Without working very hard, I can recall two instances in which the media and entertainment industry looked technological innovation in the eye, saw the Apocalypse, and later awoke to find that not only was there nothing to worry about, but that the bogeyman in fact was loaded with cash that made nearly everyone a lot richer.
Think about these examples as you digest the breathless fear now afflicting the media business: ad blocking.
In the 1930s, professional baseball owners were terrified of radio. Anxious to preserve ticket sales – the only engine their businesses had ever known – they first restricted broadcast access to some games.
Along the way, though, team owners realized that with radio – and, later, television – expanding the audience for their product, advertisers were eager to follow.
In 1946, Gillette began its 10-year, $14 million sponsorship of the World Series and All-Star radio broadcasts. The economics here were, with no pun intended, game changing. Consider the following analysis of the 1946 World Series, which pitted the Boston Red Sox against the St. Louis Cardinals.
Images of ticket stubs from that year show prices ranging from $1.20 for Fenway bleacher seats to $6.25 in St. Louis. Let’s assume a weighted average of $5, just to be conservative.
I estimate that total ticket sales were 250,071 (total attendance) x $5, or $1,250,355.
Assuming Gillette’s sponsorship was spread equally over all 10 years, or $1.4 million per year, this means that Gillette out-spent the combined Cardinals’ and Fenway faithful.
Perhaps more unexpectedly, ballpark attendance increased, too. According to Baseball Almanac, the average annual National and American League stadium attendance went up 53% and 95%, respectively, from 1930-1950.
The Motion Picture Association of America, or MPAA, worried that home video recording machines, like the VHS, would crush the movie business. Jack Valenti, the MPAA’s former head, testified before Congress in 1982, saying, “I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.”
The reality wasn’t nearly so grim. In fact, from 1982 to 2002, motion picture box office revenues increased by 165%, while total tickets sold increased by 34%.
This business, in other words, has a lousy track record when it comes to threat assessment. In fact, these threats always nudge the industry to innovate. That’s one reason why the latest doomsday scenario – digital ad blocking – just isn’t that big of a deal.
Two stakeholders will be impacted: content publishers and advertisers. Here’s why neither needs to worry.
Ad blocking only works on web browsers.
More digital consumption is migrating from PCs to mobile devices.
On those devices, users prefer apps by a wide margin.
Apps have not been subject to ad blocking. though one app now claims it can block ads on iOS. For a variety of reasons, I don’t see this being as big of a threat as ad blockers for browsers. For one thing, it won’t significantly speed loading times on apps, as it does for sites. Also, it offers to unblock them in return for the user earning rewards, which might make the app’s approval by Apple and Google hard to sustain. Apple has given the app a green light for now, but I wouldn’t be surprised to see that change.
Publishers who have already made the switch to quality native apps, therefore, won’t be impacted by lost revenue due to ad blockers.
Publishers who still rely heavily on PC web browsers for traffic have alternatives to giving away their content for free.
For example, their sites could detect that a user has ad blocking software and respond by serving an invitation to pay for the content directly.
As more content moves to apps, more ad blocking-immune, app-based ad inventory will open to advertisers, creating an alternative to the inventory they might lose on websites.
That’s why I do not expect any significant long term impact.
I could go on and on with all sorts of ways the industry could evolve its engagement and business models to adjust. There’s only one certainty this development brings: it further erodes the quality of the traditional digital display market. This vestige of the web’s early days is already beset by ad fraud and viewability rates below 50%. Ad blocking software is just the latest problem.
If you’re an advertiser, these conditions make mobile advertising on Facebook/Instagram, Twitter and Pinterest even more of a slam dunk. These represent the world’s biggest and best mobile-first platforms, and they suffer none of the problems plaguing the traditional display business. In addition, they offer better targeting and ad units perfectly tailored for the smartphone. Maybe ad blockers will convince more advertisers to finally take the plunge into mobile done, as these platforms do, the right way.
In another 10 years, I predict we’ll look back at ad blocking and ask ourselves the same questions that now are so easy to ask of major league baseball and the movie industry.
“What was all the fuss about?”