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Mobile carriers consider blocking ads as turf war with Google escalates

Several mobile carriers in Europe are reportedly considering blocking display advertising to their subscribers as tension grows between the telecommunications sector and ad technology companies such as Google. 

According to a report in the Financial Times, one European wireless carrier told the publication that it plans to start blocking ads to mobile subscribers by the end of the year and claims other carriers are also ready to do the same. If the report is correct, this could have a significant impact on the mobile advertising industry, which is currently undergoing significant growth. 

?We expect the first [wireless carrier using Shine?s ad-block software] to happen within the next couple of months, maybe sooner,? said Roi Carthy, chief marketing officer of Shine

?The WhatsApp-Facebook deal from two years ago was a watershed moment in the lives of carriers,? he said. ?That was the moment when they figured they have to decide whether they are going to be dumb pipes or something different. 

?In the two years afterwards, some are trying to be more adversarial while others are taking different attitude.?

Shine, which is based in Israel, developed the ad blocking software, which prevents many types of ads from loading on Web sites and in apps, with the exception of native ads.  

Advertising-free service
Carriers are reportedly looking at a couple of different ways to limit mobile advertising for subscribers. 

One strategy would see the carriers give customers the ability to opt-in for an advertising-free service. 

The more dramatic strategy would be to cut off ads for all subscribers. However, this strategy could draw the ire of technology companies and regulators. 

Ad blocking software has made a mark on desktop but it still relatively new on mobile. 

According to Shine, about 144 million consumers use ad-blocking apps on the Web. 

Shine says that carriers that are planning to pilot the technology are actually looking at this as a way to forge a new kind of relationship with subscribers with the goal of making ads better and less intrusive. 

Stagnant growth
The news comes as telecommunications providers have been struggling with driving growth as they run out of new people to sell services to, their services become commodities and competition grows from over-the-top players such as WhatsApp.

Wireless carriers? role in mobile advertising was expected to be bigger what it is currently is. At the same time, ad tech companies are growing and increasingly encroaching the carriers? turf. 

Facebook acquired mobile messaging app WhatsApp for $19 billion in early 2014, underscoring how mobile messaging is increasingly moving away from text messaging ? a service offered by carriers ? and towards over-the-top service that cut into carriers profits. 

Google, which is exploring new avenues of business, recently launched its own wireless carrier Project Fi in an attempt to shore up its significant mobile ad revenues. 

Carriers appear to be ready to do something to change the situation. 

Last week, Verizon announced a $4.4 billion deal to acquiring AOL, pointing to how it might look to simplify distribution of content, build cross-channel customer profiles and deliver advertising solutions for brands looking to extend their reach beyond television (see story). 

Blocking mobile advertising is another way carriers could rewrite the landscape. Carriers could be looking to put pressure on Google to share a cut of the revenues from the advertising delivered across the infrastructure built by the carriers without any support from technology companies such as Google that are taking advantage of it. 

Better user experiences
Per Mr. Carthy, the move to block ads is not purely about being adversarial. Carriers also see an opportunity to provide a service to mobile users that is already established on desktop. 

?Carriers came to the realization that ad tech was not just making a buck off their back but really polluting the user experience,? Mr. Carthy said. 

?Driving forward, there is a desire to provide users with a less polluted user experience.  In many markets, the penetration of desktop ad blocking is upwards of 25 percent. 

?If you are a carrier and you know that, you would be rather foolish not to ask yourself if you could offer the same thing in mobile.?

Final Take
Chantal Tode is senior editor on Mobile Marketer, New York