1.
THE COST OF AD BLOCKING
David Stern, Director of Product
david.stern@slate.com
@davestern

2.
MONEY QUESTION:
WHAT VALUE WOULD THE
LOST IMPRESSIONS HAVE HAD?
REVENUE = IMPRESSIONS X CPM
(?)

3.
THE AVERAGE CPM???
So, 16% US ad blocking rate = 16% fewer impressions
= 16% less revenue?

4.
PROBLEM #1:
PROGRAMMATICVS. DIRECT
• Programmatic inventory monetizes at much lower
rates than direct-sold inventory.
• Publishers usually aren’t sold out, so most of the ad
impressions lost to ad blocking should be valued at
programmatic CPMs rather than the average CPM
of all impressions.

5.
SAMPLE PUBLISHER
0%
25%
50%
75%
100%
Q1 Q2 Q3 Q4
Direct (CPM = $10)
Programmatic (CPM = $2)
= $7
Average CPM of
impressions lost to
ad blockers
= $4
ad blocked impressions
ShareofImpressions
Average CPM

6.
PROBLEM #2:
SUPPLY & DEMAND
Ad
supply with ad
blocking
Dem
and
for AdvertisingAs the supply of ad
inventory increases,
the equilibrium price
(CPM) will decrease.
P1
Q1
PRICE
QUANTITY

7.
PROBLEM #2:
SUPPLY & DEMAND
Ad
supply with ad
blocking
Ad
supply without ad
blocking
Dem
and
for Advertising
P1
P2
Q1 Q2
PRICE
QUANTITY
As the supply of ad
inventory increases,
the equilibrium price
(CPM) will decrease.

8.
SO…WHAT ARETHE LOST
IMPRESSIONS WORTH?
Fraction of the
year sold out
X Direct CPM X
Fraction of the
year NOT sold out
X X
Programmatic
CPM
Ad Block
Rate
Ad Block
Rate
=
=
?
+
?
____________
???
X
= ???????
lost impressions )( elasticity of demandX???

9.
To determine:
• How big of a threat ad blocking is
• How to treat ad block users
• How much time to devote to the problem
• How much money to spend on an ad
blocking solution
WHY ARE WE ASKINGTHE QUESTION?
A ballpark
figure is
sufficient to
address these.

10.
A BALLPARK FORMULA
Average of direct
and programmatic
CPMs
Impressions
blocked 50%X X

11.
SLATE’S APPROACH: LOOK FORWARD
• Lost impressions amount to roughly 8% of total revenue.
• We might be able to recover half of that with an aggressive
Conde-style wall.
• We would irritate and lose tech savvy readers who may be
monetizable elsewhere in the future.
• We would irritate and lose tech savvy readers who won’t
share our content.

12.
SLATE’S APPROACH: LOOK FORWARD
• We’re asking ad block users to voluntarily become paid members.
• We’re eliminating intrusive advertising on desktop and improving
page speed, then we’ll ask users to disable their ad blockers.
• We’re investing in rapidly growing platforms where ad blocking
isn't possible: Native apps. Podcasting. Facebook Instant Articles.
Apple News.

13.
THANKYOU
David Stern, Director of Product
david.stern@slate.com
@davestern