The Impacts of AdBlock Plus on Google's Revenues

By Micah McDunnigan

AdBlock proponents argue the issue with advertising revenue is the need for better advertising products.
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Those ads you see on websites aren't just nuisances; they are the way many otherwise free websites and online services make the money necessary to keep going. Google is one major provider of onsite advertisements, and splitting fees from ad clicks between itself and individual website owners represents a significant amount of its annual revenue. Software like AdBlock Plus, which keep visitors from ever seeing ads in the first place, deprives Google of some revenue but can have a much larger impact on the websites Google services with ads.

Google and Advertising Revenue

Google's advertising service is one way Google makes money. Website owners can sign up with Google's AdSense program for Google to display ads on their website. Advertisers, in turn, sign up with Google AdWords to submit ads for Google to display through websites that have signed up with AdSense. When a user clicks on an AdSense ad, Google charges the advertiser a fee. Google keeps part of this fee for itself and pays the rest to the website owner whose visitor clicked the ad.

Impact on Google

When AdBlock plus blocks an ad, there is no way the visitor can click on it and consequently no way Google can make money from it. While this technically deprives Google of potential revenue, it has not hampered the company from making increasing profits from advertising in recent years. According to the company's financial disclosures, Google's annual advertising revenue rose from approximately $28 billion annually in 2010 to approximately $43 billion in 2012.

Individual Websites

Despite Google's growing profits, its advertising networks span many different sites that target many different user demographics. However, individuals who target demographic segments which are more likely to install AdBlock Plus on their Web browsers can feel the effects of AdBlocking more acutely. When smaller websites rely on advertising revenue to pay hosting bills and put some money in their operator's pocket, AdBlocking can have a much more pronounced effect on their revenue and viability.

Better Advertising

The makers of AdBlock Plus and the software's supporters say that the issue is not with AdBlock Plus and its users, but with the old revenue model on which sites have come to rely. The argument goes that if users did not feel that websites were trying to trick them into clicking on ads, or using ads that were irritating and distracting from their online experience, they would not install software like AdBlock Plus in the first place. In late 2011, AdBlock Plus did introduce a new feature that allowed what the company described as "non-intrusive advertising" through the software's filter. From this view, the real issue is the need for advertising services like Google to start providing better advertising platforms and products that do not irritate users.