Ad blockers are forcing biz model innovation | Media Analysis | Business
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Even as US broadband households watch an average of 3.8 hours of online video on TV sets each week, accounting for a fifth of all big screen viewing, operators face problems as ad blocking is also on the rise.

Parks Associates Video Consumption on a TV ScreenParks Associates warns that consumers might increasingly use ad-blocking solutions while streaming video if the digital advertising methods disrupt their viewing experience. So, service providers and media companies need to develop digital advertising models that are integrated and non-disruptive to the viewing experience.

“Many content creators rely on advertising revenue to monetise video, especially as newly launched digital services seek revenue,” said Glenn Hower, research analyst, Parks Associates. “As digital video viewership increases on all screens, use of ad-blocking technologies is a concern for content owners and distributors. Ad blockers have their roots in Web publishing, often to prevent full-page overlays or pop-ups that would disrupt the experience. As Internet video viewership on the television screen increases, advertisers are seeking to leverage prime living room real estate in this new media model. Content and OTT providers and advertisers need to ensure their methods do not interfere with the viewing experience, which would otherwise drive viewers to ad-blocking technologies.”

Increases in personalised over-the-top (OTT) service offerings, automated media buying and selling, and advertising as a necessity in low-income markets have driven greater interest in dynamic ad insertion. Parks Associates forecasts total digital video advertising revenue increasing from $14.4 billion worldwide in 2016 to $28.9 billion in 2020, leading to a five-year CAGR of 15%.

Ad blocking costs the digital publishing industries an estimated $41.4 billion worldwide in 2015, while Internet video viewership increased by a five-year CAGR of over 18% from 2010 to 2015. The total number of OTT video services has tripled from 2010 to 2015.

“Connecting advertisers with appropriate, and accepting, audiences is a significant challenge for ad-supported video providers,” Hower said. “The reward, however, is more meaningful ad messages to consumers, with greater impact, response, and brand retentions. Another reward is more valuable media inventory for both content and service providers and their advertising partners.”