SlideShare a Scribd company logo
of Adblock
Foreword
2
Sean Blanchfield
CEO & Co-Founder, PageFair
February 2017
PAGEFAIR | The Hidden Cost of Adblock: Adblock's hidden impact on website traffic
This whitepaper presents the primary findings of new research by Professor Benjamin Shiller (Brandeis University),
Professor Joel Waldfogel (University of Minnesota and the National Bureau of Economic Research), and Dr. Johnny Ryan
(PageFair).
Research of 2,574 websites over three years reveals that adblock has a hidden cost: it not only reduces small and
medium publishers’ revenue, it also reduces their traffic.
Studying the changing rate of desktop adblock usage and traffic rank from April 2013 – June 2016 reveals that adblock
usage is undermining many websites’ ability to invest in content. Affected websites then attract fewer visitors, and so
their traffic declines. The full paper is available from NBER, the U.S. National Bureau of Economic Research.
This is the adblock paradox: users may avoid ads in the short term, but ultimately undermine the value they can derive
from the web. To reverse this phenomenon, publishers must listen to users’ legitimate grievances about online ads and
respond by fixing the problems. Once they have remedied the users’ grievances, publishers can choose to serve their
ads using technology that adblock companies cannot tamper with.
Jun 2016Jul 2013 Feb 2014 Apr 2015Sept 2014 Nov 2014
Adblock usage on a website hurts traffic too.
Key finding
➔ Every 1% increase in the number of visitors that use adblock
software produces a 0.67% decrease in traffic for
small/medium sites.
Analysis
Small and medium websites suffer a hidden cost from adblock that
compounds its direct impact on their revenue. These publishers
must respond to adblock not only to protect their revenue, but to
continue to attract their audience.
Adblocked traffic
PAGEFAIR | The Hidden Cost of Adblock: Adblock's hidden impact on website traffic
A small or medium website that experienced
adblock growth from 0% in July 2013 to 25% in
June 2016 would suffer a 16% decline in traffic,
despite an initial 5% traffic boost.
84%
100%
103%
95%
89%
105%
EXAMPLE: SMALL/MEDIUM WEBSITE TRAFFIC
DECLINE UNDER SUSTAINED ADBLOCK GROWTH
(0% to 25% adblock rate, 36 months)
3
PAGEFAIR | The Hidden Cost of Adblock: Adblock's hidden impact on website traffic
Short term benefit
(users see no ads)
Long term crisis
(content investment is unsustainable)
TRAFFIC DECLINES
Month 14 - 21
TRAFFIC INCREASES TRAFFIC STALLS
Month 1 Month 35
Key findings
➔ Significant adblock usage by a website's audience usually causes a temporary boost to its page traffic. This short term effect occurs
because adblock users can enjoy the site without advertising.
➔ However, traffic then declines significantly after approximately 1.5 years. This long term effect occurs because sites can no longer
sustain their investment in content.
➔ Average site traffic declined by 8% over 35 months due to adblock.
Insight
The reduction to site traffic occurs because adblock reduces a website’s revenue, which in turn reduces the website’s ability to invest in
content to attract visitors. Over the space of three years this was shown to significantly reduce website traffic. This is the “adblock paradox,” a
paradoxical situation in which an adblock user benefits in the short term by avoiding advertising, but reduces the quality and variety of
content available to them over the longer term.
The adblock paradox
4
5
Key findings
➔ Over three years the majority of websites sites with high
adblock rates saw their traffic levels significantly decrease
relative to other websites.
➔ However, this was not observed among the 20% most
popular websites.
Analysis
Large websites generate the majority of their revenue by selling a
small part of their impressions directly to advertisers at a high
price. Smaller websites do not have this premium direct revenue,
and rely entirely on ad networks to sell all of their impressions.
This means larger sites have a buffer against the full impact of
adblock for as long as the number of their visitors who do not
block ads is large enough to view their directly sold ad
impressions.
Impact on small and
medium websites
IMPACT ON SITES BY ALEXA RANK
(2,574 websites)
NO OBSERVABLE
IMPACT
LOST TRAFFIC AS
ADBLOCK RATE
INCREASED
PAGEFAIR | The Hidden Cost of Adblock: Adblock's hidden impact on website traffic
WEBSITES IN
TOP 20% OF
ALEXA
RANKINGS
WEBSITES IN
BOTTOM 80%
OF ALEXA
RANKINGS
PAGEFAIR | The Hidden Cost of Adblock: Adblock's hidden impact on website traffic 6
Methodology & references
1. Data were collected for the study
a. The 2,574 web sites in the sample are a range of
websites that signed up to use PageFair Analytics. The
websites in the PageFair sample are skewed toward
more popular websites than the average, and covered
a mix of categories.
b. Traffic ranks for each site were taken from Alexa.
2. The impact of adblock on website traffic was determined in
three ways:
a. First, a regression of websites’ Alexa ranks from April
2013 – June 2016 on the same websites’ adblock block
rate.
b. Second, a longitudinal study of Alexa rank before 2013
(when adblock usage started to grow) to discount the
possibility that Alexa rank of websites with more
adblocking were worsening anyway, irrespective of
adblock.
c. Third, an instrumental variable strategy to discount the
possibility that some other factor is causing the
worsening of websites’ Alexa ranking.
See the full research paper by Professor Benjamin Shiller (Brandeis
University), Professor Joel Waldfogel (University of Minnesota and the
National Bureau of Economic Research), and Dr Johnny Ryan (PageFair)
for a lengthy discussion of methodology.
