×

Are Apple's ad blocking moves aimed at Google?

iPhone 6 mobile phone
Tomohiro Ohsumi | Bloomberg | Getty Images

Apple's move to include ad blocking software in its App Store and latest operating system has shaken up the digital media and advertising industry.

While it directly affects publishers (like CNBC.com) that use ad revenue to pay for content, it's also impacting ad serving companies that use data and technology to display ads on websites.

It just so happens that one of the biggest ad serving companies out there, AdSense, is owned by one of Apple's biggest competitors — Google.

"Apple is able to take this position as their business is not dependent on advertising," said Jason Kint, CEO of trade organization Digital Content Next.

Because consumers are the ones using the ad blockers, many ad serving companies have no idea their ads are not showing up, Kint said. It their hurts business because it cuts the overall number of ads they are displaying, which takes a toll on their revenue.

According to an Adobe and PageFair report, there were about 198 million active ad block software users globally this year.

"Throughout the history of digital media marketing and advertising, you see an ongoing war among technology companies about control of the advertising and marketing communications marketplace that continuously threatens to leave collateral damage among publishers, brands and retailers," said Randall Rothenberg, president and CEO of the Interactive Advertising Bureau.

"It's like the tragedy of the commons. Everybody wants to get a piece of that common lawn to graze their own cows, but if all the grass is gone and the cows die, the community can't feed itself," he said.

However, technology platform Vivoom CEO Katherine Hays pointed out that ad serving may have been a faulty model to begin with. It's an intrusive model that prevented people getting to the content they wanted, she said.

For example, consumers often complain about pop-up ads that take over a Web page and have no exit strategy. Sometimes ads displayed have no relevance for the person viewing the site.

"Ad serving players were operating on borrowed time due to issues like ad fraud and viewability," Hays said. "What you'll see is models crop up that replace the interruptive model at scale."

What ad blocking is forcing the industry to do is come up with ways to create advertising that the consumer wants to view, she said. That includes native advertising or brand-created content, as well as user-generated content on social media through contests and campaigns, which is what Vivoom helps manage.

"Because they were shared by a friend, they are really ad blocking immune," she said.

Apple's ad blocking push could be seen as defying Google, but the more likely scenario is that Apple is trying to improve consumer experience, said Kint.

For that matter, Google has also included ad blocking software in its Android store, so the company sees at least some merit in the activity. Kint pointed out that there was growing pressure on Google not to block consumer applications that claimed to protect privacy.

Kint said AdSense has also already gotten around some ad blockers, since Google pays ad blocking companies like Adblock Plus and Eyeo in order for their ads to appear, a process known as "whitelisting."

That practice is becoming more common, The Financial Times reported that one advertiser — it didn't say who — was paying about 30 percent of its revenue to be whitelisted by both of those companies.

Google and Apple declined to comment. However, Google senior vice president of ads and commerce, Sridhar Ramaswamy, addressed the situation at an Advertising Week panel on Monday in New York.

"Apple is one of our largest partners and vice versa," he said. "As you know, search on Safari and iOS is powered by Google. We've had a long collaborative relationship; we've also had disagreements and competition. I think of this as an issue where we need to be actively working together."

"Apple has a different business model; I think we all understand that," he added. "But, I think we need to see the virtue in the ad supported business model and figure out how to make it better."