Escalating the advertising arms race with Shine and Google’s new idea

There’s a new ad blocking company in town focused on blocking mobile advertising. Shine offers a new twist on an old model: instead of users blocking ads, Shine offers mobile operators a white label solution that blocks ads for them.  It will block display ads, video and in-app advertising but it won’t block native in-app advertising. “It’s up to the carriers to decide how they roll it out. They could choose to make it a premium service, where customer pays a couple of dollars extra a month or year. They could make it an opt-in, where customers get their rates dropped because they are using less infrastructure. It could be completely free, or even pre-loaded on smartphones,” says Roi Carthy, CMO at Shine. Shine claims that “ads are using up 10-50% of user’s data plans” and that ads’ bandwidth needs are driving operators to add expensive infrastructure.

Hard-to-close completely irrelevant interstitials. Just one example of many.

Hard-to-close completely irrelevant interstitials. Just one example of many.

While Shine’s operator-driven approach is new, ad blocking has been around for a while and has already survived legal opposition. The problem with ad blockers is that many sites, mobile and web, rely on advertising revenue to run their business. So many content sites are funded by ad revenue exclusively and the argument (here’s just one) is that blocking ads from appearing on those sites will cause them to go out of business.

There are several unanswered questions here:

  1. At what point will content providers need to think of alternative revenue sources and will those revenue sources be enough to keep the business alive? Leading publications such as the New York Times rely on a mix of advertising and subscription income. Some, such as the Wall Street Journal shows ads and requires a paid subscription to access any articles. Will every currently free site require a subscription to access content and will readers pay up?
  2. Users hate advertisements because they are “annoying” yet advertises feel that they have to do more and more to grab readers’ attention. Sure, the advice is always to target the user and present compelling ad copy but that seems out of reach for many advertisers on many platforms.
  3. Users are not fans of sound in ads and autoplay video yet again, as above, advertisers feel they need to use these tools to catch readers’ attention.
  4. What other models can publishers work with? Stratechery offers subscription-only content via its Daily Update which “consists of 12~15 articles a week delivered via five daily emails.” Model View Culture is supported by a print quarterly. Yes, these are various forms of subscriptions, just like the Wall Street Journal and New York Times but they are exploring the model.

One solution that seems to be a compromise is AdBlock Plus. Advertisers pay to be white-listed (their ads shown to consumers) if those ads meet their Acceptable Ads criteria such as s “being transparent about the fact they are advertising and not disrupting or distorting page content.” This seems a bit disingenuous on AdBlock’s part to both sell the blocking software and then sell access. Either way, the content providers are squeezed. Yet perhaps this model is the right one: give some control to users to decide what kind of ads they want to see.

Another interesting take is Google’s new (so new it’s wait-list only) called Google Contributor which bills itself as  “an experiment in additional ways to fund the web.” The way it works is that users pay a certain monthly contribution between $2 and $10, and Google divides it up between the websites that that user visits that month. For those sites, Google will block the ads the user sees on web and mobile. Right now Google is working with only a few publishers and it will be interesting to see if this model can work. Google Contributor is somewhat similar to KQED’s, the Bay Area’s local NPR station, “pledge-free” stream. During fundraising periods, KQED offers listeners who donate to the station a chance to listen to all the programming without the pledge sessions that interrupt the final minutes of a show. The question will be if these contributions will be enough to fund publishers.

Bottom line is that if these solutions fail to provide “adequate” revenue for publishers, they will continue to rely on advertising income and escalate the advertising “arms race.” Ads will become more visually and audibly aggressive and users will do more to block them. Publishers might be in trouble either way: alienate users with annoying ads and suffer a reduction in ad revenue. It will be readers, however, who will lose out in the end as the decision on what content to create will be driven by cost only. From what I’ve heard, quality journalism doesn’t come cheap.



One thought on “Escalating the advertising arms race with Shine and Google’s new idea

  1. Pingback: The debate around the new ad-blocking apps is now about ethics in advertising | What it all boils down to

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s