Ad blocking scare globally; India insulated but only for now

The country's savior seems to be its low Internet penetration and a relatively smaller share of digital advertising

Media planners, advertisers and publishing houses across the world are nervous ahead of the launch of the new version of Apple’s operating system that has content blocking features.

The version will provide easy-to-build tools for developers that could spawn a new industry of advertisement blocking applications. Apple released the beta version of the new software for preview by its users earlier this week.

India seems insulated from this scare, but only for now. What protects the country is its low Internet penetration and a relatively small share of digital advertising.

Ad blocking could have significant impact on wide-ranging businesses, including companies like Google and Facebook, and most publishing houses that depend heavily on advertising for revenue.

 

  “The digital wave globally precedes ours by a few decades. So the fatigue factor for online ads visible with users globally is not the case in India,” said Manas Mishra, formerly with Lintas Media Group who now runs his own agency Mediant Communications.  

India was a fairly young market for digital advertising, so it was unlikely that users were skipping ads the way their international counterparts were doing, he added.

According to a recent GroupM forecast, digital advertising is pegged at 9.5 per cent of total advertising. The digital ad market, GroupM said, would touch Rs 4,661 crore this year. Total advertising in the country was pegged at Rs 48,976 crore by the agency.

The industry estimates that in another seven years, digital advertising could grow to 20-25 per cent of total advertising, by which time it would have crossed the Rs 10,000-crore mark.

Globally, where digital ad spending is much larger, the problem is more acute. According to Reuters Institute Digital News Report, some 47 per cent of US internet users use ad blocking software. For the age group 18-24, that number is even higher at 55 per cent.

A recent report in Fortune cites a worrying statistic that two ad blockers, UC Browser and Maxthon browser, claim they have over 600 million users, mostly in India and China. However, it difficult to say how many of them are in India. The company was not available for comment for this article.

Mahesh Murthy, a digital entrepreneur and investor who runs a Mumbai-based digital agency Pinstorm, made little of the issue. He said while digital ad blocking was being discussed now, TV viewers had been doing it all along by either switching channels or doing something else as the ads rolled.

“The problem seems acute now because there is a mechanism to block digital ads. It is either available in your browser or, as in the case of the iOS 9 operating system, it could come with the software,” he said. Advertisers were aware of this and companies like his were making them aware of the options available, Murthy added.

With very few people willing to pay for content, and advertising revenues also shrinking, publishers fear they could be left with very few avenues for making money.  One way out was through native advertising, apart from making engaging storyboards, Murthy said.

Arvind Sharma, former chairman and CEO, India sub-continent, Leo Burnett, who now has his own e-commerce platform Indiasarihouse.com, said while ad blocking had been around for over a decade, it would gain steam with the launch of the new iPhone operating system.

“It will become a point of conversation. The probability of other handset makers considering this option is there, which could make the threat very real. So advertisers will have to heed these emerging trends,” Sharma pointed out.

Earned media, content that made users want to say they wanted more of it, was the biggest phenomenon on digital, he added. “Advertisers will have to look at this trend more closely,” Sharma said.