Over the past year, Google’s top executives have been increasingly vocal about the need for the advertising industry to deal with the rise of ad blockers.
As Digiday reported earlier this week, now Google is exploring the creation of an “acceptable ads policy” that appears to suggest it wants to create an industry-standard for online ad formats.
Several executives with knowledge of these discussions confirmed to Business Insider that Google has been looking at spearheading such a policy. Google has been meeting with several companies and industry trade bodies to discuss how it might be implemented in practice. Whatever form it takes will likely lean heavily on new research Google is due to publish in the coming weeks about the types of ads consumers find unacceptable.
Google has been hinting at this for a while. Google ads SVP Sridhar Ramaswamy said late last year: “There needs to be more of a sustainable ad standard that we voluntarily define, and things in that standard should not get blocked. I think this is essential to us all for survival.”
Now Google is nearing an actual announcement. Google declined to comment on this story, beyond pointing us to past quotes from its executives about ad blocking (including the one above.)
There are a few scenarios Google’s acceptable ads policy could take. But they all run into issues.
Google could create its own acceptable ads policy. That’s fine and would address its own search ads, the ads that appear on YouTube, and the DoubleClick ad exchange that swathes of publishers use to monetize their websites. But if Google goes at it alone and switches off all but the least-annoying, “acceptable” ads, it will allow its internet advertising rivals to gobble up the swathes of inventory it no longer sells – putting Google at a disadvantage. Google needs to take the industry with it.
Google could create an acceptable ads policy for the entire web. That’s unlikely to go down well with competitors or the publishers that use DoubleClick. And having the most dominant force in the internet advertising industry dictating what people can and can’t do on the web is likely to alert the attention of competition authorities, too.
Google could create the policy, but have a third-party association like the internet advertising trade body the IAB badge it. There are two big issues there: The IAB doesn’t represent all interested parties – publishers and consumers should have their say too. And there’s the issue of enforcement. The IAB can certainly create a policy but it lacks the teeth to punish any bad actors that don’t comply with it.
Google and ad blockers: The journey so far
If an “acceptable ads policy” sounds familiar, it’s because it’s the name of popular ad blocker Adblock Plus’ whitelist.
Adblock Plus is a free ad blocking tool but it makes its money by charging large advertising companies 30% of the additional ad revenue created by having their ads whitelisted (meaning Adblock Plus users who have not turned on the strictest settings in the tool will see some ads.)
Google is one of the companies that pays Adblock Plus to have its ads whitelisted.
“They are speaking out of both sides of their mouth with the current policy. From a business perspective, it makes sense, but you can’t be championing publishers’ rights and at the same time funding their fall.”
It has previously been reported that Google pays Adblock Plus-owner Eyeo $25 million annually to ensure its ads are unblocked. The executives we spoke to for this piece have also repeatedly heard this $25 million figure, although neither company has ever confirmed it (so there’s a chance everyone could all just be talking about that single, unverified report.)
Nevertheless, $25 million, is a drop in the ocean for a company that generated $74.5 billion in revenue last year and it’s a bargain considering Google has managed to claw back around $1 billion in recovered ad revenue in the US by appearing on the whitelist, according to estimates from anti-ad blocking firm PageFair.
But several executives we spoke to with some knowledge of Google’s ad blocking response plans said Google is frankly embarrassed by the deal and wants to distance itself from it.
One ad tech industry executive told Business Insider: “They are speaking out of both sides of their mouths with the current policy. From a business perspective, it makes sense, but you can’t be championing publishers’ rights and at the same time funding their fall.”
In 2014 Google decided it needed to set up a team devoted to looking at a response to the rise in ad blocker usage.
The “sustainable advertising” team, based in New York City, was born.
In 2015, as the noise around ad blocking grew even louder, Google appointed Scott Spencer, the director of product management for the DoubleClick Ad Exchange business, to lead the unit. Appointing such a senior executive, who had joined Google in 2008 when it acquired DoubleClick (where he was VP of product management for its ad serving solutions) was a reflection of how seriously the company was taking the matter.
