The gaming website Destructoid published a piece last week where their founder, Niero Gonzalez, bemoaned the loss of revenue due to ad-blockers. His basic argument was that the future of his site and sites like his are in danger because so many users are blocking all ads by default that they can no longer receive enough revenue to keep in business.
Micropayments have never really taken off and subscriptions only seem to work if you have a major news website like the New York Times or Wall Street Journal. For the smaller players, it seems that ads are the only realistic source of revenue. And if too many users start to use ad-block, then you're surely going to be driven out of business.
Niero bases most of his argument on data collected by a third-party tool called BlockMetrics and it showed that 42-46% of his viewers are blocking ads. BlockMetrics also allows you to enter your current CPM (which is a measure of the revenue you get per 1000 ads shown) and then it calculates how much money you have lost on non-ad-viewing readers. For example, if you show 100,000 ads daily at $1.20 CPM, you're making $120 per day. And if 45% of your readers have ad-block enabled, then BlockMetrics would calculate that you could be showing 181,800 ads daily and therefore you're effectively losing $98.18 in revenue every day.
Lets imagine for a moment that there was a magic switch and Niero could force all of his users to see ads. On day 1, he would get nearly a doubling of ad revenue, but things would surely change from there.
Websites sell ads on the basis of the number of views. Advertisers buy ads on the basis that they will cause people to buy their product. There is a disconnect between what the website is selling and what the advertiser is buying and this is resolved through the CPM. Websites that can drive clicks (and ultimately purchases) to a product can charge a higher CPM; ones that can't watch their CPM fall. If Niero was able to force the 45% of his audience who doesn't want to see ads to see them, would these people really click on ads at the same rate that the non-ad-blockers do? They would click some, but it only stands to reason that the rate would be somewhat less, which would drive down his CPM. Showing ads to people who don't want to see them is not going to lead to more sales for the advertiser.
The other consideration is that the people who are blocking ads are doing so because ads were so repulsive to them that they were willing to spend time and effort to find, download, install, and setup an ad-blocker. Admittedly, if you know what you're doing, this doesn't take even five minutes, but still these people were bothered enough to do it. If they are forced to view ads on one website, but not on another, which site are they going to view? Gaming websites, like Destructoid, are numerous and if you don't like one, it's not hard to find another. If Niero forced his audience to view ads, then his audience would surely shrink. And since most traffic to websites is driven by people sharing on Facebook, tweeting on Twitter, posting to links on blogs, et cetera, the loss of the ad-blocking audience would surely result in some drop-off in the non-ad-blocking audience as well.
Unfortunately, BlockMetrics data only shows you part of the picture and it makes it seem like you're leaving money on the table. No one likes to think that half of their income is being stolen. But the truth is that an ad-block rate of 0% would be mostly canceled out with a decrease in CPM and a decrease in readership. Without ad-blockers, Destructoid's revenue might go up, but it would be a modest increase at best.
My advice? Don't go chasing every nickle. You'll make yourself mad trying to do so. It's like Google's Amit Singhal said last week about SEO: "If you build high-quality content that adds value, and your readers and your users seek you out, then you don't need to worry about anything else." Niero should focus on making his content the best it can be and the advertising revenue is sure to follow.
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