Adblocking

Green Armadillo said using adblockers is an issue of trust, as allowing scripts (needed to track ad clicks and views) practically allow the site to do anything with your computer, including inserting viruses. Even trustworthy sites can be hacked and used as virus hives. While being cautious is a good reason to block ads, trusting in the site is still not a good reason to block ads. I block ads everywhere possible and suggested the same.

The article he refers is just pathetic. The site noticed that 40% of their reader base block ads. Their arguments are mostly lies like "Imagine running a restaurant where 40% of the people who came and ate didn't pay. In a way, that's what ad blocking is doing to us." It's a lie because most of the costs of a restaurant are variable: creating your meal cost them raw materials and worktime of the cooks and waiters, and you also occupy a table so other people can't come in. On the other hand the website costs are 99% fixed, if you created the content for 1 person, you created it for 10000.

Other "arguments" are just QQ: "It can result in people losing their jobs, it can result in less content on any given site, and it definitely can affect the quality of content. It can also put sites into a real advertising death spin. As ad revenues go down, many sites are lured into running advertising of a truly questionable nature." or "many people do not think about the people, the families, the careers that go into producing a website". Oh, the cruel world, I'm almost crying.

But instead of just stating the obvious "thanks I already got your content, so I can't care less if you bankrupt tomorrow as someone else will provide me content", let me analyze the whole internet marketing (ad) system and prove that despite they claim otherwise, their business model sucks.

Let's see the way of the money in the standard ad-supported media:

1. User consumes content that cost money to the publisher to produce
2. User views ad, the ad-agency pays the publisher
3. Ad-agencies are hired by companies to advertise their product
4. The whole point of advertising is to increase sales. The idea is that the viewer of the ad will more likely buy the product of the company, than a non-viewer would. If it's true, then money will go from the pocket of the user to the company.

Step 4 is the crucial. The producing companies would still have sales without internet marketing, assuming they produce something worth buying. So "I go to the car dealership and buy car" can stand on its own, without the advertising industry. All other can only exist as accessory of this. If we assume that all companies in the scheme are profitable, the money coming in for the system comes from the "user". Lets see where his money goes:

• to the producing company to produce the item without marketing
• the profit of the producing company
  
• the marketing cost of the company (divided by the amount of items sold). This cost includes:
  
• the running costs of the ad-agency (staff salaries, bandwidth, electricity, taxes, office rent)
• the profit of the ad-agency
• the money they pay to the sites that display the ads, consisting
  
• the costs of producing content
• the profit of the content provider

So I pay all these and receive a product and internet content. But what if I will never buy the product? This case the ad was not "properly targeted". It did not increase the income of the producer, so the marketing costs were wasted. This case if I do or don't see the ad does not matter. The idea of tracking views instead of sales (like in affiliate marketing), is that the targeting chance is not the function of the person himself. If I see the ad, I have X% chance to make a purchase, depending on random factors like do I already own this or competitor's item, do I have money and so on. However it's absolutely not true.

Let's compare the above cost scheme to a scheme where someone buys both the content (via paid subscribing) and the product without advertising. This case the buyer pays for

• to the producing company to produce the item without marketing
• the profit of the producing company
• the costs of producing content
• the profit of the content provider

He received the very same things as before, obviously cheaper, plus his content consumption was not obstructed by annoying ads. So rationally, he should choose this option. If he chooses the more expensive and annoying way, he is an idiot. And this is the core idea of the whole advertising industry: people are morons. The well-created advertisement can somehow trick their brain to do something really stupid: buy something that has its price increased by advertising and content-producing costs at best and completely useless to him at worst.

However the business model where views and not sales are tracked are based on the incorrect generalization of the core idea: since everyone are morons, more views = more sales. Well, not everyone are morons. I regularly see huge car advertisement posters by the road between my work and home. I had money and I wanted to buy a car, so they were perfectly targeted ads. Yet I did not buy any of the advertised cars, as I bought a used car. It is in good condition and cost 30% of a new car. What happened? The posters shown either sexy girls or happy families by the cars and I'm not a moron to believe that a piece of metal can gets me either.

Of course you can claim that there is no effective moron-detector, so the market shall still be carpet-bombed, as 2x more views means 2x more morons reached (and 2x more intelligent people). However it's not true! The existence of the ad-blocker is a proof that the person is not a moron (or at least not on this field). Installing the ad-blockers is the internet version of the sign "traveling salesmen don't bother me, I won't buy your crap" placed in your garden. It actually helps the ad-agency to target their ads better, preventing wasting money by paying content that does not get them enough morons.

Of course there is a reason why the linked magazine wrote their "nice ppl plz plz plz don't block our ads": they don't want the ad-agency to know that the ads on their site are pointless, as most of their readers are not morons. However it cannot work, and not only because the "plz plz plz" is rarely a good business model. Either the ad agencies will figure out that advertising on intelligent sites does not make enough sales, or the producers will figure out that the sales increased by advertisements are not enough to support the marketing costs. One way or another, the completely wrongly targeted ads will disappear.

So the ad-supported content can only work if the content draws morons. The producers of intelligent content can either be truly free (like this site) or can be paid by subscription fees.


PS: forcing users to not block ads does not work. It would just make someone create an adblocker, that downloads the ad and run the scrips, but hide them from the screen, consuming more bandwidth for absolutely nothing.