NEW YORK - A year ago, Jim Doherty downloaded software that promised to eliminate Web ads while he surfed. But until recently, the sales manager from suburban Boston didn't realize how well it worked. When - out of curiosity - he turned off the AdSubtract program one day, he became something of a digital Rip Van Winkle. "I had forgotten about advertising on the Web," says Doherty, who spends a few hours a day online. The easily ignored banners had been replaced by a less-avoidable strain of ads: Disney's "big unit," which takes up about one-third of the screen on ESPN.com; the full-column "skyscraper" on the New York Times site; CNET's "big boxes"; and an endless variety of in-your-face pop-up windows.
With advertising click-through rates running a pitiful 0.5 percent or less, Web marketers have turned to more-intrusive forms of advertising. Their strategy is simple: Bigger displays will lead to higher response levels. But consumers are annoyed by the new formats, not least because they tend to slow download speeds.
That's where ad-blocking software comes in. Marketed under such brand names as AdKiller, AdSubtract and Junkbuster Proxy, the software has been quietly spreading among Web users for the past three years. More than 4 million people have downloaded WebWasher, a Siemens spinoff, and InterMute's AdSubtract expects to have 2 million users by the end of the year.
Ad killers may be on the verge of critical mass. Makers of ad-erasing software are striking deals with PC and modem manufacturers to include ad-blockers right in the box. Boston-based InterMute expects AdSubtract to be packaged with 70 percent of modems shipped in the U.S. by June. InterMute's marketing VP Walker Whitehouse says the company is close to sealing deals that would bundle AdSubtract with some of the largest PC brands.
The spread of ad-blocking technology is bad news for the beleaguered online advertising business and the Web companies struggling to survive on it - from local newspapers to online giants like Yahoo. In fact, ad-blockers pose the same kind of threat TV networks face with the advent of recorders like TiVo (which has only 150,000 users) and UltimateTV: Viewers can skip the ads entirely. The temptation is hard to resist, even for the chairman of the Internet Advertising Bureau, Rich LeFurgy. "I got a TiVo in January, and if I watch a TV commercial now it's strictly accidental," he admits. But LeFurgy won't use software to block Internet ads. "That would put all the content sites out of business," he says. On the Net, he insists, ad-blocking software's user base is too small to be of any significance.
Software makers are doing what they can to prove LeFurgy wrong. In addition to bundling their products with modems and PCs, they continue to seek customers online. WebWasher gives away a basic version of its software and aims its marketing at the corporate sector. InterMute and others offer free, bare-bones downloads in the hopes that consumers will pay for the premium version. So far, though, software makers haven't turned to the most obvious marketing tactic. "We aren't doing banner ads," says InterMute's Whitehouse, "although it is tempting."
If ad-busting software catches on, it will force Joe Consumer to face a nettlesome choice: Put up with Internet ads as they get bigger and more intrusive, or pay for Web content that he's used to getting for free. Doherty made his choice. His experiment lasted only a few days before he turned AdSubtract back on.
