Online advertisers are always working hard to get people to click on their ads. But what if users don't ever see those ads? It hasn't reached that stage yet, but faced with a nearly four-fold increase in revenue lost from ad-blocking software in 2015, the Interactive Advertising Bureau (IAB) is considering whether to sue software companies that provide the services.
The burgeoning use of ad blockers creates a tricky situation for the IAB, which doesn't want to alienate either advertisers or readers. The latter have largely grown accustomed to paying little to no money for content over the past two decades. But now they're getting increasingly annoyed by the proliferation of ads that load when they access websites either on their PCs or mobile devices. As a result, many mobile users see their data plans, which are often capped, get chewed up with ads they don't want.
About 198 million people around the world use ad blockers, leading to a projected $21.8 billion in lost ad revenue this year, according to a recent joint study by Adobe (ADBE), which sells ad-blocking software, and PageFair, which provides technology to help publishers deal with ad blockers. An Adobe spokesperson declined comment for this story.
"We have actually been tracking this for quite some time," Scott Cunningham, an IAB senior vice president who also heads the association's Technology Lab, told CBS MoneyWatch. "This has ratcheted up over the past several months. "
The issue has huge ramifications for a variety of companies from new media giants such as Google (GOOG) and Yahoo (YHOO) to newspapers and magazines, which have struggled for years to reinvent themselves for the digital age.
Making matters worse, some signs indicate that the boom in digital ads is slowing. According to the Pew Research Center's State of the Media Report, $19 billion was spent on mobile ads in 2014, up 78 percent from the previous year. But that's a slowdown from the 170 percent increases of the prior two years.
Adding to the problem for publishers, Apple (AAPL) is expected to include an ad-blocking feature when it releases the latest version of its operating system for iPhones and iPads. According to Advertising Age, the IAB held a meeting in July to discuss the issue that was attended by a number of sales and technology execs. They discussed several ideas, including making more direct pleas to users to turn their ad blockers off.
"All options are on the table," the IAB's Cunningham said, adding that includes litigation. "There is no single silver bullet to combat ad blocking." The IAB doesn't have a timetable for making a decision about whether to pursue litigation.
Launching litigation won't be easy. For one thing, it isn't clear if any laws are being broken even though ad blocking obviously hurts the way content has been largely funded for years. There's also the potential to set a precedent.
"If they went down that route, what would be the potential outcome. Would it be a net benefit for the ad industry, or would it have a negative impact?" said Bryan Yeager, an analyst with eMarketer, in an interview with CBS MoneyWatch. "If you take this further, you have to look at would they go after Tivo (TIVO) or DVR manufacturers because they're coming out with ad-skipping?"