Google suffers losses of billions of dollars due to Adblock every single year.
Yet google ignores and has never taken any step to stop Adblock. In the Google chrome store, one of the most popular adblocking services was founded. Then also Google never attempted to block the extension.Furthermore, the ad-blocking issue is not at all a small issue. This cost U.S publishers 15.8 billion dollars in revenue loss as the users in the U.S were using some sort of adblocking services. Now the question arises why Google stayed silent after such huge losses in revenue every year. Before we get into that let’s get a better understanding of
How AdBlock even works.
Adblocks filter out all the requests to display something on a particular website. And blocks the request related to advertising. Adblocking services make a list of domains that are most involved in serving ads and block any request from these domains for displaying advertisements. On the other hand, users can also add the domain to this list or even block certain aspects of a given website like social media buttons.
Adblocks are very simple to bypass and it wouldn’t take very long for Google to bypass these services or take them down altogether. The reason Google doesn’t do this starts with
How Google makes money with advertisements.
Google only charges advertisers money when a user clicks on ads, and not when it is simply displayed. However, on the back end, keywords and details like the audience demographics are bid by the advertisers. This bid from the advertisers is the amount of money they are willing to pay Google for per click from the user. But in the end, only the highest bidder is shown to the audience. And the advertiser doesn’t have to pay google until a user clicks on an advertisement shown to them. People who are so opposed to ads that they will go after a way to block them usually wouldn’t click on these ads anyway.
We cannot say that these ads would be 100 % ineffective. Against these demographics, it’s just that the click-through rate would be much lower. Furthermore, by isolating this demographic out and not showing them ads the click-through rate for the average user would be higher.
This results in a high click-through rate and leads to advertisers bidding higher. As advertisers bid higher they pay more for each click. And the click revenue is divided between Google and the owners of the website.
Google takes 40 % of ad revenue
While 60 % goes to creators, this is how the bulk of the losses don’t fall on Google. Of course, despite all of this Google is losing billions by ad blockers. Google knows very well that blocking ads would go against their entire business model. If they blocked AdBlock or a movie extension for the Chrome Web Store or added some sort of update that would prevent AdBlock from running. And a big portion of their userbase will leave. And all the money they have invested in these users would be lost. Google loses money in most of its ventures. You would be surprised to know that youtube has been profitable before. Google reports huge losses as more users come and use their platform. We can see this is the same case for most of the free services like Gmail, Google Maps, Google Drive, Google Playstore, and so on.
Google has made many of these companies profitable after several years.
But that was never the goal, as you can see Google doesn’t care about making money. From the very beginning, Google is known for giving out crazy services for free in exchange of to get users to use Google.com.We can see the overly generous email or cloud space or a free streaming platform Google isn’t looking to make money.
Google sees these money-losing services as an investment.
And focuses on continuing to keep them free to grow the user base. Their main goal is to make users use their services for free. And by this, they can collect data from you. There is a famous saying:- “if you are not paying for the product then you are the product”.
Google collects data from its users and sells this information to advertisers to show ads. This is how Google makes a profit, and it’s the major source of income. Despite the hundreds of sectors are delved into Google’s advertising revenue is what make up 83.3% of Alphabet’s total annual revenue.
If a group of Google users wants to use Adblock to continue using Google products. Google is more than okay with that. As they can still collect data from the users. So AdBlock users are not a complete loss in revenue for Google. Their main goal is to keep users on Google and sacrificing a bit of ad revenue for that it’s not an issue. Also if they stop AdBlock these users are more likely to use Google services for shorter periods.
The best example of this would be YouTube. Users who are used to watching YouTube without ads may spend less time watching YouTube after ad-block. This will decrease the number of active users for Google. If ads are forced onto them. This will affect audience retention as well as impact the amount of data Google can collect from these users.
The company doesn’t want its reputation to be severely hurt due to ad blocking which they have been building over the past two decades.
Google is known as a friendly company.
Google prioritizes its customers first. This is why they offer so many services for free. Google wants its users to use its services and want users to trust them. And as people are starting to become more cautious about data mining. Blocking AdBlock would just severely hurt trust in Google and this hurt the company more than any loss of revenues.
Overall though Adblock is harmful to Google over the short term, blocking the services would have long-term repercussions. This is why Google has yet to block AdBlock and likely never will.