The Impact of Ad-blockers on Online Consumer Behavior
Marketing Science (Forthcoming)
26 Pages Posted: 2 Mar 2021 Last revised: 7 Jun 2021
Date Written: July 16, 2020
Digital advertising is on track to become the dominant form of advertising but ad-blocking technologies have recently emerged posing a potential threat to the online advertising ecosystem. A significant and increasing fraction of Internet users has indeed already started employing ad-blockers. However, surprisingly little is known yet about the effects of ad-blockers on consumers. This paper investigates the impact of ad-blockers on online search and purchasing behaviors by empirically analyzing a consumer-level panel dataset. Interestingly, the analyses reveal that ad-blockers have a significant effect on online purchasing behavior: online consumer spending decreases due to ad-blockers by approximately $14.2 billion a year in total. In examining the underlying mechanism of the ad-blocker effects, I find that ad-blockers significantly decrease spending for brands consumers have not experienced before, partially shifting spending towards brands they have experienced in the past. I also find that ad-blockers spur additional unintended consequences as they reduce consumers' search activities across information channels. The findings remain robust to different identifying assumptions and robustness checks. The analyses draw timely managerial and policy implications for the digital advertising industry as well as additional insights into the role of online advertising.
Keywords: ad-blockers, panel data, online consumers, purchasing behavior, search behavior
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