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a16z Podcast | Advertising vs. Micropayments in the Age of Ad Blockers

a16zChris Dixon, Benedict Evans
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  • Smartphone usage is projected to remain predominantly within closed apps like Facebook rather than web browsers, limiting the impact of ad blockers to web views; however, a default ad-blocking setting by Apple would constitute a major industry disruption.
  • Non-default software features, such as ad blockers, are expected to capture only 5% to 10% of users, a segment presumed to have low purchasing intent, while default settings (e.g., Google Maps) drive significantly higher adoption.
  • Publishers may face sustainability challenges prompting shifts toward app-based distribution, micropayments, or new methods, though Facebook could act as a "new browser" or "ad blocker" that forces reliance on Instant Articles to maintain reach.
  • Dependency on Facebook is highlighted as a critical risk; if a publisher derives 50% of traffic from the platform, it effectively blocks alternative monetization channels, rendering other ad-blocking discussions less relevant.
  • Micropayments face high friction due to the lack of unified identity platforms and complex payment integrations, with existing credit card and PayPal systems deemed flawed for covering the global market.
  • Architectural solutions like Bitcoin are suggested as potential enablers for small, casual payments without high transaction fees, though adoption remains uncertain and the ecosystem is challenged by a "chicken egg" problem requiring simultaneous publisher and user buy-in.
  • The ad tech industry and banner ads are predicted to largely disappear, replaced by native advertising and identity-aware platforms like Facebook and Google.
  • Despite a transitional industry shakeout, the publishing sector is expected to become stronger than ever, driven by a predicted global addressable market of six billion people by 2020.
  • Smartphone user growth is forecast to increase from 2.5 billion to four billion, creating a revenue multiplier that could offset a tenfold or hundredfold reduction in per-user monetization.
  • Following the market consolidation, high-quality journalists, writers, and content creators are expected to perform well in the new environment.