For the first time, the social network highlighted ad blocking technologies as a significant risk factor in its annual 10-K filing, noting that they have impacted its ad revenue "from time to time."Although Facebook mentioned ad blockers in its 10-K last year, too, it did so only briefly as one of many things that could potentially impact its ads businesses, whereas it dedicated a whole section to the technology this time around. The warning about ad blockers comes as Facebook delivered blockbuster fourth-quarter financial results and as its ad business appears to be firing on all cylinders.
Ad-blocking software, which nixes display advertising from websites, became a hot topic last year after an Apple operating-system update allowed ad blocking on iPhones and iPads for the first time.Facebook makes about ~96% of its revenue from advertising, so if more people started using ad blockers on all of their devices, it could "adversely affect" Facebook's financial results.
Facebook notes that the adverse impact has so far has been on PCs, which represents a decreasing slice of its overall user base. But it notes that if ad blocking technology takes hold on mobile devices, its financials could be "harmed."Here's how Facebook phrased the risk in its filings:
Technologies have been developed, and will likely continue to be developed, that can block the display of our ads, particularly advertising displayed on personal computers. We generate substantially all of our revenue from advertising, including revenue resulting from the display of ads on personal computers. Revenue generated from the display of ads on personal computers has been impacted by these technologies from time to time. As a result, these technologies have had an adverse effect on our financial results and, if such technologies continue to proliferate, in particular with respect to mobile platforms, our future financial results may be harmed.Facebook isn't the only one fretting.
Last fall, Google's ads boss Sridhar Ramaswamy said that ad blockers were "a blunt instrument and we need to be worried."