In his new role, Spencer has been meeting with the industry, ad blocking technology companies, and participating at events in order to help Google address how to monetize an increasingly-blocked web.
Google is readying itself for an announcement
As Spencer told The Drum in December last year, Google has been conducting a big piece of research into the types of ads users find particularly annoying and intrusive. Unlike other studies looking into the motivations that drive consumers into downloading ad blockers, Google’s research has involved A/B testing different ad experiences with thousands of different users in a controlled environment.
Spencer told ClickZ in November last year that simply asking consumers what makes a good ad experience or not is too subjective, it requires actual testing. He added: “For example, instead of just saying ads should be ‘fast,’ maybe we should be saying they need to load in under 450 ms. Instead of saying ‘non-intrusive,’ maybe we need to specify no audio autoplay.”
That research is due to be published in a matter of weeks, according to sources familiar with the matter. It will help form the backbone of what an acceptable ads policy – whichever entity ends up taking ownership of it – will look like.
Sources familiar with the matter said Google is keen for the new acceptable advertising policy to be presented as an industry-level effort. Therein lies the issue: there are many industries and representatives in the value chain who will all want a voice. Who supplies the technology – why Google? Why not another internet advertising company, or even an ad blocking company? Who has ultimate control over the policy itself?
- Adblock Plus
To that end, Adblock Plus is also trying to figure out how it can create a third-party “committee” – made up of publishers, advertising companies, trade bodies, and consumer advocates – to oversee its own acceptable ads policy. However, many publishers and advertising executives are critical of the company’s business model and feel Adblock Plus has simply set up a toll booth on the web to derive them of their hard-earned revenue. So it’s taking a little while to get off the ground.
Quite how Google’s soon-to-be-proposed acceptable ads policy will technically work is still unclear, according to the sources we spoke to.
One executive, with knowledge of the early discussions about the policy, said Google was exploring providing some sort of incentive – like a quality score visible to users – for the advertisers and publishers that comply with the acceptable ads program.
They also said Google’s involvement could also simply be providing the “tech backbone and intellectual rigor” – possibly in partnership with other technology companies in the field of ad blocking – to help implement a kind of white label acceptable ads algorithm the entire industry could use. However, the discussions have likely moved on since our source was privy to them.
Google has used incentives to move the industry forward several times before, particularly when it comes to mobile. Last year, for example, it began downgrading websites that were not mobile-optimized in its search results. The company also released a number of free tools to encourage site owners to make their sites fit for mobile as that’s now where the majority of browsing takes place.
The executive told Business Insider the acceptable ads policy might take on a similar philosophy: “That wasn’t about malicious intent, that was about the need to move the web forward and the need to help people move to where the users are.”
- PageFair and Adobe
While Google decides on its plans, in the background, as The Drum reported earlier this week, PageFair has been facilitating talks with a number of the advertising industry’s largest stakeholders about developing a manifesto about how best to serve ads to consumers who use ad blockers. Those present have included publisher and advertising trade bodies like Digital Content Next and the World Federation of Advertisers, plus other parties such as Mozilla and the Electronic Frontier Foundation, as well as media agencies, The Drum reported.
Cross-industry standards are important, but they’ll require an incentive to sign up for anything to change. Those participating need to see that bad actors are being punished in some way by serving terrible ads, rather than taking advantage of the good guys who have agreed to show fewer, less-annoying ads who might take a revenue hit in the short-term (although most of the industry is in agreement that fewer, less-annoying ads are better for everyone in the long-run.)
For companies that have built their businesses by selling ads online, this all needs to be sorted out quickly. Ad blocking isn’t going away. A study released Wednesday by Juniper Research predicted ad blocking will cost publishers $27 billion in lost revenues by 2020.
All the actions Google’s sustainable ads team have taken in the past few months show the company wants to see less talking and more doing.
But it’d just rather not put its name to it.