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August 10, 2015

Advertisers face $41.4 billion loss as ad blockers hit

Growing use of ad blockers mean that advertisers face huge losses in revenue.

By James Nunns

Advertisers are facing a $21.8 billion loss in revenue this year due to ad blocking.

In the U.S. alone, ad blocking has cost an estimated $5.8bn in 2014 with this set to skyrocket as people turn to tools to get rid of unwanted advertising.

According to a joint report from PageFair and Adobe, the lost revenue is expected to hit $10.7bn in 2015 and $20.3bn in 2016, globally the cost is expected to reach $41.4bn in 2016.

This isn’t the first report to highlight a potentially dangerous trend for consumers to restrict data access to third parties such as advertisers.

A KPMG survey revealed that 97% of 18-24 year olds refuse to allow their details to be passed on, regardless of the benefits being offered in return.

The joint report from Adobe and PageFair doesn’t identify the social reasons behind why people are turning to ad blockers. However, it often comes as a result of a lack of trust from the consumer towards the advertiser and how they will use the data.

Yves Schwarzbart, Regulatory Affairs Manager, Internet Advertising Bureau, told CBR: "Everyone is fully aware of the fact that data is basically a commodity. Data has a value that you attach to it, but the data has no value whatsoever if there is no trust behind it."

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It could be argued then that advertisers are losing the battle to win consumers trust. Although Schwarzbart believes that once advertising data use is explained to consumers, they will see the benefit and not opt out of dating sharing.

This doesn’t appear to be the case for consumers, either they are not seeing the value of what advertisers are offering or they are distrustful of data sharing.

Whatever the reason, the growth of ad blocking use is quickly hurting advertisers. In the U.S. ad blocking grew by 48% between Q2 2014 and Q2 2015 to 45 million monthly active users. In Europe it grew by 35% during the same period, equating to 77 million monthly active users.

Sean Blanchfield, CEO, PageFair, said: "It is tragic that ad block users are inadvertently inflicting multi-billion dollar losses on the very websites they most enjoy. With ad blocking going mobile, there’s an eminent threat that the business model that has supported the open web for two decades is going to collapse."

Although ad blocking is typically concentrated on desktop browsers, the report shows that this is now spreading to mobile, particularly in Asia. This trend is likely to accelerate globally in September when the ability to block ads is introduced into iOS.

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