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SMBs Have Little To Fear From Mobile Ad Blocking

While other industries may be affected more heavily, small businesses spend much more on marketing tools than ad campaigns that would be affected by ad blocking.

The equal parts bemoaning and cheering that greeted Apple’s mobile ad blocking tools, which were embedded in last week’s full release of IOS 9, has caused a significant stir across the online media landscape.

While much of the focus has been on the very real plight of publishers already struggling to replace old media dimes with digital pennies, there’s been a lot less focus on what it means to advertisers who’ve become accosted to getting their messages out directly and efficiently.

Oblivious To Blocking

The issues faced by smaller, local publishers seems particularly dire, since they tend not to have the capabilities for running native ads that larger media outlets do. But on the other end of the spectrum, local SMBs, the kind that have only started to embrace interactive marketing, would, at first glance, appear to be just as out of luck as their sell-side counterparts.Screen Shot 2015-09-21 at 5.47.01 PM

But as a number of industry research reports released over the summer have shown, SMBs have largely been holdouts when it comes to banner-based mobile advertising.

So with that in mind, SMBs have nothing to fear from Apple’s allowance of ad blocking software on iOS9 —not yet at least.

As we reported this summer, Borrell Associates’  “Local Advertising Hits a Tipping Point,” which was based on a survey of 7,228 SMBs and 513 U.S. marketers, found that local and regional businesses spend far more on marketing services than they did on advertising — the former increasing 72 percent and the latter decreasing by 22 percent over the last 10 years.

“We’ve been monitoring a phenomenon that occurred in 2007 when local advertisers for the first time began spending more money on marketing services and promotions than they did on classic advertising,” the Borrell report reads. “Between 2004 and 2012, advertising as a percentage of gross revenues went from 1.19 percent to 1.05 percent. While that doesn’t seem like much, consider this: Had businesses maintained their ad-spending ratio, it would have meant an additional $27 billion in the advertising economy in 2012.“

SMBs’ True Concerns

This means that, while larger brands and enterprises have massive ad budgets to increase brand awareness, SMBs, which are more concerned with day-to-day customer interactions than clever TV commercials, are spending their money on marketing assets such as social media, dedicated mobile apps, and digital storefronts.

Here’s where Apple’s ad-blocking comes in: While other industries (particularly media) may be more justified in their fear of what mobile ad blocking might mean, SMBs may rest easy knowing that it will most likely have negligible effect on them.

“There’s been lots of hand wringing and misunderstandings of the new batch of ad blockers,” said Michael Boland, BIA/Kelsey’s Chief Analyst and VP, Content. “They currently don’t work within apps (mobile web only), and apps is where the majority of mobile time is spent and where the majority of banner ads are shown.”Screen Shot 2015-09-21 at 5.47.57 PM

As “local and relatively large” businesses have emerged as drivers of digital advertising following years being classified as “untapped” by online ad sellers, BIA/Kelsey, like Borrell, has noted that SMBs’ interest has gravitated toward spending on solutions that are intended to meet daily performance goals.

About 72.2 percent of survey respondents in last months’ BIA/Kelsey’s Local Commerce Monitor, an ongoing insights report, say they’re using at least one of the 12 different social media platforms/formats. Overall, SMBs tell the local market researcher that they spend 23.3 percent of their advertising/marketing budget on social media.

That focus on social media has left SMBs mostly in the clear. And considering that most SMBs’ immersion in social media marketing is still at the nascent stage, the battles over mobile ad blocking will, if anything, continue the trend pattern they’ve started on, especially considering the increasing efforts by Facebook, Twitter, and Pinterest to serve local businesses solutions for digital presence management, SEO, m-commerce, and other marketing.

“In many cases, it’s Facebook Pages, which is a non-paid marketing channel,” said Boland. “Facebook pages also aren’t ‘ads’ so aren’t subject to ad blocking. Lastly, they also require a manual download and activation which most mobile users won’t do. Add up all of these variables, and ad blockers won’t have the impact that everyone is saying.”

About The Author
Daniel Parisi Daniel Parisi @daniel_parisi_

Daniel Parisi is a New York City-based writer and recent graduate of the University of Maryland. Daniel specializes in coverage of mobile payments, loyalty programs, and the Internet of Things.