Billions Of Online Ads Are About To Die A Well-Deserved Death

From my Forbes blog:

Businesses that run annoying ads on your smartphone and laptop are about to get a rude awakening.

Not only are online ad blockers quickly gaining in popularity, now two very big companies will soon offer us new ways to avoid in-your-face video and animated ads, pop-ups, and other intrusive ads that plague our online existence.

Today, Sept. 1, Google will start blocking ads that use Adobe’s Flash software, employed widely by video advertisers, in its Chrome browser. And as early as next week, Apple is expected to release its new mobile operating software for iPhones and iPads that will allow the installation of apps that keep ads from appearing in its Safari Web browser.

These developments suggest a new era in which you’ll finally be able to zap annoying ads like those in the video above. For a variety of reasons, it’s unlikely that ad blocking alone will cause advertisers and publishers a big problem. But the fact that the two biggest forces in mobile phones are both cracking down on annoying ads means the online ad business is about to change in a big way. …

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A Deeper Look At The New Google

From MIT Technology Review:

Before Apple’s Steve Jobs died in 2011, he told Google cofounder and CEO Larry Page that his company was trying to do too much. As Page later told the Financial Times, he replied, “If we just do the same things we did before and don’t do something new, it seems like a crime to me.” Yet Page also acknowledged that Jobs was right in one sense: he could manage only so many things before too many would get lost in the shuffle.

Those twin desires—to do new things regardless of how weird and unrelated they seem to Google’s core search and advertising business, and yet still find a way to manage them to fruition—explain Page’s surprise announcement Monday that he was creating a holding company called Alphabet. It will separate Google’s lucrative ad-related businesses, including Android mobile software and the video site YouTube, from the company’s wide-ranging efforts on self-driving cars, human longevity, Internet access balloons, the Nest connected-home devices, and more, each of which will probably become discrete subsidiaries.

But the move, while cheered by investors, is just the first step to fulfilling the company’s long-standing goal to “make Google a long term success and the world a better place.” In the view of several management experts, Alphabet will be successful only if the individual projects and companies can be successful enough on their own to be spun off into freestanding companies eventually. The new corporate structure enables that to happen, but it surely doesn’t guarantee it.

First, it’s important to dispel the assumption that Page and cofounder Sergey Brin have created something like the Berkshire Hathaway of the Internet, an updated version of Warren Buffett’s conglomerate. “The comparison is silly,” says Michael A. Cusumano, a professor at MIT’s Sloan School of Management. Buffett, he says, invests in existing, undervalued companies, a bit like a mutual fund—precisely the opposite of Alphabet’s VC-style focus on risky new ventures like Calico, which wants to somehow fight aging. ….

Read the complete analysis.

Why Ad Blockers Won’t Destroy Online Advertising … Yet


From my Forbes blog:

Today’s release of another study on the rising use of ad blockers has sparked a new round of hand-wringing over the software’s blow to the online ad industry. Some $22 billion will be lost worldwide this year, according to the report from Adobe and PageFair, an Irish company that helps advertisers get some of that lost ad revenue back.

Sounds scary! But the concerns are overblown, at least for now. Here’s why:

* It’s still a relatively small percentage of people especially in the U.S., where only 15% of users employ ad blocking, according to the study.

And the U.S. is by far the most lucrative ad market in the world. So in the places where most online companies advertise, they’ll continue to reach the vast majority of users.

* Only desktop ads are getting blocked for now. And we all know we’re rapidly approaching the time when most of the ads we see will be on our mobile devices. So the fastest-growing ad market, on mobile devices, isn’t even affected yet, not least because app stores such as Google’s don’t allow ad blocking apps. …

All this isn’t to say advertisers shouldn’t be concerned. They should be. The ad blocking trend line doesn’t bode well for brands that expect to keep reaching people as easily online as they have everywhere else.

But advertisers that create ads that aren’t intrusive and may even be useful have less to fear. Those that keep trying to shovel pop-ups and annoying mortgage come-ons? They probably deserve to lose business anyway.

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As Mobile Video Ads Soar At Facebook, Big Brands Pile In

Facebook CEO Mark Zuckerberg

Facebook CEO Mark Zuckerberg

From my Forbes blog:

Facebook’s second-quarter results today didn’t thrill investors, who knocked shares down more than 3% in after-hours trading. They don’t like to hear about an 82% jump in expenses to get revenue growth of half that much–even less so when Mark Zuckerberg, CEO and founder of the social network, says that spending won’t slow down much anytime soon.

But advertisers were a different story–in particular, big brand advertisers like Procter & Gamble and Under Armour that are looking to reach people via the mobile devices they carry with them all the time. Mobile ad revenues shot up 74% from a year ago, considerably faster than ads overall, which rose 55% after taking out currency impacts, and it’s now 76% of ad revenue.

