Ad-Blockers and Limited Ad-Blocking

58 Pages Posted: 25 Oct 2019 Last revised: 1 Apr 2021

See all articles by Upender Subramanian

Upender Subramanian

University of Texas at Dallas - Naveen Jindal School of Management

Mohammad Zia

Chapman University

Date Written: April 1, 2021

Abstract

Ad-blockers enable consumers to block ads on websites. While ad-blockers began as user-oriented initiatives promising to block all ads, many now allow limited display of ads. Much of the ensuing debate has questioned the role and intent of the ad-blocker, viewing ad-blocking as a zero-sum game between consumers and the website publisher. We show limited ad-blocking (LAB) can transform ad-blocking to a win-win for all. In fact, even a user-oriented ad-blocker may offer LAB, while also benefiting the publisher and leading to better website content than in the absence of ad-blocking. Specifically, LAB can be used to incentivize content provision in two distinct ways: not just by enabling a publisher monetize website visits from ad-blocker users, but also by limiting the publisher’s ability to attract ad-blocker users if website content quality is low; since, by not blocking all ads, LAB can make a low-quality website less attractive for ad-blocker users. From the publisher’s perspective, although the publisher faces pressure to lower its website ad intensity to counter ad-blocking, LAB can emerge as an indirect means to discriminate ad intensity across consumers since they sort themselves according to their tolerance for ads through adopting the ad-blocker. We show beneficial discrimination can occur if consumers with higher valuation of content quality also find ads more disruptive and are less tolerant of ads. Interestingly, the ad-blocker may be more widely adopted when it employs LAB than when it does not. Furthermore, even a user-oriented ad-blocker may charge its users a fee.

Keywords: Ad-blockers, Limited Ad-blocking, Online Advertising, Game Theory

Suggested Citation

Subramanian, Upender and Zia, Mohammad, Ad-Blockers and Limited Ad-Blocking (April 1, 2021). Available at SSRN: https://ssrn.com/abstract=3466105 or http://dx.doi.org/10.2139/ssrn.3466105

Upender Subramanian (Contact Author)

University of Texas at Dallas - Naveen Jindal School of Management ( email )

Dallas, TX
United States

Mohammad Zia

Chapman University ( email )

Orange, CA
United States

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