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Will Ad Blocking Break the Internet?

Author

Listed:
  • Ben Shiller
  • Joel Waldfogel
  • Johnny Ryan

Abstract

Ad blockers allow Internet users to obtain information without generating ad revenue for site owners; and by 2016 they were used by roughly a quarter of site visitors. Given the ad-supported nature of much of the web, ad blocking poses a threat to site revenue and, if revenue losses undermine investment, a possible threat to consumers' access to appealing content. Using unique, proprietary, and site-specific data on the share of site visitors using ad blockers at a few thousand sites, along with Alexa traffic data, we explore the impact of ad blocker usage on site quality, as inferred from traffic ranks, 2013-2016. We find that each additional percentage point of site visitors using ad blockers raises (worsens) its traffic rank by about 0.6 percent over a 35 month period, with stronger effects at initially worse-ranked sites. We provide additional evidence of causality by showing that the relationship between traffic trends and eventual ad blocking does not predate ad blocking. Plausible instruments for ad blocking also deliver consistent results. Effects of ad blocking on revenue are compounded by the fact that ad blocking reduces visits, while also generating less revenue from remaining visitors employing ad blockers. We conclude that ad blocking poses a substantial threat to the ad-supported web.

Suggested Citation

  • Ben Shiller & Joel Waldfogel & Johnny Ryan, 2017. "Will Ad Blocking Break the Internet?," NBER Working Papers 23058, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23058
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    References listed on IDEAS

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    4. Chiou, Lesley & Tucker, Catherine, 2013. "Paywalls and the demand for news," Information Economics and Policy, Elsevier, vol. 25(2), pages 61-69.
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    6. Michela Giorcelli & Petra Moser, 2020. "Copyright and Creativity. Evidence from Italian Opera During the Napoleonic Age," NBER Working Papers 26885, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Cagé, Julia, 2020. "Media competition, information provision and political participation: Evidence from French local newspapers and elections, 1944–2014," Journal of Public Economics, Elsevier, vol. 185(C).
    2. Carlo Vercellone & Francesco Brancaccio & Alfonso Giuliani & Federico Puletti & Giulia Rocchi & Pierluigi Vattimo, 2018. "Data-driven disruptive commons-based models," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01952141, HAL.
    3. Just, Natascha, 2018. "Governing online platforms: Competition policy in times of platformization," Telecommunications Policy, Elsevier, vol. 42(5), pages 386-394.
    4. Charles Angelucci & Julia Cagé, 2019. "Newspapers in Times of Low Advertising Revenues," American Economic Journal: Microeconomics, American Economic Association, vol. 11(3), pages 319-364, August.
    5. Charles Angelucci & Julia Cagé & Michael Sinkinson, 2020. "Media Competition and News Diets," NBER Working Papers 26782, National Bureau of Economic Research, Inc.
    6. Carlo Vercellone & Francesco Brancaccio & Alfonso Giuliani & Federico Puletti & Giulia Rocchi & Pierluigi Vattimo, 2018. "Data-driven disruptive commons-based models," Working Papers halshs-01952141, HAL.

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    More about this item

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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