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Will Ad Blocking Break the Internet?

Benjamin Shiller, Joel Waldfogel and Johnny Ryan

No 23058, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: L81 L82 (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-ict, nep-ind, nep-mkt and nep-pay
Note: IO
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