The full paper “Will Ad Blocking Break the Internet” (NBER Working
Paper No. 23058) is available at the U.S. National Bureau of Economic
Research.

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White paper on the hidden cost of adblock

  • 2. Foreword 2 Sean Blanchfield CEO & Co-Founder, PageFair February 2017 PAGEFAIR | The Hidden Cost of Adblock: Adblock's hidden impact on website traffic This whitepaper presents the primary findings of new research by Professor Benjamin Shiller (Brandeis University), Professor Joel Waldfogel (University of Minnesota and the National Bureau of Economic Research), and Dr. Johnny Ryan (PageFair). Research of 2,574 websites over three years reveals that adblock has a hidden cost: it not only reduces small and medium publishers’ revenue, it also reduces their traffic. Studying the changing rate of desktop adblock usage and traffic rank from April 2013 – June 2016 reveals that adblock usage is undermining many websites’ ability to invest in content. Affected websites then attract fewer visitors, and so their traffic declines. The full paper is available from NBER, the U.S. National Bureau of Economic Research. This is the adblock paradox: users may avoid ads in the short term, but ultimately undermine the value they can derive from the web. To reverse this phenomenon, publishers must listen to users’ legitimate grievances about online ads and respond by fixing the problems. Once they have remedied the users’ grievances, publishers can choose to serve their ads using technology that adblock companies cannot tamper with.
  • 3. Jun 2016Jul 2013 Feb 2014 Apr 2015Sept 2014 Nov 2014 Adblock usage on a website hurts traffic too. Key finding ➔ Every 1% increase in the number of visitors that use adblock software produces a 0.67% decrease in traffic for small/medium sites. Analysis Small and medium websites suffer a hidden cost from adblock that compounds its direct impact on their revenue. These publishers must respond to adblock not only to protect their revenue, but to continue to attract their audience. Adblocked traffic PAGEFAIR | The Hidden Cost of Adblock: Adblock's hidden impact on website traffic A small or medium website that experienced adblock growth from 0% in July 2013 to 25% in June 2016 would suffer a 16% decline in traffic, despite an initial 5% traffic boost. 84% 100% 103% 95% 89% 105% EXAMPLE: SMALL/MEDIUM WEBSITE TRAFFIC DECLINE UNDER SUSTAINED ADBLOCK GROWTH (0% to 25% adblock rate, 36 months) 3
  • 4. PAGEFAIR | The Hidden Cost of Adblock: Adblock's hidden impact on website traffic Short term benefit (users see no ads) Long term crisis (content investment is unsustainable) TRAFFIC DECLINES Month 14 - 21 TRAFFIC INCREASES TRAFFIC STALLS Month 1 Month 35 Key findings ➔ Significant adblock usage by a website's audience usually causes a temporary boost to its page traffic. This short term effect occurs because adblock users can enjoy the site without advertising. ➔ However, traffic then declines significantly after approximately 1.5 years. This long term effect occurs because sites can no longer sustain their investment in content. ➔ Average site traffic declined by 8% over 35 months due to adblock. Insight The reduction to site traffic occurs because adblock reduces a website’s revenue, which in turn reduces the website’s ability to invest in content to attract visitors. Over the space of three years this was shown to significantly reduce website traffic. This is the “adblock paradox,” a paradoxical situation in which an adblock user benefits in the short term by avoiding advertising, but reduces the quality and variety of content available to them over the longer term. The adblock paradox 4
  • 5. 5 Key findings ➔ Over three years the majority of websites sites with high adblock rates saw their traffic levels significantly decrease relative to other websites. ➔ However, this was not observed among the 20% most popular websites. Analysis Large websites generate the majority of their revenue by selling a small part of their impressions directly to advertisers at a high price. Smaller websites do not have this premium direct revenue, and rely entirely on ad networks to sell all of their impressions. This means larger sites have a buffer against the full impact of adblock for as long as the number of their visitors who do not block ads is large enough to view their directly sold ad impressions. Impact on small and medium websites IMPACT ON SITES BY ALEXA RANK (2,574 websites) NO OBSERVABLE IMPACT LOST TRAFFIC AS ADBLOCK RATE INCREASED PAGEFAIR | The Hidden Cost of Adblock: Adblock's hidden impact on website traffic WEBSITES IN TOP 20% OF ALEXA RANKINGS WEBSITES IN BOTTOM 80% OF ALEXA RANKINGS
  • 6. PAGEFAIR | The Hidden Cost of Adblock: Adblock's hidden impact on website traffic 6 Methodology & references 1. Data were collected for the study a. The 2,574 web sites in the sample are a range of websites that signed up to use PageFair Analytics. The websites in the PageFair sample are skewed toward more popular websites than the average, and covered a mix of categories. b. Traffic ranks for each site were taken from Alexa. 2. The impact of adblock on website traffic was determined in three ways: a. First, a regression of websites’ Alexa ranks from April 2013 – June 2016 on the same websites’ adblock block rate. b. Second, a longitudinal study of Alexa rank before 2013 (when adblock usage started to grow) to discount the possibility that Alexa rank of websites with more adblocking were worsening anyway, irrespective of adblock. c. Third, an instrumental variable strategy to discount the possibility that some other factor is causing the worsening of websites’ Alexa ranking. See the full research paper by Professor Benjamin Shiller (Brandeis University), Professor Joel Waldfogel (University of Minnesota and the National Bureau of Economic Research), and Dr Johnny Ryan (PageFair) for a lengthy discussion of methodology. The full paper “Will Ad Blocking Break the Internet” (NBER Working Paper No. 23058) is available at the U.S. National Bureau of Economic Research.