Will Ad Blocking Break the Internet?

53 Pages Posted: 23 Jan 2017

See all articles by Benjamin Shiller

Benjamin Shiller

Brandeis University - Department of Economics

Joel Waldfogel

University of Minnesota - Twin Cities - Carlson School of Management; National Bureau of Economic Research (NBER); University of Minnesota - Twin Cities - Department of Economics

Johnny Ryan

PageFair

Date Written: January 2017

Abstract

Ad blockers allow Internet users to obtain information without generating ad revenue for site owners; and by 2016 they were used by roughly a quarter of site visitors. Given the ad-supported nature of much of the web, ad blocking poses a threat to site revenue and, if revenue losses undermine investment, a possible threat to consumers' access to appealing content. Using unique, proprietary, and site-specific data on the share of site visitors using ad blockers at a few thousand sites, along with Alexa traffic data, we explore the impact of ad blocker usage on site quality, as inferred from traffic ranks, 2013-2016. We find that each additional percentage point of site visitors using ad blockers raises (worsens) its traffic rank by about 0.6 percent over a 35 month period, with stronger effects at initially worse-ranked sites. We provide additional evidence of causality by showing that the relationship between traffic trends and eventual ad blocking does not predate ad blocking. Plausible instruments for ad blocking also deliver consistent results. Effects of ad blocking on revenue are compounded by the fact that ad blocking reduces visits, while also generating less revenue from remaining visitors employing ad blockers. We conclude that ad blocking poses a substantial threat to the ad-supported web.

Suggested Citation

Shiller, Benjamin and Waldfogel, Joel and Ryan, Johnny, Will Ad Blocking Break the Internet? (January 2017). NBER Working Paper No. w23058, Available at SSRN: https://ssrn.com/abstract=2903705

Benjamin Shiller (Contact Author)

Brandeis University - Department of Economics ( email )

Waltham, MA 02454-9110
United States
781-736-5205 (Phone)

HOME PAGE: http://benjaminshiller.com

Joel Waldfogel

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
Minneapolis, MN 55455
United States

Johnny Ryan

PageFair ( email )

Unit D, Mountpleasant Business Centre
Dublin
Ireland

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