Have you ever wondered about the efficacy of digital advertising? Is digital advertising a luxury channel afforded by large enterprise brands only? Or Is it an absolute necessity for all businesses small and large?
One researcher, out of the Goizueta Business School at Emory University, Dr. Vilma Todri, seeks to answer these questions using an interesting user demographic: ad blockers.
Previously, Dr. Todri worked for Google where she was developing integrated cross-platform advertising strategies for enterprise clients. In her working paper “The Impact of Ad-blockers on Online Consumer Behavior”, Dr. Todri explores how user behavior differs given the absence of display ads.
With over 615 million internet users employing ad-blockers, it's critical to understand the effects of these tools on consumer behavior. There is no question about the impact ad blockers have on digital publishers’ bottom lines. While the boom in users circumventing advertising impacts publishers on the supply side– the impacts also have shocking consequences for digital advertisers on the demand side.
Adblocking is not just a "publisher problem". It materially impacts the entire ecosystem.
Adblocking is not just a “publisher problem”. It materially impacts the entire ecosystem and can result in a measurable loss of revenue and brand awareness by advertisers.
Ad-blocking users provide an excellent research group to understand consumer behavior when digital advertising is absent. Since ad-blocking users will not see display ads, researchers can study this segment to understand how ad-blocking users behave differently than those users viewing ads. In addition to this simple difference– Dr. Todri also looked at the impact on users who recently installed an ad blocker.
Adblock Impact Research Key Findings
1) Ad-Blockers Reduce Online Consumer Spending
Dr. Todri discovered that among those users who recently installed an ad blocker, there was a significant decrease in online consumer spending. On average, those with an ad blocker spent about 1.45% less online.
Given the widespread popularity of ad-blockers, this percentage translates to a staggering $14.2 billion loss in online consumer spending annually. This finding challenges the assumption that digital advertising has little to no impact on consumer behavior.
Dr. Todri offers a strong rebuttal to the belief that consumers blocking ads would otherwise not be influenced by ads:
“if consumer purchasing falls after installing ad-blockers, it would suggest that advertising does work – seeing advertisements does drive searching and purchasing behaviors.”
2) Ad-Blockers Affect Brands Differently
Her work further suggests that users with ad blockers are more likely to spend on large brands they are familiar with, which contributes to market consolidation. In other words, these consumers blocking ads tend to rely more on their past experiences with familiar brands when making purchase decisions. Thus, not only are ads effective in driving search behavior– they likely also play a substantial role in helping emerging brands acquire new customers.
Adblockers hurt those brands that advertise online the most.
Given this astonishing finding, Dr. Todri also concludes that this would penalize brands that invest the most in online advertising more than those that don’t. In other words, ad-blockers are hurting those who advertise online the most.
3) Ad-Blockers Reduce Search Activity
Display ads’ impact on consumer behavior is far-reaching. Dr. Todri's research also shows that ad-blockers significantly reduce users’ propensity to engage in search activities across various channels.
Among ad blockers, there were substantially fewer search engine sessions and fewer visits to shopping websites– they spent almost 5.5% less time visiting e-commerce websites. In other words, consumers who opt out of seeing ads end up browsing and shopping significantly less than others.
This finding challenges the assumption that advertising and search are substitutes, highlighting that they often complement each other in providing information to consumers.
To cope with the adverse effects of ad-blockers, marketers may need to enhance organic channels, invest in search engine optimization, create high-quality content, and regularly update their websites to engage consumers.
“Mere exposure to display advertising can significantly increase users’ propensity to search for the brand and the corresponding product.”
Conclusion and Implications
Todri's research provides valuable insights into the impact of ad-blockers on online consumer behavior and brands. When asked about how publishers should interpret her findings, Dr. Todri further adds:
"The influence of ad-blockers reaches beyond just impacting publishers' revenue. They significantly alter consumer behaviors, including purchasing and search patterns, as well as interactions with brands.
Particularly, consumers using ad-blockers tend to prefer familiar-to-them brands, disadvantaging emerging brands and potentially hurting overall consumer welfare.
This underscores the critical need for balanced digital advertising strategies that consider the adverse effects of negative online experiences, which can lead to the use of ad-blockers and harm all stakeholders in the advertising ecosystem."
Ad-blockers are not limited to affecting publishers alone; they can also negatively impact advertisers. As ad-blockers grow in popularity, brands and marketers should adapt their strategies to mitigate adblock losses, and explore additional win-win value exchanges in the publisher-visitor relationship.
This research highlights the need for industry-wide initiatives to address the rise of ad-blockers and develop balanced advertising practices on the web. Furthermore, future research may explore additional implications of ad-blockers and evaluate strategies to combat their growth in the digital advertising ecosystem.
Admiral Helps Publishers Measure and Mitigate the Impact of Adblockers
Admiral's platform grows the number of visitors who turn off their adblocker, or, support the site in other ways. Donations, subscriptions, registration, newsletter signups, social follows, and more, are all out-of-the-box simple with Admiral's Visitor Relationship Management (VRM) platform.
Additional resources:
- Pre-recorded walkthrough of the Admiral platform with third-party commentary
- Adblock Revenue Recovery Guide and FAQ
- Adblock recovery case study
To find out more, schedule a demo today.
