economist.com

Ad-blocking may not quickly spread to smartphones

AD-BLOCKING is becoming ever more popular on personal computers. According to some estimates, in a few countries more than a third of internet users now have the necessary software installed in their browsers. But what has advertisers and publishers really worried is that ad-blocking could soon make a dent in the more rapidly growing market for ads on smartphones, which will reach $100 billion this year globally, according to eMarketer, a data provider.
On the face of it, such fears are indeed warranted. Mobile browsers which block ads on web pages (though not in apps) have become more popular, particularly in Asia. The operating system for Apple’s iPhones now lets users download ad-blocking software. Most importantly, last month Three, a big mobile operator, announced that it is planning to install ad-blocking technology in its British and Italian networks. Its customers will be able to use it to block ads within apps, too. Other carriers have said that they are looking into offering such a service. Digicel, which is based in Jamaica, is already doing so.
But on closer inspection, it is too soon to write the obituary of mobile advertising, says Dean Bubley, a telecoms consultant. More than half the time, smartphone users connect to the internet using Wi-Fi, so they will still get ads even if their mobile operator blocks them. What is more, the fastest-growing sort of mobile advertising is “native”, meaning indistinguishable from other types of content, and sometimes even encrypted. That makes network-based blocking hard, if not impossible.
Then there are legal and commercial hurdles. Three is planning to let subscribers opt into its ad-blocking service, which is based on technology developed by Shine, an Israeli startup. But that may still run afoul of “network neutrality” rules, which require that all sorts of online traffic, including ads, should be treated equally. To be on the safe side, the service is likely to be offered directly through Shine. Three has given itself a few months to figure it all out. Other carriers are likely to wait and see how Three’s ad-blocking efforts fare.
Given all this, mobile ad-blocking may not grow much beyond its current level in the short term. Online publishers interviewed by Joseph Evans of Enders Analysis, a consulting firm, report that only a few percent of all ads are getting blocked. Even some consumers with ad-blockers installed on their phones may still be choosing to let some through.
Yet advertisers and publishers should not get their hopes up too high. The frustration with mobile ads is growing, and not just because they can annoy. An increasing worry is privacy: mobile ads are targeted using lots of personal data, but it often remains unclear how they are being collected and used. If the advertising industry doesn’t clean up its act, ad-blocking on smartphones may yet grow, albeit slowly, to become as widespread as it is on personal computers.