United States: The Rise Of Ad Blocking

Ad blocking, long a concern of agencies, marketers and publishers, has emerged this year as the hot topic in the digital advertising industry. In fact, ad blocking stole the spotlight at this year's Advertising Week: it was addressed by nearly every panel.

Background

Ad blocking is nothing new, as software allowing users to block or obscure online advertisements has been around for years. But in the past, this software existed primarily as extensions on desktop browsers, and went largely unaddressed by publishers.

Recent developments, however, have significantly broadened the potential for ad blocking technology to become a game-changer. This is partly because the use of ad blockers is on the rise, especially among millennials; usage (by some measures) has grown by over 40 percent in the last year. As the sheer amount and intrusiveness of ads increases, especially on mobile platforms, users are becoming increasingly averse to slow sites and the risk of malware.

What is perhaps even more critical is that the fight has now moved beyond the desktop. Apple's most recent release of their iOS operating system included a default ad blocker within the Safari mobile web browser. Apple also announced that, for the first time, developers will be allowed to create third party ad blockers for the Apple App Store. There are even rumors and claims that new technologies may permit in-app ad blocking and expand the effect of ad blocking to the native and social arena.

But publishers, finally realizing the extent to which ad blocking software is affecting advertising revenue, are starting to push back with new approaches to fight ad blockers and engage users. For example, thanks to software that can detect when users are utilizing ad blockers, publishers can now directly engage users utilizing them, withhold content from them, or even bypass the blockers entirely. Recently, the Washington Post began testing a feature that prevents readers running ad blockers from viewing content unless they sign up for an e-mail newsletter or subscribe to content. Other publishers have experimented with technologies that effectively block the ad blockers themselves.

Significantly, for the first time, publishers and industry groups are considering legal action. Recently, the IAB indicated that it is actively looking into the possibility of litigation against ad blockers. As the battle between publishers and ad blockers heats up, litigation will almost certainly result. The question is whether the publishers have a case.

What follows is a brief discussion of some legal theories that publishers can bring to bear and some practical solutions that will surely play a role in the meantime.

Copyright-based Claims

Copyright litigation has been the most common legal means used to fight ad blockers so far. The primary argument is that ad blockers infringe publishers' copyrights by impermissibly changing publishers' pages. Changing how a website's page appears to users, publishers argue, constitutes the making of a derivative work of the page without permission, which is a form of infringement.

The essence of this argument has already been raised – and struck down – in some U.S. courts. However, fighting ad blocking on a copyright basis is not dead in the water. A derivative-work argument may work in a case where an ad blocker did more than just mask or obscure certain parts of a publisher's site. To the extent a publisher can argue that an ad blocker is "changing" a publisher's protected content (or more directly copying that content), they may have a case.

Terms of Use-Based claims

The way battle lines are emerging, the focus of litigation in the near future may be publishers' terms of use. Publishers have already begun to add language to their terms of use stating that users are prohibited from masking or obscuring the ads that appear on their sites. For example, the Chicago Sun-Times' terms of use states that "you agree that you will not... cover or obscure any banner or other advertisement" on their website. Similarly, Hulu's terms of use state that "you will not use [Hulu] in a way that... removes, modifies, disables, blocks obscures or otherwise impairs any advertising."

These terms may be clear, but what is less clear is how enforceable the terms are and what violating them will lead to. Litigation will almost certainly result, but it could be in the form of publishers suing users for a breach of their terms, users suing publishers seeking to invalidate the terms, or publishers suing ad blockers for tortious interference with agreements between them and their users (or, depending upon how the ad blocker works, suing the ad blocker as a "user" of the site).

Practical Solutions

It will take some time for the legal standards that regulate ad blocking to further evolve. In the meantime, below are some steps that agencies, marketers and publishers can take.

  1. Publishers should consider revising their terms of use to prohibit users (or other third parties) from masking or obscuring the ads that appear on their sites.
  2. Publishers can consider following the lead set by the Washington Post, which detects the use of ad blockers and prevents users from viewing content without some form of payment or consideration.
  3. Although the legal implications would need to be carefully considered in each case, publishers can also consider technologies that more aggressively prevent ad blockers from working, showing ads despite the efforts of ad blocking software.
  4. Agencies, marketers and publishers can work together to change the nature of the inventory that is bought and sold:

    • Consider moving a higher percentage of buys within ad environments that are less likely to be blocked (at least at present), including mobile apps that provide "in-feed" ad units.
    • Consider moving a higher percentage of buys to ad units that are less likely to be blocked, such as native ads.
    • Sponsor, create and/or distribute original/branded content (and ensure this is done in a way that is not likely to be blocked).
    • To help address the issues that are making ad blockers increasingly popular, improve the quality and relevance of ads on a page, while limiting the number of ads.
  5. Advertisers may be able to find ways to target around likely users of ad blocking technology by avoiding the most common demographics, environments and sites associated with these users.
  6. In all cases, if you are an advertiser or marketer, it is critical that you take steps to ensure you are not being charged for ads that have been blocked. Technology – like a sophisticated ad server - can help ensure you are not paying for ads that never appeared.

Bottom Line

As ad blocking technologies continue to evolve at ever-increasing speed, purely legal solutions will have trouble keeping pace. While legal solutions will surely play a role, in the short-term, agencies, marketers and publishers should consider implementing practical solutions to ensure ad content is not blocked.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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