved without finding oneself thinking of the \u201clarger properties\u201d the firm already deals with to draw up its whitelist.<\/p>\n

Companies operating on the web, in social media, online games and the internet in general desperately require innovations that can support them while reflecting the current consumer preference for free.<\/p>\n

Advertising-based business models need to capitalise on the promise of cross-device advertising<\/a> as part of the move towards a truly customised user experience<\/a>.<\/p>\n

However, it\u2019s clear that over the longer term the internet needs entirely new business models<\/a> \u2013 and with or without the tacit support of the German courts, the patronage model of AdBlock Plus is not a prime candidate.<\/p>\n

By Gordon Fletcher,\u00a0Centre for Digital Business at University of Salford<\/em><\/p>\n