Impact of Ad-Free Subscription in the UK on Advertisers

What does an ad-free subscription in the UK mean for advertisers?

Meta recently announced that users in the UK will have the option of paying £2.99 per month (from desktop) for an ad-free subscription. I’ve seen the claim that this could actually be a good thing for advertisers.

But is it?

The Argument

The argument goes like this…

If someone is willing to pay to remove ads, they weren’t your customer in the first place. By paying for this subscription, they are proving that they wouldn’t have clicked on your ads. And by removing these people from the user pool, it might actually make ads more effective.

It makes sense, in theory. But I don’t think it’s that simple.

Why it Doesn’t Hold Up

Let’s think about the people who would pay to remove ads from Facebook and Instagram. The assumption is that they did this because they hate ads and would never click on them. But that generalization doesn’t hold up.

Just because someone pays to remove ads doesn’t mean that they don’t click them. They might pay for this as a status thing or an attempt to improve their own user experience. They may know that they have clicked on ads in the past, but they want to limit their feed going forward.

Even if they claim they never click on ads, we’ve heard this before. What people say rarely reflects what they do. A good ad that solves a problem is often not seen as an ad at all.

There’s also the matter of the demographic that signs up for this. By subscribing, they prove they are internet savvy and willing to pay for something online. They’re probably power users of these apps. Aren’t these often our potential customers?

And given the low 2.99 price, I’d expect more people to sign up for this in the UK than have in the EU. Meta priced the EU version only to appease regulators. But the UK version is clearly priced to sell.

Time Will Tell

So I don’t buy the argument that the potential revenue pool for advertisers will be improved by removing these people. That said, it’s entirely possible that the user pool is so deep that it will have a minimal impact.

So, will this hurt advertisers? Time will tell. Ignoring it, though, would be foolish.

We likely haven’t seen the end of the option. As regulatory pressure increases, it’ll spread to other parts of the world.

And what happens if this is a huge win for Meta? Maybe it will be popular, which could give usage driven by an ad-free experience a huge boost. It could even improve activity for those who don’t sign up if those with the subscription are more active.

This doesn’t mean that the advertising business is going away, of course. The main reason the ad-free subscription is attractive is because the alternative is an ad-driven model. But it’s way too early to tell how this will impact everyone involved.

Watch this closely.