Rise of ad-blocking sobering news for businesses

Tech giants such as Google pay to get around the practice.

Trend may hurt consumers as well as businesses

Ad blockers are growing in popularity, and that could be a big problem for any business that relies on online advertising to pay the bills.

A study published Monday by Adobe and the software company PageFair revealed that 45 million active users in the United States use ad-blocking software - an increase of 48 percent in one year as of June. That's about 15 per cent of US Internet users. In other countries, such as Poland, the number is as high as 30 per cent, the report said.

The study's authors estimate that ad blocking will cost online businesses US$22 billion in advertising revenues this year.

Although blocking intrusive ads sounds like a good thing for consumers, it can hurt everyone over time. The individual gets a better experience, but companies are starting to feel the hit to revenue, with tech giants such as Google paying to get around the practice. Because the report predicted that ad blockers could soon become common on mobile devices, too, advertisers will probably feel the need to urgently address the issue.

One could argue that the core problem is that people have become used to getting things free on the Internet, and that many do not realise that advertisements are the price they pay for those Web services, advertising analysts said.

Simply put, if Web sites can't pay their bills through ads, they will have to shut down or start charging a fee. That's why it's fairly common to see messages from sites asking people to stop using blockers or to register certain sites with their browsers so that the ads won't be refused.

But guilting consumers isn't necessarily an effective method. In fact, it can have the opposite effect. A lot of people who understand how ads work - certainly those who know enough to use ad blockers - don't trust advertisers. They see them as intruders who have quietly gathered personal data for years and amassed profiles on users without their knowledge. Ad blocking could be as much about wanting to protect privacy as it is about making the Internet experience less annoying.

So, is there a way out?

The dream, of course, is that Internet ads could be useful instead of intrusive. In a recent article from AdAge, author Brad Meehan said that advertisers should become more transparent about what they do with the information they collect from consumers, something privacy advocates have pushed for years.

Meehan argued that consumers are often willing to give up information about themselves to get deals. That's basically the premise of any "personalisation" or rewards program.

"When personalisation is done well, consumers benefit by receiving marketing content with increased relevance and a smoother buying process," said Meehan, who works for VML, a global marketing agency. He also recommended allowing people to opt out of some tracking so they feel comfortable with the information that is being handed over.

Consumers can expect to see more retailers and businesses try new ways of advertising that focus on personalisation, and more strategies that aim to track users between sites and their devices. In an ideal world, companies would realize that trust is as important a currency as data - and that they should be more open about how they operate.

Until then, what we have is an arms race, and one in which everyone loses.