NEW YORK: Many of the world’s largest Internet companies, such as Google and Facebook Inc, rely heavily on advertising to finance their online empires.
However, that business model is increasingly coming under threat, with one in five smartphone users, or almost 420 million people worldwide, blocking ads when browsing the Web on cellphones.
That represents a 90 percent annual increase, according to a new report from PageFair Ltd, a start-up that helps to recoup some of this lost advertising revenue, and Priori Data GmbH, a company that tracks smartphone applications.
The use of ad-blocking software has divided the online world.
Supporters say it allows people to get better access to content without having to suffer through abrasive ads.
Opponents, particularly companies that rely on advertising, say blocking ads violates the implicit contract that people agree to when viewing online material, much of which is paid for by digital advertising.
However, mobile ad blockers have become particularly widespread in emerging markets, where people are more reliant on their smartphones to use the Internet.
To date, 36 percent of smartphone users in the Asia-Pacific region have so-called ad-blocking browsers on their mobile devices, allowing them to remove online ads when they use the Internet.
In India and Indonesia — two of the world’s fastest-growing Internet markets — that figure is almost two-thirds of smartphone users, according to the report.
“We found the results surprising, because in the West we don’t often consider what’s going on in developing countries,” PageFair CEO Sean Blanchfield said. “It’s only a matter of time until mobile ad blocking comes to the West.”
Priori Data CEO Patrick Kane said greater use of the software in emerging markets was driven by attempts to minimize spending on mobile data. Ad blockers help conserve data and make Web sites load faster by not downloading ads on people’s smartphones.
While mobile ad blocking is mostly an emerging market phenomenon now, it is costing the global advertising industry billions of US dollars per year in lost revenue.
However, as people in Western markets increasingly rely on smartphones to reach the Internet, the use of mobile ad blocking is expected to rise.
“It’s already used by hundreds of millions of people,” Blanchfield said. “You can’t put the cat back in the bag.”
