Ad Blocking Costing Websites $21B In Revenue, Report Finds

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Ad blocking software is convenient for users, but is starting to cost websites billions of dollars in lost revenue, according to a new report issued by PageFair, a Dublin-based consultancy that sells ad blocking solutions, and Adobe. The study illustrates how difficult it is to support the new web-based economy with traditional advertising methods.

The company's third annual report estimates that $21.8 billion in advertising revenues will be lost in 2015 due to ad blocking. In the United States, ad blocking costs were an estimated $5.8 billion in revenue in 2014, and that number is expected to jump to $10.7 billion this year and $20.3 billion in 2016.

The global cost of ad blocking is expected to reach a total of $41.4 billion by 2016.

Globally, the number of people using ad blocking software grew by 41% year-over-year, according to the report. As of June, there were 198 million monthly active users (MAUs) across the major browser extensions that block ads.

Ad block usage in the United States grew 48% during the past year, increasing to 45 million MAUs during the second quarter of this year. PageFair also found that 16% of the US online population blocked ads during the second quarter.

Interestingly, PageFair also found that Oregon has the highest ad blocking rate in the United States at 16.4%, and that Washington D.C. has the lowest ad blocking rate at 8.2%.

They also estimated that ad blocker usage in Europe grew by 35% during the past year, increasing to 77 million MAUs during the second quarter.

"Although the 198 million MAUs in Q2 2015 represent only 6% of the global internet population, ad blocking is estimated to cost over $21B in 2015, which is 14% of the global ad spend," according to the Aug. 10 PageFair report.

The report also found that blocking varied by the type of website visited.

Gaming website visitors were more likely to block advertising, while visitors to health, charity, and government or legal websites were significantly less likely to block advertising.

PageFair blames Google's Chrome browser for the growth in ad blocking.

The report noted: "The ease with which ad block extensions can be installed on Google Chrome, combined with the continuing shift of internet users to Chrome for browsing, are major drivers of ad block growth."

[Read about improvements to Chrome.]

Ad block use on Chrome increased 51% from second quarter of 2014 to the second quarter of this year, averaging 126 million MAUs.

The irony of this was not lost on them. As the report states: "It is well known that Google's primary business is in online advertising; ironically, Google's own browser appears to be bringing ad blocking to the masses."

Mobile browisng has yet to significantly affect ad blocking stats. 

PageFair thinks this will change from a "very underdeveloped state" with the release of iOS 9 in the fall. Mobile Safari represents 52% of the mobile browsing market (and 14% of total web browsing). With support for ad block apps coming in iOS 9, they expect ad blocking on mobile Safari to trend toward the levels seen in the mobile version of Firefox (16% on Android) over the next year.