Ad-blocking comes from a measurement problem
The release of iOS 9, which enables ad-blocking apps on iPhones, has caused no end of controversy.
One the one hand, advertising is the sponsor of lots of things on the internet that are free and wouldn't be otherwise. On the other people find online ads sufficiently annoying that they want to block them - to an extend that far exceeds ad avoidance in any other medium.
And annoyingly, both sides are right, which suggests something is broken in the online advertising market.
In fact, it's very clear what this is. Online advertising still suffers from an enormous measurement problem that has led to the proliferation of bad ads.
A vast amount of online ads are still measured on a 'last-click' basis. They are deemed effective only if they are the last thing that drags someone over the threshold to your website, app or online store.
This is, obviously, a horribly flawed way of thinking about how advertising works. To take an offline analogy, this is like saying that if someone sees a big TV ad for a new brand of baked beans; then a great series of press ads; then sponsorship at their favourite sports game; then a PR story about how the beans are sustainably farmed; then goes to the supermarket where there are shelf wobblers pointing him to the brand... then the shelf wobblers should take all the credit if he buys a tin.
This is a problem that has been solved many times over - by marketing mix modelling, and more recently by more detailed digital attribution methods that can see entire customer journeys to purchase, and calculate how important each advertising exposure along that journey was to the final outcome. We've run dozens of mix modelling and attribution studies for clients, and in almost every case, we've found two things:
- Clicks barely matter. Seeing ads is what makes people more likely to purchase.
- All the advertising people see matters - not just what they see last.
This is not surprising. Yet we're still buying adverts based on a cost-per-click basis, and attributing sales based on clickthrough, because it's easier to keep doing that than to change how we measure and report. Since clicking is an unnatural behaviour, we flood the web with ads in order to get a few clicks, and we reward shrill, intrusive, noisy advertising that leads to clicking, a behaviour that (with the exception of paid search) has almost nothing to do with how advertising works.
No wonder people want to switch off the advertising hose. By measuring properly, understanding which exposures to advertising are effective are worth paying for, we might avoid crashing our own market.
# Alex Steer (19/09/2015)