Ad Blocking Goes Mobile with iOS9- Implications for Pharma and Readiness Planning

Executive Summary

The next Apple operating system update has the potential to push ad blocking into the mainstream.  According to Apple’s pre-released developer documentation for new versions of its iOS and OS X operating systems, the company plans to bring content blocking extensions to the Safari Web browser.  For developers, the folks that build apps, this is an invitation to create extensions that – among other things – can empower users to block ads on their mobile browser.  With high adoption of iPhones and iPads among HCPs, this could greatly affect pharma marketers. Medical publishers and their advertising clients should be scenario planning now to address the proliferation of user controlled ad blocking technology, including improving the user experience, developing a content marketing strategy, and maximizing underutilized channels. This POV provides more background on the issue and clear next steps.

Background

As a channel, there are many attributes that make digital unique compared to traditional forms of media.  This year, the ever increasing ability of users to control their online and mobile experience has emerged as a leading topic of discussion among marketers and publishers thanks in part to Apple’s latest announcement to extend ad-blocking functionality to the mobile version of Safari with the upcoming Internet Operating System (iOS9) update this fall.  General estimates attribute 25% of all mobile Web browsing to Safari.  Needless to say, the news has many concerned given the high penetration of Apple devices.

Ad Blocking

Ad blocking software works to remove ads from the Internet via a browser extension and is not a new phenomenon.  Adblockers are plugins within a user’s browser that act similar to a firewall, but between a web browser and all known ad servers. When these ad blockers are enabled within the users’ browser, the adblockers block the call of the ad server, and hence all ads and all ad formats on every website the user visits. The most popular plugins are “AdBlock Pro,” “AdBlock Plus” and “AdBlock.”  Adblock Plus, which was initially released in 2006, covers almost all major browsers and surpassed 300 million installs this year, boasting over 50 million active users.

Beyond the removal of ads, browser speed and battery life are compelling factors to users of ad blocking add-ons.

Publishers and advertising networks have the option to work with blockers such as AdBlock Plus by applying to have each type of ad they serve accepted and hence unblocked.  The process is free for small publishers who may be serving an ad or two, but for giants like Google and Amazon, there are hefty fees on top of administrative drain.  Pop-ups, interstitials and other more interruptive units are among the most commonly denied.  With the emergence of ad blockers has come the formation of companies who help publishers measure the impact of ad blocking to their business and assist with the whitelisting process.  One such company, PageFair, estimates that Google lost out on $6.6 billion in global revenue to ad blockers last year.  That is 10% of the total revenue Google reported in 2014.

Updates and Implications

If all this wasn’t enough, the news from Apple is bringing the topic to a fever pitch among publishers and advertisers alike.  Mobile has been generally unaffected although it is notable that Adblock Plus is launching its first mobile browser and will block ads by default.    But with a significant user base established, it is the new iOS9 update from Apple that has the potential to make ad blocking commonplace.  Apple is synonymous with ease – within the App Store users can quickly identify the most popular and useful apps.  And apps with a large amount of downloads tend to remain in the featured and top charts for extended periods of time.

On the other hand, little detail has been made public about the Safari iOS9 extension such as default settings, thoroughness of the block list and ability of users to manage individual settings to block/whitelist specific sites and types of ad formats.

Today, even the largest publishers like The New York Times or Wall Street Journal struggle to monetize their online traffic.  Given the potential impact – if Apple could shut down 25% of all ads on the Web – we could see thousands of smaller, online-only publishers simply vanish in a worst case scenario situation.

Enter the niche medical publisher.  Based on YTD 2015 CMI/Compas campaign metrics, iOS powered devices account for nearly 11% of total impressions served; traffic from Apple devices is up 35% from last year. More concerning is that these impressions are driving the majority of engagement at 32% of total clicks. Comparing this traffic to other mobile sources confirms physicians are strong Apple advocates, with over 60% of all mobile traffic coming from iOS powered devices.

Readiness Planning

Fundamentally, promotional and media agencies are charged with engaging customers in a mobile dominated world.   With the high penetration of Apple devices among a highly educated and empowered audience, the move by Apple could be especially dire for the professional ecosystem already characterized by severe inventory constraints as almost all medical publishers would find it impossible to make up for any significant volume of lost impressions.  Medical publishers and their advertising clients should be scenario planning now to address the proliferation of user controlled ad blocking technology:

Ultimately, advertisers can shift budgets to new channels and tactics in an effort to maintain and grow customer connections.  Our publishers will be on the front line but not without options.  Ad blockers violate publishers by allowing users to essentially steal content.  Free content is a privilege made possible by advertisers in exchange for the placement of advertisements.  Essentially, ads are the currency of the Web and pay the bill for all that content.  Publishers could appeal to their users to manually whitelist their site or simply block the content from serving when an ad blocker is detected. AdBlock Plus and the like have shown Apple that large publishers are willing to pay for inclusion.

Apple Power

On the surface, integration of ad blocking features in the iOS9 update appears to empower savvy consumers who want to actively preserve their online privacy and data.

However, many industry insiders are questioning the intent behind Apple’s decision saying instead that the tech giant has more to gain than meets the eye.  First and foremost, ads served within the Apple proprietary app ad network, iAds, would not be subject to blocking.  The thinking here is that by pinching sites that rely on ad revenue, more publishers could turn to native apps and join iAds where Apple would have a direct benefit.   It’s highly unlikely that scientific medical publishers who need to control ad placements would ever join such a network, as evidenced by their low participation to date in general ad networks.

The launch of Apple News in a parallel move could also be significant.  News will officially replace Newsstand and will be ad supported.  For publishers, partnering with Apple is another revenue stream but only if the audience gravitates toward News.  As ad blocking is adopted and ad blocking apps gain prominence in the App Store, publishers may have to opt-in to curated feeds like Apple News and Facebook Instant Articles.

Just last month, Apple secured a patent for a viral ad platform that can track personal information and actions such as content consumed across social and email channels which could position them favorably with third party advertisers looking to target custom audiences.  All moves point to Apple gaining control over the consumer connection and seeking new revenue streams.

Conclusion

As panic spreads, lest we forget that nothing is set in stone.  Apple may be a giant but if Taylor Swift can single-handedly impact the launch of Apple Music, certainly publishers and advertisers can make an impact.  You may also remember Microsoft’s 2012 “do not track” default feature that never got off the ground.  After raising alarms among the online ad community and causing an internal rift between the browser and ad departments, Microsoft eventually got out of the ad business altogether.

If not careful, Apple could be dealing with a real iMess come the fall and face a publisher backlash or worse an antitrust suit, when publishers refuse to pay for inclusion on an acceptable ads list and opt instead to disrupt the user experience by blocking content thus frustrating users who are promised a seamless experience.