Facebook and Google are banning bad ads (GOOGL, FB)

These two companies are teaming up with other giants in tech and advertising as part of the Coalition for Better Advertising, which includes Microsoft, Group M, and The Washington Post among its members, according to Ad Age. The Coalition is reportedly considering entirely blocking the web’s most annoying and interruptive advertising formats in browsers. Google and Facebook have each attempted to make mobile advertisements less intrusive and faster-loading, the former through its Accelerated Mobile Pages (AMP) solution, and the latter through Facebook Instant Articles.

Here’s why they’re doubling down with other leaders in the industry:

For Facebook, cleaning up the mobile web is important for the tech giant to keep people spending more time within its mobile app. Consumers spend a lot of time on Facebook in the app’s mobile webview browser, meaning they access the mobile web by clicking on a link within the Facebook app. Web access via Facebook is so common that Facebook mobile webview accounted for nearly 50% of all mobile web traffic on iOS in Q4 2016 and 34% of all mobile web traffic on Android, according to a 2017 report from ScientiaMobile (see chart, below). Facebook previously attempted to fix the issue of poor mobile webview experiences with the launch of Instant Articles (IA), which provides faster page load time and more streamlined ads. While this program gained early traction with publishers, in recent months publishers have been abandoning the program, claiming IA doesn’t result in better monetization.

Google is banking that consumers will shift their mobile behavior and spend more time on the mobile web rather than almost entirely in-app. The company’s Instant Apps effort, which lets consumers access only the most immediately relevant part of apps through a mobile browser without downloading the app, is a big part of that strategy. The technology enables consumers to find and access these apps via Google Search.

Google has previously attempted to coerce mobile entities to create cleaner web pages and ads by prioritizing mobile-friendly websites in its search results. This is because Google needs the mobile web to be clean and enjoyable in order for consumers to shift mobile behavior more toward the mobile web. Stock browsers accounted for 48% of web traffic on iOS and 62% of web traffic on Android in Q4 2016. Google’s Chrome browser accounted for 45% of all mobile browser web traffic globally as of March 2017.

Outside of these two tech giants, cleaning up the mobile web more generally is important for overall mobile internet usage in developed and emerging markets alike. In North America and Europe, mobile web users have very low tolerance for ad formats like pop-up ads with countdowns, large sticky ads at the bottom of pages, and interstitial ads, according to survey results from a study run by the Coalition for Better Advertising. In emerging markets, intrusive ads on mobile tend to be a drain on expensive and slow data allotments. Consumers in both markets turn to ad blockers in order to have a better overall mobile web experience, a step that may not be necessary if the worst offenders can be blocked from the get-go.

There's no question that consumers are increasing the amount of time they spend consuming digital media, while advertisers are increasing their ad budgets into digital channels. What may come as a surprise, however, is the complexity of the interconnected web of companies involved in the process of delivering digital advertisements to end users. Collectively, these companies are known as “advertising technology,” or “ad tech” for short.

Ad tech companies are intermediaries between advertisers and publishers, and add value to the ad delivery process by consolidating inventory, automating workflows, and offering precise targeting capabilities at scale. The automation of ad buying is also known as “programmatic advertising” — that is, using technology and software to buy digital ads. Programmatic ad spend in the US is quickly ramping up: It will top $20 billion this year and reach $38.5 billion by year-end 2020.

But ad tech's ascendancy isn’t without its drawbacks. The advertising industry in the US is dominated by two main players: Facebook and Google. As a result, ad tech players are fighting for a pretty small piece of revenue pie, one of the many drivers of increased consolidation in the space.

Kevin Gallagher, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on ad tech that examines the different players involved in the process of delivering ads, the formats that are driving growth (notably mobile and video), and the factors that are driving increased consolidation over the coming years.

Here are some key points from the report:

In full, the report:

Interested in getting the full report? Here are two ways to access it: