Report: Mobile Operators to Block Online Ads

May 18, 2015 9:52 AM PST

LOS ANGELES — A new ad-blocking initiative is underway by a cadre of international mobile carriers, which could dramatically reshape tomorrow’s advertising landscape.

According to a report in the Financial Times by digital media correspondent Robert Cookson, at least one European wireless carrier has already installed ad-blocking software in its data centers, which it plans to activate sometime this year. This software reportedly blocks most ad types from being displayed on web pages or in apps — with the exception of “in-feed” creatives — such as those that are used by Facebook and Twitter.

Cookson explains that the new ad-blocking technology was invented by Israeli development firm Shine, with the backing of Asia’s richest person, Li Ka-shing, who has a reported net worth approach $34Bn — and who also controls one of the world’s largest telecoms.

With 2015’s mobile marketing space expected to be worth nearly $69Bn this year — a three-fold jump in just the past two years — there is a considerable amount of money up for grabs in this forced power play that targets Google and other giants, but which could also impact the fortunes of smaller players, including independent sites and adult entertainment companies.

“Tens of millions of mobile subscribers around the world will be opting in to ad blocking by the end of the year,” said Shine’s CMO Roi Carthy. “If this scales, it could have a devastating impact on the online advertising industry.”

The mobile carriers working with Shine, including one with a reported 40 million subscribers, may begin by offering an opt-in ad-free service option for customers. This plan is not the only one on the table, however, with a zero-day option called “the bomb,” intended to rollout immediately across the entire network in a move specifically targeting Google, in an effort to force it to pay for its ads to be displayed.  

This tactic may not be legal these days, given the recent Net Neutrality law passed in the U.S., as well as similar initiatives in the EU and elsewhere, which require equal treatment of all data across network — and Google, which recently launched its own U.S.-based wireless carrier, is not just standing still for it.

“People pay for mobile Internet packages so they can access the apps, video streaming, webmail and other services they love, many of which are funded by ads,” explains a company spokesperson, who notes that “Google and other web companies invest heavily in developing these services — and in the behind-the-scenes infrastructure to deliver them.”

It is an investment that these companies hope to recoup, and to profit from, despite the objections of many consumers who believe they have the right to block unwanted content — such as intrusive ads — ads that mobile customers must pay to view as part of their mobile plan’s data allocation.  

“Online advertising is out of control and it’s polluting the user experience,” Carthy says. “Pop-ups, auto-playing videos and other forms of digital advertising can consume between 10 and 50 percent of a mobile subscriber’s data plan.”

Despite the seeming care for consumer’s data spend, this initiative is not about saving customer’s cash, but about which service provider gets to keep this windfall.

The Financial Times report notes that ad blocking may be new to the mobile market, but it is entrenched on the PC platform, where more than 140 million users (five percent of users), employ Adblock Plus and other tools. FT also notes that Amazon, Google and Microsoft have paid Adblock Plus to allow their ads to pass through the filter — a payment that the mobile carriers are also hoping to receive.

Regardless of the outcome of this particular battle, it is clear that the vast sums of money that are up for grabs in the mobile advertising space will drive ongoing efforts by companies that want a slice of the pie.

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