Rethinking Monetization in The Ad Blocking Era

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If you were to ask what is behind the growth of ad blocking, the most commonly held view blames publishers for bombarding users with digital advertising, but this notion is too simplistic.

In reality, the vast majority of ad blockers are installed in response to a particular subset of low quality or illegal websites that are crammed with ads. Younger users, for instance, are likely to install ad blockers so they can access video websites that illegally stream films and TV shows, without being inundated with annoying and intrusive advertising. Because these ad blockers run across all sites, they have a negative impact on the ability of higher quality publishers in the market to generate advertising revenue – effectively crushing that part of the industry.

While the majority of higher quality publishers aren’t the ones driving ad blocking, they may still need to rethink their monetization strategies in response to increasingly challenging market conditions. Here are three things publishers could look at in their approach to monetization:

Less is more

The number of ads per page is one element publishers could consider when revising their monetization approach. Data calls and tech associated with digital advertising can cause the page to load slowly when there are too many ads – often increasing latency by two to three seconds – which can be frustrating for the user and contribute to ad blocking.

But it’s not practical to ask publishers to reduce the number of ads on a page so it loads quicker, and the user is happier, without offering a replacement for the resulting loss of revenue. The key is to think about revenue per page rather than revenue per ad. Publishers often fall into the trap of thinking ten ads on a page, at $1 each, equals $10 in revenue, but if they reduce this to just two or three better quality ads, one might generate $10 on its own, so they end up with the same or more revenue and a much better user experience.

If we look at the human side, one user equals a maximum of one click, a user will never click on ten ads. The more ads there are on the page the more diluted the chances of the user clicking on one. Initially, you might generate more revenue, but the buy-side algorithms will quickly notice a loss of performance on other ad units and pay less for them.

Viewability is an important factor here. If there are two ads on the page that are viewable and have high engagement, they will create more value for both advertisers and publisher than ten ads that never come into view. Some niche publishers with very desirable audiences are taking dramatic steps by only loading ads when they are in view and selling based on engagement, in the hope other publishers will follow suit.

Ideally moving forward, publishers will have fewer ads per page, but these would be high quality, well-placed, and targeted according to rich data. If publishers can measure engagement and prove to the buy-side that a couple of well-placed, highly viewable, and precisely targeted ads are more engaging and have a greater impact on their audience, they can generate the same revenue per page with fewer ads than they did before.

Diversify to survive

When publishers are entirely reliant on digital advertising, it can be difficult to balance revenue generation with offering a positive user experience, but if publishers are able to diversify their offering and blend multiple revenue streams this makes it easier to be more responsible with digital advertising.

Many larger publishers are adding subscriptions as a revenue stream, possibly bringing together clusters of publications, events and activities as part of a membership. Times+ membership, for instance, is about more than just reading the digital version of the newspaper. Members also receive access to exclusive events and competitions, discounts on products or services, and possibly a print copy at the weekend. They feel like members of an elite club that just happens to come with access to a digital newspaper.

Dennis Publishing is another good example of a more holistic user offering. It leverages its car buying audience from Auto Express and Car Buyer magazines by operating an automotive marketplace, and also enjoys a significant revenue stream from enabling loans for second-hand and new car buyers. Ecommerce is an effective way for publishers to diversify revenue generation, and this is particularly relevant for niche mid to long-tail publishers whose audiences are specifically interested in certain products or services. By making advertising just one of multiple revenue streams, publishers can swing the balance back towards user experience.

Focus on engagement

In the past, smaller premium publishers were often ignored by buyers as they didn’t have the reach of the larger platforms. But the tide is slowly changing, with buyers beginning to understand the value of a curated audience and looking for engagement rather than just reach. Both buyers and audiences want quality, engaging content, and buyers are looking for inventory that is creating impact and engagement not just high traffic volumes. They want to place ads on quality websites that are thoughtful about page layouts, ad clutter, content depth, and viewability.

Lastly, it is important to note that when it comes to detering ad-blocking the largest publishers have the greatest responsibility to be good actors. A small low-quality site described above might see 10,000 users in and hour and drive 50 of them to download an ad blocker, but a high quality site with the same bad experience may see 1,000,000 users and produce 5,000 new ad blockers in that same hour.

That’s why we joined the Coalition for Better Ads and support Google Chrome’s plan to start blocking ads on the most egregious bad actors – no matter their size – next month. Improving the lowest common denominator of the user experience, will help all publishers big and small.

Whatever its cause (or solution), ad blocking is having a significant impact on publisher revenues and many feel the need to rethink their monetisation strategies. By reducing the number of ads per page and focussing on higher quality, data-driven targeting and viewability, diversifying revenue streams to include subscription or ecommerce as well as advertising, and focussing on audience engagement rather than scale, publishers can adapt to the evolving market and reverse their fortunes.

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