EC1 Capital

Ad Blocking and the Tragedy of the Commons

Jay Jay Wed 21st Jan 2015 17:22

The online advertising industry is fighting a long, drawn out, seemingly never-ending battle against two enemies:

Fraudulent Bots 

The first enemy is in the form of fraudulent bots, which are programmed to crawl across the net ‘reading’ webpages.   The Interactive Advertising Bureau trade group estimated that around 25% of all web traffic is thought to be fake.  This fakery means that ads are reaching machines instead of eyeballs, resulting in wasted spending by advertisers that pay per impression. 

Ad Blocking Software

The second enemy – and one on which I will elaborate - is ad blocking software (or the perhaps people who download and use it).  Israeli startup ClarityRay estimated in 2012 that just over 9% of all impressions were ad blocked, which strikes me as surprisingly high.  This proportion is likely to have increased over time as more web users find out about the likes of AdBlock and AdblockPlus.

Depleting our Web Commons

I’m very much in the consumer camp and believe there are few immediate ethical issues surrounding users downloading ad blocking add-ons.  Most ads are frankly pretty irritating and badly tailored to viewers.

However, this is not without its long-term implications. An economic theory, called the tragedy of the commons, helped me to frame the problem of ad blocking.   The theory states that individuals acting solely on self-interest may not be acting in the interests of the community and may end up depleting a common resource for the misery of all.

To put the theory into practice, let’s think of the individual rational decision in our current example. Acting purely on self-interest, why wouldn’t anyone use an ad blocker?  If ads are proving no marginal benefit (and of course in may cases they do), away with them!  

However, if everyone were of this opinion and had free access to ad blockers, there would be two effects. On the one hand we would be in a far less ad-saturated world – arguably a good thing.  Yet on the other hand, publishers would find it far more difficult to monetise their traffic. This may mean smaller publishers become extinct and aspiring ones fail to get of the ground.  This ultimately means a depleted common resource of good quality, accessible information on the web. 

What are the solutions?  Digiday offers a few including publishers charging for an ad free service; improving the quality of the ads (see: native advertising) and blocking the blockers.  None have proven themselves as fully viable. But there needs to be a better solution soon as both the consumer and industry stand to suffer over the long term.

 



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