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Tuesday, February 23, 2016

Mobile adblocking is overhyped & mostly unworkable

There's been a lot of fuss in recent weeks about the possibility of mobile operators blocking ads transiting cellular networks - or perhaps even charging advertisers for their delivery. I've written before that I think the idea is a non-starter (link), and I still believe that to to be the case

Three has announced a deal (link) with Shine that will (at a future date) implement network-level ad-blocking. The PR talks a good game about privacy and control, but is unfortunately divorced from reality in several important ways.

(Incidentally - I apologise. Mea culpa. I was the one who originally suggested that mobile ads' data-traffic could be charged to the advertisers - see this link. But that was 5 years ago, and the mobile world has moved on rather far since then)

Now to be fair, some mobile ads are very annoying and intrusive. I hate the ones that pop-up while scrolling through a website (or in-app) and take you straight to the appstore download page, as you swipe on the wrong bit of the screen. And yes, if I was limited to a very small data allowance, I'd be annoyed by the big chunks of data from the ads themselves, cookies and assorted other background marketing eating up my quota. There's a bunch of dodgy privacy-invading practices too, which I despise.

But.

There are multiple reasons why trying to fix these issues in the cellular network is the wrong answer:
  • 50-90% of smartphone use, and probably 90-95% of tablet use, is over WiFi - and almost exclusively WiFi not provided by cellular operators, or transiting their core networks. Therefore people will still get ads on their phones most of the time. (And no, they won't "onload" to cellular just for the ad-free experience).
  • The most fast-growing part of mobile advertising is in-app. And while some in-app traffic (eg rendered in browser-style webview pages) might be blockable, the "native" ads such as Facebook's in-timeline ads won't be. Facebook blends them in at the server, and encrypts it all. That's not going to change, apart from becoming ever more-sophisticated.
  • Encryption is also being more widely used elsewhere. HTTPS, encrypted video streams, full-VPN clients and so forth. Some of this might be block-able, eg if it comes from easily-identified servers or IP addresses, but it's naive to think that isn't subject to a million workarounds
  • People who really want ad-blocking are likely to do it themselves, either with an app or browser-capability, or perhaps even in the OS. That way they can block ads on WiFi too
  • Any network-level solution is held hostage to future modifications in Android and iOS which offer work-around options for advertisers. That might not be a bad thing, in that it could cut down on some of the worse pop-up offenders or most-egregious "cookie monsters", but it won't reduce the overall amount of ads.
  • Advertising and B2C engagement is changing anyway. Some is moving to apps, some is moving to ads/interactions in messaging (conversational commerce - see link here from my friends at STL Partners)
  • It risks all manner of embarassing or legally-questionable side-effects. There will be false positives (eg blocking things that aren't ads) and false negatives (failing to blocks ads). What happens when Operator A blocks an ad from Operator B, and the competition authorities take a dim view? Or blocks a government ad for submitting tax returns on time, or a charity's disaster appeal? Put your PR and legal teams on danger-money....

The bottom line is that screaming headlines in stories like those from ZeroHedge (link) about "the risk to Internet companies' business models" are nonsense. Ironically, it's Google and Facebook's approach to advertising that is safe. Small online publications using other advertising channels may not be so lucky. I noticed this tweet referencing mobile advertising growth forecasts from Goldman Sachs (link) which seems to suggest that Wall St is sanguine about the adblocking "threat" and that rapid growth in revenues will continue.

Yes, there are some possible upsides here. Network-level cookie blocking is a possibility, and could help preserve privacy. (I already use a VPN service from F-Secure that anonymises my traffic, on mobile and WiFi). We could also see a proportion of the nastiest pop-up ads being squashed, which is also a good thing in most users' eyes. But that will just shift mobile advertising to other inventory types or channels. And maybe for some very low-end users, in markets with low-end data plans and a preponderance of web vs. app traffic, it could make a worthwhile difference.

But for everyone else, I think it's hugely overhyped. It's unlikely to stop more than single-digit % of overall data traffic per user. There's a huge set of "gotchas" for the idea that mobile network operators can make a meaningful difference, given WiFI and in-app ads. And the idea of actually charging advertisers for some sort of curated "personal advertising preference" system isn't going to come through this route either. (There's a whole separate post's worth of problems about that side of things, but it won't even get to that stage).

Yes, it makes for fun controversial headlines and might allow telcos to stick another metaphorical finger up at net-neutrality rules ("See? We're protecting consumers by fiddling with traffic non-consensually!"). But it's a sideshow, not something that will give Google sleepless nights.

Incidentally if you're reading this on a phone, here's a mobile advert: I do workshops, consulting projects and speaking engagements for operators, vendors and investors, on a variety of topics such as mobile networks, voice/video/UCaaS, and broader telecom futurism (link). I think of concepts like this, 5 years ahead, when they're stilll plausible. Drop me a line via information AT disruptive-analysis dot com, or via Twitter or LinkedIn. And good luck blocking this paragraph in the network without some really good AI and contextual analysis (I cover those technologies too).

2 comments:

Reflector said...

Great post. I'll add a comparison to URL or Content Filtering services that have been available through vendors and offered by operators for quite some time. These are mandatory in some geographies through laws and regulation and are less controversial or business impactful compared to ad-blocking yet they've also failed to take off.
They suffer from similar problems you've mentioned in the post:
No continuity of experience in WiFi, encryption, user installed solutions, etc.
These are cost centers, have low opt-in rates - under 5%, usually much lower from what I've seen - and are a subscriber friction point.
Operators should learn from past mistakes and focus on revenue generating services instead of this hype.

Ashu Mathura said...

Great post! Check out my 2-cents on ad blocking here and let me know what you think:
https://www.linkedin.com/pulse/audience-data-save-publishers-ad-revenues-ashu-mathura?trk=pulse_spock-articles