News

POV: Telcos jumping on the ad blocking bandwagon

Mindshare Point of View

Background
The ad blocking debate continues to gain momentum this week in the UK, with mobile carriers EE [Deutsche Telekom/Orange] & O2 [Telefonica] the latest to enter the ring with bold proposals around network level ad blocking. In a move already causing a stir in the industry, both companies are claimed to be in advanced stages of updating their servers which would allow them to block ads before they’re even downloaded to a user’s phone.

With a combined 52 million UK customers this is big news which could get bigger with the proposed acquisition of O2 from rival operator Three. Crucially -­ and unlike the iOS9 software update -­ the decision is likely to be taken away from the consumer which would give the networks complete control on which ads, if any, their customers see across the mobile web.

Details and Implications
Neither carrier has categorically outlined their plans but as you’d expect both are tactfully positioning this as a move to improve the mobile web experience for their customers. This all sounds very noble but there is no denying it could open up huge new revenue streams and monopolize their existing proprietary advertising offerings.

In September a Jamaican based carrier announced similar plans and became the first operator globally to adopt this approach. In an extreme move the carrier blocked all ads then charged advertising companies who wanted to be whitelisted. O2 has announced that its unlikely to adopt a similar approach stressing that transparency with its customers is paramount. EE is taking a similar stance recognizing that not all ads are bad, making this more about the level and intensity of ads its customers receive.

A move towards a better web experience can only be deemed as a positive move but it’s hard to define what constitutes a suitable level of ad intensity. It also begs the question, should the company defining this have such a vested interest in the category? O2 for example owns WEVE, an established mobile marketing company and you’d expect its definitions or potential whitelists to benefit its own stakeholders. On the flipside it’s interesting to speculate what a company like Google would do should its ad business be impacted. Could it retaliate by de-­listing EE or O2 from its search listings? We can only hope that a sensible and responsible approach will be taken.

It’s easy to forget that the internet is an ad-­funded business and any drastic move will shake up the way online publishers monetize their content. In-­app environments like Facebook and Snapchat are safe houses for the ad-­blocking apocalypse and they’ll be rubbing their hands together at the prospect of incremental content and advertising budgets within their ecosystems.


Summary/ POV
We’re yet to see how far these companies will push this but from what we’ve heard it seems unlikely they’ll adopt a ‘block everything’ approach that would jeopardize the free internet as we know it. Having said that, the current model is in danger of collapsing and as an industry we need to seek the help of experienced governing bodies to help establish some strict and consistent guidelines around advertising. The IAB is doing some fantastic work in this area and have recently launched its LEAN principles in the US and Europe which focus on championing lightweight, encrypted, ad-­choice supported, non-­invasive ads. Shine, the ad blocking company rumored to be powering the technology carriers may use, recently estimated that up to 50% of monthly data is currently being eaten by advertising. Its technology has the capability to only block the heaviest and most intrusive ads and if companies like EE and O2 were to enforce these regulated and consistent principles it would give the industry the wake up call it
so desperately needs.