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Ad blockers shaking up the industry

The advertising industry in Kenya has been on the move in recent years as the demand for print advertising has declined, with marketers shifting to online platforms as a way of reach-

ing their target audiences. But marketers now face a new challenge, as global consumers adopt ways of blocking these very same digi- tal advertisements and campaigns.

“In Kenya, the return on investments on print advertising for advertisers in 2015 was at 35.48 per cent, which was lower compared to the digital ROI that was at 75 per cent,” reported Price Waterhouse Coopers (PWC) on the trends shaping the entertainment and media industry in South africa, Nigeria and Kenya. “advertisers are now embracing the growing and easily accessible smartphone users in the market as Internet   advertising revenue  is  projected  to  rise  from $72m in 2015 to $151m in  2020.”

This rise in online advertising has led to revenue losses for media companies as marketers abandon print media, while for the world’s largest digital advertising channel, Google adwords, the shift has deliv- ered  exponential growth.

By 2012, Google was generating some $44bn of advertising revenue. Conversely, print media had lost more than $40bn, equivalent to   60 per cent of its advertising revenue, according  to  the  US  News   media

alliance. In Kenya, social media plat- forms now lead as the main source of current news content for mobile phone users. Television comes in at a distant second, with newspapers being the least important source. yet as audiences have migrated online, the interruption by advertisements on these online platforms has fueled a surge in the uptake of ad blocking plugins.

Kenyan digital audiences may be slower to disappear, however, than global consumers are proving. “The two most common brows- ers in Kenya are Google Chrome and Opera mini. Chrome for android mobile phones, which are the most popular in the country, does not support extensions, therefore users

cannot block advertisements. There are ways to get around it. However, most Kenyan users are not tech- savvy enough as yet,” said Valerie Ngugi, a business developer at Bean Interactive, a digital marketing agen- cy in Kenya. “It is the high-end phones such as iPhones that allow ad blocking, but that is less than one percent of the country’s total smart phone users’ population. Right now, the impact of ad blockers is negligi- ble, but as users become savvier, this will likely increase.”

 

Globally, advertisers are facing much greater challenges due to the high rate of adoption of ad blockers

by online users. Currently, 16 per cent of the estimated 1.9bn global smartphone users have installed the ad blocking software on their devic- es. In fact, research suggests that while online advertising is projected to rise in coming years, its popularity with marketers will diminish due to ad blocking, as they look for new ways to reach their target audience.

“While the prospects for growth in Internet advertising revenues in the next five years look bright, there are clouds on the horizon – not least the rise of ad-blocking. Consumer adoption of ad-blocking technology on their devices has largely been driven by  poor execution of   advertisements, slowing down the loading times of web pages and increasing data consumption with little or no benefit to the end user,” reported PWC.

 

Ad format

“advertisements on connected devic- es generally succeed when they are targeted, relevant and useful: hence the popularity of paid search. ad for- mats that do not meet these require- ments will struggle to deliver results for advertisers, so new formats – such as native advertising, which has the look and feel of content – will likely become more prevalent.” The

by consumers has left advertis- ers and media companies grappling to find ways to reach their target audience and generate revenues, but for the leading providers of digital advertising it is already costing bil- lions of dollars in lost ad revenues.

a 2016 report published by PageFair on the cost of ad blocking, estimated that the potential ad reve- nue loss numbers due to ad blockers would be $20.3bn in 2016 and the number would double this year. In this, brands such as Facebook are worried.

“Technologies have been developed, and will likely continue to be developed, that  can  block the  display  of our ads, partic- ularly advertis ing displayed on personal computers. We generate substantially all of our revenue from advertising, including revenue resulting from the display of ads on personal computers,” said Facebook in its 2016 annual

“Revenue generated from the display of ads on personal com- puters has been impacted by these technologies from time to time.

as a result, these technologies have had an adverse effect on our financial results and if such technol- ogies continue to proliferate, in par- ticular with respect to mobile plat- forms, our future financial results may be harmed.”

For marketers and media com- panies, the next base is emerging as native     advertising, which has seen immense

growth from last year and is project- ed to make up more than 50 per cent of digital display spend this year.

“Growth of native digital adver- tising is being driven by publishers’ pursuit of higher-value and more mobile-friendly inventory, as well as by advertisers’ demands for more engaging, less intrusive advertise- ments,” said emarketer principal analyst Lauren Fisher.

“The new forecast estimates that US native digital display ad spends will grow 36.2 per cent this year to reach  $22.09bn  and  will  make up 52.9 per cent of all display ad spend- ing in the  US.”

In native advertising, brands have found a way to present their products to their target market by using content positioned as valu- able and one that the audience will enjoy reading.

“Unlike content marketing, in native advertising, brands   are renting a c o n t e n t distribution platform just like advertis- ing, except that it is not direct- ly promoting the company’s product or    service,”  according to Joe Pulizzi, the founder of the Content marketing Institute, a mar- keting business information company in an article titled ‘native advertising is not con- tent marketing’.

“It does not disrupt the user experience and offers  helpful information in a format similar   to   the   other   content on the news platform so users engage with it more than they would with a display advertisement.”