Adblock Plus- Controversy or Business Breakthrough?
Recently the company behind AdBlock Plus, the most ubiquitous advertisement filtering browser plugin available, made a controversial decision to start allowing advertising companies to pay money to show ads to AdBlock users. This pay-to-play whitelist was immediately derided by critics, who complained that AdBlock was “selling out” to the same advertising companies that it had spent years fighting. As a consumer, I agree with these mob-like sentiments- AdBlock Plus has faithfully performed its unique duty well for years, and I’m sad that I’ll have to deal with more advertisements while web browsing now.
However, the risk that AdBlock Plus has taken with this decision makes perfect sense from a business standpoint. Users that are angry gain nothing from uninstalling- there isn’t a viable ad filtering competitor on the market right now. The ones that do uninstall in protest will be forced to see every single ad on every website they visit, not just the whitelisted ones from AdBlock Plus. Also, as a free service, AdBlock doesn’t lose anything when users ‘leave’ by uninstalling- its revenue from selling whitelist spots is not affected on small changes to its userbase.
As a game theory scenario (below, where the payoff for AdBlock Plus is in terms of profits, and the payoff for users is in units of happiness), it is safe to assume that the vast majority of AdBlock users (who do not care about the extra whitelisted ads) will only suffer a small decrease in happiness, as shown from the decrease from 1 to 0.9 when AdBlock whitelists ads. However, the decrease in happiness from removing AdBlock Plus is much greater- because users will now be exposed to all the ads online (not just a small number of whitelisted ones), that decrease is represented by a fall to 0.5 base happiness. On the other hand, if we assume that the profit lost by angry customers is very marginal, the increase in profit by allowing companies to pay for whitelisted ads is represented by the shift to 2 (from base profit 1).
The dominant strategy for AdBlock Plus is to whitelist ads- there is no downside in terms of lost revenue. The dominant strategy for users is to keep AdBlock Plus no matter what, because the alternative (facing the full fury of internet advertisements) is much, much worse than dealing with select whitelisted ads. The nash equilibrium, in this case, would be for both parties to continue their dominant strategies: AdBlock whitelists, users keep the software.
AdBlock Plus’s newest move may be controversial, but it’s also ingenious- the company has increased its profits at very little risk to its amount of users. Bravo AdBlock, bravo!
-Justin Kuang
Payoff Matrix- AdBlock Plus vs its users
Reference:
http://www.theverge.com/2016/9/13/12890050/adblock-plus-now-sells-ads
Good article, I agree with your points.