Skip to main content



Ad-Blocking Software and Game Theory

In the podcast “Hello Internet”, YouTubers C.G.P. Grey and Brady Haran spend a lot of time discussing the advertising industry. In a segment about ad-blocking software, Grey outlines a paradox of using these programs: “It is undeniable that, in aggregate, ad-blocking software is bad for the Internet. The problem is… the impact of ad-blocking software on any one individual’s computer is not going to break anything. And that is always the fundamental conflict, is that for any one person, they can say, ‘Well, it doesn’t make a difference to Creator X if I have ad-blocking software or if I don’t.'”

In a prisoner’s dilemma scenario, the exact effect of prisoner’s choice of strategy depends on what the other prisoner chooses. For example, Prisoner A’s confession could get him out of jail completely if Prisoner B does not confess, but it could also land him significant jail time if Prisoner B also confesses. This principle can be applied very generally to the issue of ad-blocking software; the only difference is that users of the software may not realize that the net effect of their actions depends also on the actions of others.

If only a small group of Internet users chooses to use ad-blocking software, each of them will see a positive payoff (fewer ads), and the effect will be negligible on the remainder of the Internet. Advertisers will be able to absorb the miniscule loss, and websites that rely on advertising, like YouTube, will barely feel a thing. Crucially, users of these ad-supported sites without ad-blocking software will experience no effect because they will continue to see ads as they always have.

However, there exists some Nash equilibrium at which the proportion of users with ad-blocking software is balanced with those without it. If at the equilibrium point, an individual non-ad-blocking user were to begin to use ad-blocking software, this would be the “breaking point” at which ad-supported websites would no longer be able to support themselves using advertising, and people would have to start paying for content in other ways. Thus, that individual user should not have a positive incentive to start using ad-blocking software; if he happens, all users, even those not blocking ads, receive a negative payoff.

It would be nearly impossible to calculate exact equilibrium values for this game. Since lots of different companies use online advertising and have different goals and acceptable profit margins, it is unlikely that there would be one threshold value for the entire online advertising industry. But the principle still applies, and it should be possible to determine a range of proportions of ad-blocking users that, once reached, would make online advertising no longer feasible and lead to the loss of a lot of ad-support content.

As I write, the ad-blocking software market is only picking up steam. Adblock Plus, a popular ad-blocking browser plugin, claims 170,000 downloads per day alone and over 200 million downloads total since 2011. A 2013 report found that 22.7% of visitors to 220 websites were using ad-blocking software. The same report predicted that “almost all sites” will load without ads by 2018 due to the proliferation of this software. We as an Internet society may discover what this equilibrium is sooner than we would have hoped, and since Internet users often don’t realize that the context in which they use ad-blocking software matters, it’s possible we will cross the threshold before we even realize it.

 

Citations:

Primary: Hardy, Quentin. “Troubles Ahead for Internet Advertising.” Web log post. Bits. The New York Times, 29 Aug. 2013. Web. 29 Sept. 2014.

Grey, C.G.P, and Brady Haran. “Freebooting.” Audio blog post. Hello Internet. Web. 27 Sept. 2014.

Comments

Leave a Reply

Blogging Calendar

September 2014
M T W T F S S
« Aug   Oct »
1234567
891011121314
15161718192021
22232425262728
2930  

Archives