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Technology wars: What you don’t know about ad block

By Anthony Winszman and Karthik Rangan

Section: Opinions

December 2, 2016

At first glance, ad blockers seem to be a convenient tool for avid Internet surfers who can bypass intrusive and “annoying” advertisements from popping up on their screens and “interrupting them in their reading.” Simultaneously, ad blockers have become the nightmare of many website owners and publishers who have begun to lose significant revenue generated from advertisements.

This is the battle we are discussing today. In a technology vs. technology world, where users appreciate the convenience of free access to information, they also seem to have become a bit greedy at the expense of many information providers. In fact, 15 to 20 percent of the revenue generated by advertising is lost each year due to ad blockers, which is what really raised concern about this issue.

Prof. Benjamin Shiller (IBS) is a specialist in the economics of the Internet, which led him to perform research on the effects of ad blockers starting in 2015. Ad blockers are a free software (downloaded from the Internet) that allow Internet users to go on websites without seeing any advertisements that would usually pop up on the side (or sometimes middle) of their windows. These advertisements, when unblocked, are placed on a variety of websites that charge the advertised company a fee for the space. This is how many websites generate revenue, and is especially what allows information from these websites to be free for users, who would otherwise pay a subscription.

Our research—led by Prof. Shiller and assisted by us—shows that ad blockers are hurting not only producers in the short term but also consumers in the long term. With the loss of revenue these media houses suffer, as specified above, the quality of free information could decrease significantly in the coming years, resulting in lower quality of content and causing a depression in the bank of knowledge. Free information has brought society very far, especially by educating citizens in a democracy, and taking away from this progress could bear grave consequences. With this research, our purpose is to prove the above, and present a solution before it is too late.

From Sept. to Dec. 2016, we as assistants have had the honor of contributing to Prof. Shiller’s research in the department of Economics at Brandeis University.

We pursued this research by focusing on France: a country where around a third of the Internet-using population has an activated ad blocker on their computer. Campaigns have already been conducted in France, led by Le GESTE (an administrative representative for all media sources in France), to make Internet users aware that ad blockers lower editor revenues. Two campaigns took place in France thus far: The first lasted one week in March 2016 and the second lasted one month in Sept. 2016. The goal of these campaigns was to raise awareness about the negative effects of ad block for media companies. Hence, online media websites either “fully or partially blocked” access to their websites unless the user accepted to deactivate their ad blocker. The media sites displayed messages such as, “We have noticed you are using an ad blocker. Please deactivate your ad blocker to continue browsing, as the revenue of our website comes from advertisements. If you wish to continue browsing ad free, please subscribe.” These messages were effective indeed, based on the results of the campaign, but the impact may have been shorter term than they hoped.

The GESTE provided our team information on the campaign participants, their approach to users and the number of people who “whitelisted them” as a result. The GESTE then sent us a complete report of the September campaign results—which was put together with the help of a French start-up known as AdBack—containing both “good and bad news.” With a high 66 percent of the French media market participating in the campaign, they were able to reach millions of users throughout the experiential month. However, the September report read that while about half the ad block users were responsive to deactivating their ad blocker, a strong majority (more than 60 percent) of these users reactivated it in the following week. This showed us that while the campaign was successful, there is still much work to be done to make a permanent change, to which our team seeks to contribute.

Furthermore, we need not only prove the damage caused by ad blockers, but we need to justify the potential coordination of action that media firms should take in France. It is well known that such collusion between firms is likely illegal, yet we have found that unilateral action is insufficient to combat the ad block users winning thus far. Going beyond incentivizing users to deactivate their ad blocker, we would like to help install policy to ensure the economic prosperity of media houses through advertisements and promote free information.

This is the first overview of current economic research ongoing at Brandeis University. While the research is still in a primary stage, it is coming along successfully and we expect that the progress we make every day will contribute to a bigger project overall: to promote consumer well-being and ensure that economies continue to operate smoothly without such conflicts of interest.

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