Online advertisements are what power most of the web. On mobile where ads are becoming more common, not everyone is liking it. One of them is Apple.
Apple is yet to perfect its online advertising network, but what makes it difficult to venture forward is Google. The search engine giant is powering most of online advertising, and that is not good for Apple as it aims for more dollars by showing its ads.
Apple is blocking ads for mobile devices starting with its iOS 9. It's Apple's way to ramp up its effort in a long-running battle against Google.
Apple's iOS 9 introduced a feature the company called "content-blocking Safari extensions." CEO Tim Cook didn't detail about how it works, and what the public knows is that the feature is buried deep inside its technical documents.
Blocking ads on Safari can be a good thing for users who are avoiding ads for better online experience. But for publishers, this can be frustrating because their blocked ads could pose a huge threat to their businesses.
With iOS 9, Apple is blocking competitors ads (mainly Google) which has the most ad market.
Web Ads: Powering The Web
Most web advertisements are sold programmatically. This means that algorithms are involved to decide which ad goes where, and how much will it cost. Online advertising is a hope for agencies, websites, blogs and many others to get revenue from the decreasing hopes from print ads revenue.
Unlike print and broadcast ads, online ads that are powered by algorithms, allow advertisers to pay a flat fee so they can put their specific ads in a specific place they like. The ads are then served to the user depending on their interest, browsing history, the context of the site, and other criteria.
With Apple's advertising method, advertisers can offer a price so their ads can be shown to people on iPhones. Websites will compare this bid against all others for the same audience, and then display the highest-bidding ad.
The model is applied partially. The reason for this is because it allows advertisers to personalize their ads.
While online ads are what powers most of the web, their existence occasionally interrupt user-experience to a level that they become annoying. Modern web advertisers have codes to track its audience, and those codes may increase a site's loading time, decreasing user-experience.
More ads mean more data to load, higher mobile bills, more work for the device shortening its battery life, and more loading bars to show.
Ad-blockers are meant to eliminate those in order to make a better user-experience for users.
Apple's move to block ads can be seen in two ways. One, it's trying to eliminate ads so user-experience could be better, and two, to slow down the progress of its competitors (especially Google which gets most of its revenue from showing online ads).
Google's revenue from advertising came to $59 billion in 2014 alone. This is about 90 percent of its total income. $45 billion that came from those ads, were coming from its own sites including Search and Maps. , The $14 billion came from ads served by Google on other websites.
And thanks to Android, Google is still dominant in mobile advertising.
Apple's ads serving, called iAds, was launched back in 2010. It allows developers to embed ads into their applications, with Apple taking a 30 percent cut. iAds generated only $487 million in 2014, or 0.3 percent of the company's total income. This is significantly less than Google's.
Crossing The Borders
Apple is a hardware company. It makes most of its money from iPhone sales, Macs and other Apple related hardware. Google on the other hand, is a software company. It delivers many free services such as Search, Maps and others. The company makes it money from selling ads, making it an advertising company.
But what Google did, it's doing pretty well in advertising things on Apple. Google is getting huge revenues by showing ads on Apple's hardware. Out of the $11.8 billion Google made from mobile search revenue in 2014, $9 billion came from iOS.
For that, Apple has a very good reason to block Google from showing any of its ads in its devices.
Publishers' Approach
While ad-blockers can pose huge threat to many online businesses, publishers have less to no choice. They react in different ways.
Some publishers have taken to blocking the ad-blockers. Others detect visitors using ad-blockers and ask them politely to turn the blockers off before viewing their contents. Some online publishers change their business model by asking people to become paid members by giving them more features.
While most publishers tend to search for a way around the problem, some publishers react by turning to the legal system. Some even tried to convince publishers to pay so their ads can bypass the ad-blockers.