Many online news publishers finance their websites by displaying banner ads alongside content. Such display of ads is generally perceived as undesirable by readers. But does it also harm their news consumption? That is an important question because reading high quality political and economic news contributes to many socially desirable outcomes such as shaping voters’ political attitudes, informing investors’ financial expectations, and increasing readers’ health-related awareness. Well-informed citizens are essential to a functioning society.
“… ad exposure led to a 20% decrease in the number of articles views and a 10% decrease in the number of news categories consumed.”
With colleagues Shunyao Yan and Bernd Skiera from Goethe University Frankfurt, I set out to answer this question by examining the impact of ads on news consumption in a real-world setting. We looked at 3.1 million anonymized browsing sessions from 79,856 users of a news website, some of whom had adopted an ad blocker. We compared the news-reading behavior of those who blocked ads with those who did not, essentially by examining how their news reading behavior changes before and after they blocked ads in what is called a “difference-in-differences” approach. The full empirical study and its results are available on SSRN.
The importance of quality news consumption and the impact of ads
Using data from a highly reputable news publisher in Europe, we found that exposure to ads alongside news content affects news consumption more significantly than was previously appreciated. Our study reveals that ad exposure led to a 20% decrease in the quantity of news consumption (the number of articles viewed) and a 10% decrease in the variety (the number of categories) of news consumed. The effect was driven primarily by a decrease in consumption of “hard” (political and economic) news and commentary.
What Our Findings Signify About Ad-Blocking and News Consumption
We find that adopting an ad blocker has a robust positive effect on the quantity and variety of news consumption. This effect is primarily attributable to a learning mechanism: readers have a more positive experience with an ad-free site. A cognitive mechanism, wherein ads impede processing of content, also may play a role.
“Light users, users on a smartphone, and users with older browser software are more strongly affected by ad blocker adoption.”
Taken together, these findings suggest that adopters of an ad blocker gain a double benefit: ease of news consumption improves in the absence of ads, and users learn more about the news than before. The magnitude of this effect varies. Light users are more strongly affected by ad blocker adoption. The effect is also stronger for mobile users and users with older browser software versions suggesting that the annoyance of ads and page loading speed enhanced the effect.
Implications and Applications of Ad Controls on News Consumption
Our findings have clear implications for news publishers struggling to find a sustainable business model. Publishers, reliant on advertising income, suffer greatly from ad blockers. Some pay consulting fees to ad blocking providers to learn how to create “acceptable ads”. Our findings show that eliminating ads will enhance users’ consumption behavior, resulting in more repeat visits to the website, a key loyalty metric. This finding suggests that alternative business models less reliant on ads might benefit publishers and users alike. For example, publishers might consider ad-free subscription plans, or calculating which content should have ads and which should be ad-free.
“…eliminating ads will enhance users’ consumption behavior, resulting in more repeat visits to the website …”
Our findings that ad exposure influences the quantity and variety of news consumed may have social value. For example, ad exposure can be leveraged to discourage the consumption of low-quality or fake news or to encourage more diverse news consumption, mitigating problems such as “echo chambers”, in which a reader only consumes information or opinions that reflect and reinforce their own. A further question that arises, beyond the scope of this paper, is: how much news consumption, and which kinds of news, are desirable from a societal perspective — and should policymakers intervene? For example, would it be beneficial to use ads to discourage consumption of low-quality news and remove them to encourage consumption of higher quality news?
This article was originally published on Medium.
The full working paper by Shunyao Yan, Klaus M. Miller and Bernd Skiera (all Goethe University Frankfurt) is available on SSRN.