Acceptable Ads explained: monetization
Internally, we talk about Acceptable Ads all the time. Ever since we decided to take the middle way, choosing not to block all the things but instead support publishers by creating “Acceptable Ads,” there’s been a simmering cauldron of discussion in our office – as well as engaging conversations with advertisers, publishers, and our open source community – about whether allowing non-intrusive ads is working.
Because we discuss it so frequently, we often forget that you don’t. So even if everything we do seems crystal clear to us, we understand that it might be murky to you.
Hence this blog post. You can read about how we monetize, and why, the criteria for Acceptable Ads and every whitelisted ad in our open forum. But this post has a simpler aim: explain how our monetization works.
While we cannot provide details about specific contracts or partners, we can describe how we monetize.
After applying to be whitelisted and agreeing to meet criteria, a small percentage compensate us while the rest are free – but where do we draw the line between the two?
As you can see on this web page, only advertisers that stand to gain more than 10 million incremental ad impressions per month because of whitelisting are asked to sponsor. To put that in perspective, if 5 percent of a site’s users block ads, for example, then that site needs to have 200 million ad impressions to begin with in order to break the 10 million threshold.
A site’s non-ad block traffic is not included in the calculation. Using this definition, most publishers don’t pay anything at all – in our last measurement, 90 percent were free actually.
This image shows that difference, comparing small site “A,” which would be whitelisted for free, to big site “B,” which would provide compensation.
The second part is calculating the fee. For those not admitted for free, we calculate the licensing fee as a percentage of the extra revenue the advertiser earns after whitelisting. It is not based on total ad revenue, but rather the value our service creates.
This revenue allows us to hire employees to do the hard work providing that service demands. Software engineers have to maintain the whitelist, monitor it and provide customer service to each whitelisted site, whether payment is involved or not. Acceptable Ads also provides value to publishers that was previously unavailable – and not only value, but sustainable value created with the user rather than at his/her expense.
Plus, it encourages better ads. By financially incentivizing nonintrusive and subtle ads, Acceptable Ads is helping to discover new standards for better ads by running what is, at the end of the day, an experiment in innovation.
Right now we’re laying the foundation for a committee to take over Acceptable Ads. Giving over control to independent players from the ad industry, from nonprofits and from tech will hopefully allow the idea to grow while making it more transparent.
Finally, this blog post will not answer every question. Trouble is, we can’t, because NDAs and contracts. So while we cannot provide information about specific contracts, we will continue to take every opportunity to explain how our system works and why we think it’s fair.