SAN FRANCISCO (CNN/Money) -
Two hundred fifty-five. That's how many pop-up ads my Google toolbar has blocked for me since I installed the software on my computer a little over two weeks ago. That number would likely be far higher if I wasn't out of my office for four days during that time.
Pop-ups are everywhere. In just the third quarter of this year, nearly 20 billion pop-up ads were served, according to Nielsen/Net Ratings. That's up from 8 billion in the third quarter of 2002.
Clearly, the form resonates with advertisers, and for good reason: pop-ups are 13 times more likely than a standard banner ad to result in a clickthrough, according to Advertising.com.
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That could be about to change, however. Sometime in the first half of 2004, Microsoft (MSFT: Research, Estimates) will introduce a pop-up-blocker application to a Service Pack upgrade for Windows XP.
Which means that pop-up-blocking software -- until now something that many consumers had to actively hunt out and download -- will soon come shipped with Internet Explorer, the browser that sits on more than 90 percent of desktops.
A Microsoft spokesperson said it's too early to tell whether the user will need to opt out of having the pop-ups blocked, but one thing's for certain: Pop-up advertising's days are numbered.
"If pop-up blocking is the default setting [for Internet Explorer], it would effectively end the pop-up market," says Nate Elliott, an analyst with Jupiter Media.
The customer first?
Online services that offer -- or are planning to offer -- pop-up-blocking services claim that they're simply giving the people what they want. Time Warner's (TWX: Research, Estimates) AOL (a sister company of CNN/Money), Google, Yahoo (YHOO: Research, Estimates), and scores of smaller firms are offering consumers those services.
Since nearly 90 percent of Internet users surveyed by Forrester report that pop-ups interfere with their Web surfing, the customer-service win is significant. (Forrester research also shows that 15 percent of North American Internet users have installed pop-up-blocking software on their computers.)
But there's another big reason why pop-up blockers are proliferating: Many industry observers believe that the money displaced by the near-eradication of pop-ups could find its way into the other successful online direct-marketing technique: paid search results.
Guess which services make a lot of money from those. AOL, Google, Microsoft, and Yahoo, among others.
"Companies absolutely make more money selling search [than pop-ups]," says Scott Ferber, CEO of Advertising.com. "Search commands a higher [rate] and there are more to sell."
Ferber estimates that search-results ads cost two to three times as much as pop-up ads, generating more revenue for search firms. According to statistics released last week by the Interactive Advertising Bureau, keyword-search advertisements made up 31 percent of all Internet ad revenue in the second quarter of 2003, up from only 9 percent in the same period in 2002.
Rich-media ads, the category in which pop-ups fall, collected only 6 percent of revenues during that time, up from 3 percent last year.
Rather than harming the Internet advertising industry by killing off a form that performed well and doubled in revenue in the last year, several companies could gain additional revenues by convincing advertisers to switch from pop-ups to keyword-search ads.
It might stand as a rare win-win for advertisers and consumers alike.
That's good news for the industry, which is finally seeing respectable growth again after a rough couple of years. According to the IAB, Internet advertising revenues in the United States grew 10.5 percent faster in the first six months of 2003 than they die in the first half of 2002.
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