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Mobile ad-blocking pits advertisers against consumers with operators in the middle

While mobile ad-blocking may be customer-friendly option for mobile phone providers, embracing it could lead to fallout from advertisers and publishers that make the potential benefits unclear.

A new report from Strategy Analytics looked at the potential consequences of mobile ad-blocking  enabled by operators. While Strategy Analytics concluded that enabling it may be more risky than not, the truth of the matter is still to be decided by operators and marketers together.

"Even without the participation of mobile operators, the use of mobile ad-blockers has already become popular, said Wei Shi, an analyst of wireless media strategies at Strategy Analytics. ?According to a recent study by Strategy Analytics, more than one-third of mobile users under the age of 24 years in France have installed ad-blockers on their mobile handsets. 

?This is worrying to brands and publishers,? he said.

Mobile battleground
The fight between ad-blocking creators and advertisers is a well-known one and has been raging for a few years now.

The conflict is obvious even from a cursory glance at the situation. Most free content is ad-supported, meaning that consumers can get it without paying with the expectation that they will view the ads that come along with it.

Likewise, advertisers expect that the money they are fronting to have their ads hosted on a site or app will be put to good use and the ads will actually be seen.

But many defenders of ad-blockers point to the intrusive nature of advertisements as an indication that advertisers should do better so that customers are not forced to block ads in the first place.

Adblock Plus is one of the most popular ad blockers

In the middle of all this are the operators ? the companies that provide the phones themselves. 

When Apple released its iOS9, complete with ad-blocking enabled, many thought the era of free content was coming to an end.

That has not quite happened, but it still presents a problem for advertisers and publishers.

A new report from Strategy Analytics concluded that the potential backlash from advertisers if operators allow ad-blocking will be more costly than the potential benefits from consumers of allowing it.

"Mobile operators may argue network level ad-blocking services both protect customers from annoying ads, and enables operators to participate in the mobile advertising value-chain,? said Nitesh Patel, director of wireless media strategies at Strategy Analytics. ?By enabling network level ad-blocking, however, mobile operators are not only alienating the publishing and advertising industries, but also challenging regulators, especially in markets with strict net-neutrality rules.

Block or not?
The threat that ad-blocking poses to advertisers is not exaggerated. The loss of advertising revenue could strike a serious blow to publishers and content-providers who will lose a serious revenue stream.

This is important for publishers especially, whose entire lifeblood counts on them being able to capture the attention of consumers. A Mondelez exec recently spoke about this very issue, calling attention ?the new currency? (see story).

But Strategy Analytics? point is not so clear-cut. While alienating advertisers is certainly a risk, alienating customers could be even riskier.

What might be most appropriate would be for advertisers to take into account why people use ad-blockers, and not just the fact that they do.

An example of Pandora's ad experience

A better user experience can encourage consumers to see ads as something that they actively want to engage with, and not just something standing between them and their content, according to a Pandora executive (see story).

But Strategy Analytics has another possible solution.

"Instead, operators should investigate alternative opportunities to add value to the mobile advertising ecosystem. For example, they can consider becoming data management platforms (DMPs), like Sprint's Pinsight Media, or Verizon's Precision Insights, or playing a role in ad-assurance to help advertisers overcome ad-fraud," Mr. Patel said.