Start-up of the Week / ClarityRay's Battle of the Ads

Surfers are signaling they can't stand the ads any more, but they're life-blood to content publishers. What to do?

Inbal Orpaz
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Inbal Orpaz

One of the things most guaranteed to annoy Internet users are the ubiquitous advertisements. They cause pages to load slowly. They pop up in separate windows or appear before YouTube videos start to play. Surfers have no option but to become used to the presence of these ads, because without them publishers (who host or deliver content to web users) will have no income and won't be able to keep providing free content.

However, some surfers have found a way to block advertising and surf the net undisturbed, by means of installing ad-blocking software. Enter the Israeli start-up ClarityRay, which sheds some light on the scale of the problem, and helps publishers to contend with it.

According to a recent study publicized by the company, the rate of blocked impressions (each impression being a separate ad displayed to web page users) in the United States , Europe and Israel is 9.3 percent.

"The situation is not viable for publishers. You can't expect a publisher to lose ten percent of his income," says ClarityRay co-founder and CEO Ido Yablonka.

According to him, publisher's losses amount to billions of dollars a year. He adds that a large proportion of publishers don't even realize how bad the problem is.

This study was conducted through analyzing over 100 million impressions across leading and European publishers over the last few months.

The study notes that there are high levels of variance between ad-blocking levels on different sites. There are websites where half the advertisements are blocked, in accordance with the type of web browser used, geographical location and other demographic factors. The type of websites most affected by ad-blocking software are technology websites, where 18 percent of impressions are blocked.

In contrast, only 6.1 percent of impressions on business and financial websites are blocked. The discrepancy – why s many more ads are blocked on tech sites – is probably because visitors to technology sites

Analysis by geographical location shows that in Germany , Hungary and Austria , a fifth of impressions are blocked (over 19 percent). The type of browser internet users employ also has an effect. Browsers which allow extensions (programs that extend the functionality of the browser), such as Firefox and Google Chrome, have a higher rate of blocked impressions.

ClarityRay's research notes that ad-blocking extensions are the most popular add-ons for these two browsers. In contrast, Microsoft's ancient browser – Internet Explorer – only blocks 3.9 percent of impressions.

Moreover, ClarityRay predicts that the problem will continue in the future. If the trend that has characterized the last few months continues, Google Chrome's market share will keep expanding as Internet Explorer's market share declines. Therefore, the company predicts that ad-blocking will double within the next 20 months.

As smartphones continue to gain a foothold on the mobile-phone market, there is an expected correlation in the rise of blocked impressions there as well. There are already signs that smartphone users have started to block ads - in iOS, Apple's mobile operating system, the rate of blocked impressions is 1.3 percent, and in Android, Google's operating system, the rate is 2.2 percent.

So what can be done to deal with this? "We think that the ad-blockers indicate a real need on the part of the users – their tolerance for advertising is diminishing," says Yablonka. In order to deal with the problem, the company has developed two products. One, which is aimed at users, allows them to pay a fixed monthly amount to publishers to avoid viewing the ads on their sites, while the other allows publishers to place adverts in places that are affected by the ad-blocking software through the use of a technological solution that bypasses it.

ClarityRay has five clients in Israel , Europe and the U.S. They collect a fee from publishers and paying subscribers. The company has recently received funding of $500,000 by Saar Wilf, who now serves as chairman. Wilf is the founder of Fraud Sciences, a company which was sold to PayPal for $169 million in 2008, becoming the basis for an Israeli-based R&D center dealing with online anti-fraud prevention.