As founder of Admeld, an ad-optimization platform acquired by Google for a reported $400 million back in 2011, Ben Barokas knows a thing or two about the ad tech industry. Following a three-year stint at Google, Barokas jumped ship in early 2015 to launch his next venture — Sourcepoint, which is an “ad-blocker blocker” first and foremost.
If you’re new to the ad-blocking debate, here’s the gist: Publishers pay people to produce content, which is often funded by advertisements placed alongside it. Increasingly, people are turning to ad-blocking technology such as Adblock Plus to thwart those pesky pop-ups and banners — however, if the ads are blocked, who’s paying for the content?
That is the crux of the issue. And it’s against this backdrop that Barokas is coming to market with his new project. VentureBeat caught up with him to get the lowdown on the technology.
Sourcepoint’s core raison d’être is to “create compensation choice for publishers and consumers,” as its mission statement puts it. To do this, it can enable ads that have been stymied by ad-blockers, but it can also simply insert new ads, or make it easier for a reader to buy a subscription to a website. So its longer-term vision extends beyond that of merely blocking ads.
While Barokas was cagey about the specifics of how the technology works, he did refer to a blurring of lines between ads and publishers’ content.
“There are many nuances, but at a high level our platform makes it harder for ad-block software to distinguish advertising from content,” he said. “We believe we can recover pretty much any advertising that exists today. We have started with direct-sold brand campaigns because they tend to be of higher value to publishers and higher quality to users.”
Barokas said that dozens of ComScore 500 publishers are currently using the platform, but he didn’t reveal any specific details yet regarding the uptake of Sourcepoint, other than that demand has been “overwhelming,” far-exceeding its most optimistic projections.
“We think this reflects the digital advertising and publishing industry’s collective realization that ad-blocking is a much larger challenge than anyone realized, and one that is going to continue to grow and force a number of changes in the ecosystem,” said Barokas. “You can see this growth reflected in the press as well, where a number of news media outlets are now regularly writing about ad-blocking.”
Ad-blockers vs. online advertisers
Online advertising hit $141.2 billion worldwide in 2014, so it’s big business for publishers. But online advertising is also big business for ad-blockers, who not only seek donations from users, but also let publishers pay for some ads to be included on an exception “whitelist” — advertisements that meet “strict criteria” and aren’t “obtrusive.” Though users can opt out of these ads, too.
We’re seeing ad-blocking emerge from other channels, as well. Apple is introducing an ad-blocking feature in the forthcoming iOS 9 that will arrive with the new iPhones this week — it’s basically an extension for the Safari browser that gives developers an easy way to block nuisance content such as pop-ups.
Some have seen this as a stab at Google’s mobile ad revenues, though Apple has pitched it as a security and privacy measure. While the impact of this move is not yet clear, it could serve to direct mobile advertisers to in-app advertising instead of campaigns on the mobile Web.
Elsewhere, news emerged recently that mobile networks are planning to block online ads in Europe. Why? Well, to target Google. It’s all about leverage — by blocking ads at a network level, or threatening to block ads, they could ask Google and other major ad-serving companies to pay to “unblock” ads, so they can garner a share of the revenues. The general argument goes, “Google doesn’t pay its fair share — networks are forced to increase their infrastructure investments to cater to services such as YouTube.”
It seems everyone has their reasons for wanting to block ads. But what are Barokas’s main reasons for countering this? As someone who previously built a big business in the online advertising industry, is there a degree of altruism in his latest venture? Sourcepoint, after all, is being given to publishers for free at the moment.
“There are elements of altruism and elements of pragmatism as well,” said Barokas. “A year ago, we identified ad-blocking as a potential extinction-level event for ad tech. By that, we mean that if ad-block usage continues to rise, as we believe it will, then the very existence of an independent ad-tech ecosystem is threatened. And by extension, the ability for independent publishers to monetize their content and keep the lights on is threatened as well.”
Barokas added that monetization for publishers is his primary concern, with the early adopters already “making money today by recovering ads.”
But this isn’t just about fighting back against ad-blockers. It’s not about returning things to how they were before ad-blocking skyrocketed. “We want to make advertising better and we think that ad-blocking can be a powerful catalyst in making that happen,” said Barokas. “Better ads, more transparency, less fraud, and more user-control over digital experiences — ultimately, making the Web a better place for everyone — and that’s very much our altruistic mission.”
There is a danger that Sourcepoint could be conveyed as a selfless savior, setting out to rescue an industry in distress. But of course, that ain’t so. For now, it’s all about proving the model, scaling the business, and worrying about the money later. But money is very much on their radar.
“Ad-blocking is ripping billions of dollars of annual revenue out of publisher pockets: it’s hard to imagine a more lucrative opportunity or market,” confessed Barokas. “We are fortunate to have the resources to think long-term about solutions that address not only the tactical challenges caused by ad-blockers, but also the strategic challenges that caused users to adopt ad-blocking in the first place.”
Another sure-fire sign that you’re onto a potential money-spinner is when there are other companies tackling the same problem — it shows there’s a demand. So it may be comforting for Barokas that the likes of Secret Media and PageFair are also looking to make their mark combating ad-blocking.
“While we’re all tackling the same problems, we [at Sourcepoint] believe that we alone have the strategy, team, and resources to execute on long-term solutions,” said Barokas, “such as a cross-publisher subscription model and a transparent user-choice engine that allows users to opt-in and customize their ad and content consumption experiences.”
Sourcepoint may be out to help publishers thwart ad-blockers, but it’s looking beyond that — it wants to provide an option that so many content consumers claim they want — a distraction-free reading experience that also lets them compensate the publisher for their work.
The legal case
Ad-blocking has become a thorny topic, with some questioning whether it is tantamount to theft and others stating that it’s immoral. But it seems it is not illegal — and a number of high-profile cases brought against Adblock Plus in recent times support that assertion.
Barokas doesn’t hold out any expectations that this situation will change any time soon. “Given the legal precedents, it’s clear that users have the right to try to block ads,” he said. “But at the same time, publishers have the right to respond, either by blocking access to ad-block users, or allowing us to help them serve ads in ways undetectable to ad-blocking software.”
It’s a big technical challenge for sure, but it’s one that Sourcepoint and others are clearly up for.