AAPL Apple Inc

By Jack Marshall 

When Dean Murphy created "Crystal," an application to help users block ads on Apple Inc.'s mobile devices, he knew there was pent-up demand from consumers frustrated with how cluttered the Web has become.

Still, the U.K.-based software developer was surprised by how fast consumers snapped up his product. In the week following its Sept. 16 launch, the 99 cent app received over 100,000 paid downloads, according to data from mobile-app market intelligence firm Apptopia, generating an estimated $75,000 for Mr. Murphy.

He's hardly the only developer cashing in on ad blocking. A cottage industry is emerging around the phenomenon as it gains momentum with consumers seeking to avoid ads on both mobile and desktop devices.

Apple's enabling of the technology in the latest edition of its mobile operating system "iOS" has given rise to many new entrants, from BlockBear to Blockr. With over 35,000 downloads and a $3.99 price tag, an iOS blocker called "Purify" has generated over $150,000 dollars in revenue since its launch on September 16th, Apptopia said.

In most cases, these are small-time software developers -- one or two-man shops -- doing this in their spare time. Mr. Murphy spent two months creating Crystal by himself from his home. He views Crystal as a way to challenge himself and improve his programming skills, he said, describing the app creation process as "a labor of love."

Ad-blocking could become a major threat to ad-supported online publishers if it continues to gain traction. Many publishers say they haven't seen a material increase in mobile ad blocking following Apple's new software release, but describe the wider issue of ad blocking as a serious and growing concern.

Some ad-blocking software developers are experiencing pangs of conscience as they consider that sites that rely on ads for revenue might get crushed by the blocking barrage. A blocker called "Peace" generated over $110,000 dollars in sales and 38,000 downloads in just two days last week, according to Apptopia, before its creator Marco Arment removed it from the store.

"I don't feel good making [an ad blocker] and being the arbiter of what's blocked," Mr. Arment wrote in a blog post explaining his decision.

There's money to be made blocking ads and, as it turns out, allowing ads to evade ad blockers. Eyeo GmbH, the company behind popular desktop ad-blocking tool Adblock Plus, now accepts payment from around 70 companies in exchange for letting their ads through its filter. Eyeo stipulates that they must comply with its "acceptable ads" policy, meaning their ads aren't too disruptive or intrusive to users. In total, ads from some 700 companies meet the acceptable ads policy, an Eyeo spokesman said.

Eyeo is now reaching out to developers of other ad-blocking tools to cut deals that allow certain ads to pass ads through their filters, too, in exchange for payment.

Mr. Murphy said he's taken Eyeo up on its offer, and plans to implement an option within his app whereby "acceptable" ads will be displayed to users. The feature will be switched on by default, Mr. Murphy said, and he will receive a flat monthly fee from Eyeo in return. Mr. Murphy declined to disclose the fee, but said he expects to make less money from Eyeo's payments than from sales of the app itself.

According to Mr. Murphy, he isn't adding the option for financial gain, but rather to make sure publishers aren't overburdened by all-out blocking of ads on their sites.

"Given how popular Crystal has become, it doesn't provide any way for users to support publishers," he said. "I decided that's a good feature to provide, and from what I've seen the 'acceptable ads' policy doesn't let through what I'd classify as bad ads."

Eyeo declined to disclose which companies are on its "whitelist" -- those that escape ad-blocking. According to a person familiar with the company's business relationships, Eyeo's paying customers include Google Inc., Microsoft Corp. and Taboola.

Typically the company seeks payment from any firm that generates more than 10 million unblocked ad impressions a month, an Eyeo spokesman said. Eyeo's fee is tied to the amount of revenue its clients garner from the ads it passes through its blocker.

Some companies are taking a different approach to ensure their ads are seen, using new technology tools to disguise their ads and to sneak them past ad-blocking tools.

New York-based startup Secret Media, for example, says it's now working with 10 publishers in the U.S. to help them deliver video ads in a way that cannot be detected by ad-blocking tools.

Most ad-blocking software works by preventing code from known advertising companies from loading into web pages. Secret Media's product works by obfuscating that code, thereby making it hard for ad blockers to identify it and to prevent it from loading on users' machines.

Secret Media Founder and Chief Executive Frederic Montagnon said the company's goal is to preserve the ad-supported media business model. But even Mr. Montagnon said he understands why consumers want to block ads.

"The number of banners is too much," he said. "If you mix banners with video and everything else, it's too much for everyone. At this stage the advertising market is going crazy."

Because of that, Mr. Montagnon said Secret Media plans to only work with "premium" publishers who don't bombard users with large amounts of low-quality advertising.

Mike Shields contributed to this article.

Write to Jack Marshall at Jack.Marshall@wsj.com

Access Investor Kit for "Apple, Inc."

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US0378331005

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

September 24, 2015 13:47 ET (17:47 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.