The Mobile Ad Block Debate: An AdBlockalypse for Retailers?

September 27, 2015

Phew — you made it through Mobilegeddon, but now you’re hearing all this stuff about ad blocking. Is AdBlockalypse upon us??

Ad-blocking technology has been thrust into the spotlight with the recent rollout of iOS 9, which opened up ad-blocking extensions on Apple’s native Safari browser on iPhones and iPads. While much has been written about ad blocking in the media/publishing space, in this post we’re focusing on the impact to online retailers and recommendations for adapting to the fast-evolving world of mobile-commerce.

The Highlights:

1.  iOS 9, released on September 16th, opened the door for ad-blocker extensions in Safari on iPhones and iPads. Consumers have to download the extension to get ad blocking.

2.  Early consumer adoption of ad blockers is strong, but still a small percentage of total iOS devices overall.

3.  Retailers should take this as a wake-up call to be prepared and respond to issues created by ad blockers.

Where Are We?

Thinking of this new development in stages, we’re in the very early days of stage one. While this means ad blocking is gaining traction among users, it’s not prevalent. Retailers should be concerned that Apple’s choice to allow ad blocking could signal a first step toward widespread ad blocking, perhaps eventually installed natively and automatically on all iOS devices.

Stage One — Ad blocking is mostly user-driven and sees some adoption on mobile.

Stage Two — Ad blocking is prevalent among mobile users.

Stage Three — Ad blocking is the new normal and enabled by default.

What Should Retailers Know?

First, online retailers can’t afford to ignore ad blocking. For many of our customers, the majority of traffic now comes from mobile devices, and we know commerce specifically skews heavily to Apple devices running iOS. If mobile devices aren’t yet driving a majority of your traffic, they probably will be soon. Further, because new versions of iOS tend to be adopted rapidly (50% adoption in less than a week), devices eligible to download ad blockers will be widespread soon. On top of all that, users are signaling a strong initial interest in ad blocking. Goldman Sachs recently reported that within just two days after the release of iOS 9, two of the top five apps — including the number one slot — were ad-blocker apps. So, be prepared: ad blockers are coming, and they’re most likely very popular among an important e-commerce consumer segment: iPhone users visiting your site.

baby in bathwater

The practice of ad blocking makes us think of this pictured scenario. Let’s not reject the essential (like relevant e-commerce results, analytics, reviews, etc.!) along with the inessential.

 

Second, be aware of the implications. Ad blocking works by detecting and stripping out the myriad scripts and cookies used to render ads. While that might sound nice to you as a consumer, as a retailer you know that the same technology is used for tracking shoppers and managing analytics. That same technology is also in use by the partners who help you manage your site (for instance, ChannelAdvisor uses first-party tracking pixels to help our digital marketing customers track and manage advertising channels like Google, Bing, etc.). So, ad blocking may inadvertently affect your site’s ability to render properly and even prevent shoppers from buying from you, as this recent Fortune article highlighted. It can also impact your ability to use outside vendors for analytics and reviews, among other things.

We tried out two popular ad blockers, Crystal and Purify, and here’s what we saw:

crystal vs. purify

Now, to bracket the issue with numbers, here’s some basic math to consider. Fill in your own numbers to the extent your experience is different:

mobile conversion ad block
While 1% may not sound like something to panic about, we expect mobile traffic, conversion rates and possibly ad-blocker adoption to all rise, compounding each other. A loss of revenue isn’t out of the realm of possibility, and for many retailers that’s the difference between a banner year and layoffs—so, we think it’s critical that retailers be prepared.

Third, retailers aren’t just being affected through the volume of traffic being driven to their sites. Several retailers are seeing the effects directly on their mobile sites. When viewing a big-box retailer’s website via an iPad with ad blocking turned on, you can get to the home page but ironically all of the category pages show up blank — with the exception of an ad across the top of the page incentivising visitors to install Walmart’s mobile app.

Another big-box retailer’s mobile site exhibited a different problem. While there were no issues navigating through the site, a blank page resulted when viewing your cart during the checkout process. This means retailers will need to take a hard look at the overall design of their mobile sites, determine which points in the sales funnel are creating issues and adjust accordingly.

So, What’s a Retailer to Do?

To avoid ad blockers affecting your holidays this year, and to prepare for expanded use of ad blockers going forward, we have some recommendations below.

1.  Evaluate how your mobile site operates under various ad blocker sites. Make sure your site renders properly and shoppers can check out. Test both iPhones and iPads because we’re seeing different behavior on those two classes of device.

2.  Conduct an inventory of your tracking tools. Do you really need them all or have they proliferated over time? Is there duplication? Consolidating here can help and also speed up your site. As you consolidate, be sure you’re tracking as completely as possible because some tracking services will be more thorough than others.

3.  Keep an eye on your impressions and click-through rate as ads may populate in searches, however shoppers may not be able to click through. Be sure you have data that breaks down performance by device so that you can isolate any changes in user behavior to specific devices, rather than combining into one overall view. For instance, a 15% drop in mobile impressions may not be noticeable if you don’t routinely break out impression by device.

4.  Consider offering at least a portion of your inventory for sale on marketplaces. More strategically, we’ve long said that mobile is driving share to aggregators and marketplaces like Amazon, eBay, Walmart, Jet and others. Ad blocking can only accelerate this trend because apps aren’t affected and consumers will likely shift buying from poor-performing (or blocked) web sites to convenient apps. While some retailers are reluctant to participate in marketplaces, the walls are closing in.The comScore chart below shows that the majority of traffic for major marketplaces is driven through apps.

comscore

Stay tuned as we’ll be keeping an eye on the adoption of ad blockers and how this trend impacts online merchants.

 

Blog post by David Spitz, ChannelAdvisor CEO