Ad Blocking: The next threat to Irish newspapers

An edited version of this article appeared in Village magazine, December 2015 edition

A few years ago, as print media watched their subscription and circulation plummet, digital advocates were fond of reciting Clay Shirky’s adage that “no medium can survive the indifference of 25 year olds.”

The advocates had a simple solution. Readers didn’t care about paper and ink, they wanted content, so move the content to where the readers were, establish a presence online, through the web and apps, get rid of the dead tree costs, and pursue a combination of advertising and subscription revenues.

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A few – a very small few – have managed the transition successfully, The Times and Financial Times are bullish about their subscription-only models, the New York Times seems happy with its constantly tweaked mix of leaky paywalls and advertising, the Guardian and Mail open their content to all and bet on advertising alone.

But for most newspapers and magazines, the economics of a sustainable online product are still at least one more iteration away, and readers are rebelling against the one constant of all publishers: advertising.

Ad blockers in one form or another are almost as old as the internet, and over the years have ebbed and flowed in popularity. Their first appearance in the 1990s was prompted partly by the intrusive nature of early web advertising – who remembers flashing and blinking pop-ups? – and became less of an issue as the growth and spread of viable broadband made bandwidth concerns and download speeds less of an concern.

Blockers still live on some desktop computer browsers, but the numbers blocking there stabilised a long time ago. But bandwidth issues resurfaced again in the last decade, as smartphones consumed more and more of readers’ attention. In the first five years of this decade, the number of consumers globally using ad blockers grew tenfold.

The smaller screen size on even the largest phones makes advertising more noticeable – and more of a nuisance – than on a full-size computer screen, and the combined constraints of slower chips and constrained wireless speeds mean that the ad blocker’s promise to improve loading speeds by blocking useless advertising is highly appealing.

The result, as outlined in the 2015 PageFair/Adobe report on The Cost of Ad Blocking, is a phenomenal growth in ad blocking, with a worldwide 41% year-on-year growth since 2014. In the EU, blockers grew by 35%, and are now used on 77 million devices.

Notably, the report found that 93 percent of adblockers are installed on Chrome and Firefox browsers – that is, on Android phones. With Apple’s Autumn announcement that it will allow ad blocking on Safari, the problem seems set to increase. The global cost of ad blockers to date is estimated at $21.8bn [€20.5bn].

In the second quarter of 2015, 17.7% of monthly users in Ireland had ad blockers installed. That number is low by international standards, and that should worry Irish media outlets. The comparable US number is 47%, in the UK 39%, and where the US leads, the UK tends to go also, followed shortly afterwards by Ireland.

In hard cash terms, the Irish Times expects to earn €8m from digital advertising in 2015, while INM expects digital revenues of around €12m. Circulation and print advertising revenues continue to fall at both companies.

The Irish economic recovery means digital revenues are increasing for both publishers, just about offsetting print declines, but as international experience is sowing, that growth depends not only on the Irish economy prospering, but on readers continuing to accept advertising taking up their attention,bandwidth, and phone screens.

The state of the Irish market can be understood by noting the Irish Times profitability increased in 2014 in part because it gained contracts to print the Irish Examiner following its receivership. INM revenues in the same year were helped by a contract to distribute the Irish Times. Newspapers are consolidating their print and distribution efforts, thus shaving costs, but this activity is based on the ever-shrinking print sector. Cost savings and managed decline can only sustain the industry for so long.

Advertising and editorial departments both need to adapt. User-hostile strategies, such as blocking browsers which use adblocking, seem unlikely to succeed. Those indifferent 25 year olds will simply go elsewhere, and there’s a whole wide world of web content out there. More favourable options may include increasing use of advertising formats such as sponsored content/branded journalism (the advertising formerly known as commercial features) or new forms such as sponsorship of podcasts (and perhaps vidcasts) or interstitial advertising in ‘casts.

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