In particular, Facebook is starting to become a must-buy for big brands that still spend the most on television, because it has the reach and the impact they want. Now, according to ad agency executives, they think Facebook is finally poised to capture more TV ad dollars that Chief Operating Officer Sheryl Sandberg has spent years pursuing.

“We see Facebook at a core pivot point,” says David Hewitt, VP and mobile lead at the digital agency SapientNitro. “It’s now a safe bet to put a lot of money into.”

In the last six to eight months, he says, brands have started to understand the reach Facebook has among smartphone users–some 844 million people each day. “It’s hard to get reach on mobile,” he says, but now “Facebook checks that box” in a way that few others online besides Google can. …

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Have Scammers Hijacked Your Phone For Mobile Ad Fraud?

From my Forbes blog:

For years, scammers have been hijacking people’s computers into so-called botnets, opening hidden browser windows and automatically clicking on ads. That’s fooling advertisers and their ad agencies into thinking real people saw their ads, costing them billions of dollars a year in wasted spending.

Now, the fraudsters have started moving to mobile phones. Using a technique that one ad fraud detection company calls mobile device hijacking, the scammers use mobile apps such as games that run as many as 20 ads a minute, then simulate random clicks. Forensiq, a New York firm that provides ad fraud detection and prevention, today is releasing one of the first studies to look at the relatively new technique.

Already, the company says, more than 12 million devices have been infected–about 1% of devices Forensiq observed in the U.S. and 2% to 3% in Europe and Asia. Forensiq figures that the hijacking affects some 13% of all in-app advertising impressions.

The cost to advertisers is adding up quickly, Forensiq founder and CEO David Sendroff said in an interview. He projects that in-app ad fraud, which the company estimated at $857 million last year, will pass $1 billion worldwide this year.

Users generally don’t see any of this happening on their phone, at least not directly. But the apps–some 5,000 identified by Forensiq–still can be a plague on their phones. Forensiq found that in as little as an hour, a malicious app can download two gigabytes of images and videos, draining battery life and potentially burning through data limits. …

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Unhappy With Google’s Mobilegeddon, Advertisers Spend More On Facebook

ADI_Global Display Ad CTR Growth

From my blog The New Persuaders:

When Google changed its formula for showing search results in April to favor websites it deems mobile-friendly, some businesses worried their sites would disappear from results. Mobilegeddon, as the algorithm change came to be called, was intended at least in part to spur publishers to quit sending people to sites that looked terrible or were downright unreadable on the smartphones where people spend more and more of their time online.

Perhaps that will happen eventually, but for now, according to a new report out today from Adobe, the change has indeed hurt brands that weren’t prepared. The Adobe Digital Index‘s second-quarter report on digital ads and social intelligence, which measures nearly a billion online ad impressions and 21 billion referred social visits from Facebook, Twitter, YouTube, and other social sites, shows that unprepared websites have lost 10% of their traffic compared with a year ago. And that decline is continuing to grow, says Adobe Digital Index principal analyst Tamara Gaffney.

Google has benefited, at least in the short term. Many marketers and ad agencies believe one clear goal was to boost mobile ad prices, which have continually lagged those of desktop computer ads. Indeed, prices measured as cost per click rose 16% from a year ago, according to Adobe.

But for marketers, the benefit is far less clear. Click-through rates on ads have fallen 9% from a year ago. “The bottom line is Google’s mobile business got better and marketers’ mobile business is getting worse,” says Gaffney. “They’re not getting the traffic they’re paying for.”

That situation obviously can’t last. …

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Why Most People Won’t Pay To Block Mobile Ads

From my blog The New Persuaders:

There’s no shortage of people who claim they’d pay extra to avoid having to view ads on their favorite site, or anywhere on the Internet. One even took the trouble to suggest how it might work in a recent opinion piece in the New York Times.

But as a new survey shows, it’s very unlikely the vast majority of people would be willing to shoulder the real cost of replacing the ad revenues that would be lost–revenues required to keep Facebook, Google, the New York Times, and most other commercial sites running. According to the survey by the Palo Alto-based mobile ad marketing firm AppLovin, two-thirds of respondents aren’t willing to pay any extra at all for the privilege of wiping ads from their iPhones and Androids.

The survey, conducted last month, used Google Consumer Surveys to ask 5,000 U.S. residents between 18 and 65 how much extra they’d be willing to pay on top of their phone bill to remove ads. Besides those who wouldn’t pay a dime, some 14.5% said they’d pay an extra $2 a month, but those who would pay $5, $10, $15, or $20 extra each fall into the single digit percentages.

Clearly there is some demand for paid ad blocking. Problem is, the amount even those few are willing to pay doesn’t come close to making up the revenue difference, at least by AppLovin’s reckoning. …

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