Ad Blocking: The IAB Wants To Sue, But It Probably Can’t Win

It may be premature to call ad blocking a “crisis” for the industry, but it’s obviously an area of significant concern for publishers and advertisers. The IAB (Interactive Advertising Bureau) has suggested that it may sue to try to stop ad blocking; however, the prospect of legal victory is dubious.

To the surprise of many, following the release of iOS 9, the ad-blocking app Peace immediately rose to the top of the iTunes paid app charts over the weekend, only to be later pulled by its developer Marco Arment amid feelings of remorse over its potential impact on publishers. Other ad blockers rose to take its place.

Though ad-blocking software and browser extensions have been around for many years, they weren’t widely used, so the industry largely ignored them. Now publishers, the IAB and industry observers are legitimately concerned by an increase in awareness and usage of ad blockers, as evidenced by the immediate adoption of Peace and other iOS 9 apps.

Different surveys suggest different levels of ad-blocking adoption in the US and internationally. Third-party survey data rounded up by eMarketer suggest that between 34 percent and 63 percent of Millennials are actively using ad blocking.

Desktop Ad Blocking Rates by Country (Unique Visitors)

Source: Sourcepoint, comScore (9/15)

Data recently published by Sourcepoint and comScore (above) show ad blocking rates in North America and Europe. A study conducted by PageFair and Adobe argues that roughly $22 billion in advertising revenue will be lost to ad blocking in 2015 on a global basis.

In the Sourcepoint-comScore data above, ad blocking skews younger but is also more widely used by those in the highest income categories. By comparison to the desktop findings, ad-blocking rates on mobile devices are currently below 1 percent. The expectation is that they will rise, however, in the wake of iOS 9. (Android has had ad blocking for some time with limited adoption.)

There is widespread hand-wringing and saber-rattling and calls for public education and better ads. As pointed out by The Loop and BuzzFeed, some publishers, such as CNET and the Washington Post, are starting to display messages to those using ad blockers and preventing them from viewing content.

If ad blocking continues to gain momentum, the publisher “content denial” strategy will probably become more widespread. It will also be incumbent on the IAB, 4As, the Online Publishers Association (now Digital Content Next) and others to undertake public education to point out the importance of ad-supported content. Mobile ads and ad placements also need to improve dramatically.

In the interim, the IAB says it’s mulling over its legal options. In an interview in the Wall Street Journal, IAB CEO Randall Rothenberg said that the trade association has looked into litigation and believes it has a case:

We’ve examined this, and there are some pretty good legal principles here. So that might be a course of action. Maybe. Certainly nothing aimed at consumers. That would be a bad idea. In terms of the software companies, nothing is imminent.

The IAB declined to be interviewed or comment on the legal theories it might pursue. In Europe, AdBlock Plus was sued by German publishers and won earlier this year.

Litigation based on copyright is the most likely theory that the IAB and publishers might use. The argument would be that ad blocking infringes the publisher’s copyright, because the publisher has the sole right to determine how the content (including ads) is displayed on the page or make changes to the page (a “derivative work”). And by removing ads, the user is effectively making a derivative work without permission and is violating the copyright of the publisher.

A related theory is that ad blocking is piracy because the ad-blocking user is effectively “stealing” content. The value exchange for free content is viewing ads (or being willing to be exposed to advertising). This will also play out in click-wrap terms of service: publishers will include terms such as “you agree to view ads in exchange for access to content” and make ad-blocking a violation of the terms of service and thus “illegal.”

Embedding such language in terms and conditions, which is going to happen, will almost certainly lead to litigation — either by publishers or interested parties seeking to preemptively bar such terms.

Then there’s the idea that browser-based ad blocking is like DVR ad-skipping. That battle was fought by TV networks and content producers a long time ago. They lost. For that reason, it won’t be mentioned by plaintiffs in their complaint but will probably be raised by defendants in any ad-blocking litigation (whereupon it will need to be distinguished).

While there might be reasonable legal theories to pursue, in the end it could well be a tactical and PR mistake for the IAB to bring a lawsuit, especially if it includes Apple. My guess is that ultimately any ad-blocking lawsuit would fail (though legal outcomes are often unpredictable). It probably would be better to take a pragmatic approach to the problem:

1. Wait and see how widespread ad-blocking becomes; however, the data suggest it’s already widespread on the PC.

2. Improve the quality, number and relevance of ads on pages.

3. Pursue consumer education, including in the extreme content blocking, as shown above.