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Online Ads: how they make money, how cookies work and how they affect your privacy

Much of the best content on the internet is funded by advertising. Here we explore how that industry works and how you are its most vital component.



If you don’t like the idea of paying for bandwidth for ads, or if all those animated adverts simply drive you to distraction, you might want to consider ad-blocking software. Ad blockers are available for all major browsers. Probably the most popular is AdBlock Plus for Mozilla’s Firefox browser, which has around 10 million daily users.

We talked to Adblock Plus developer and Mozilla employee, Wladimir Palant. He told us there’s an ongoing arms race between advertisers and filter list authors: “The most notorious example is probably [one of a number of companies that specialises in placing content behind adverts or surveys]. Personally, I block most ads. I made an exception for Google Ads, however, which actually try not to be annoying. I also whitelist (allow ads on) a few websites, ones where the owners actually keep on eye on what ads are getting displayed.

Funding the Web: MSN
↑ AdBlock Plus efficiently strips the ads from a web page

“I am not against advertising per se; it has its uses. What I don’t like is the intrusive advertising that we see all too often. Ads shouldn’t make noise, they shouldn’t try to steal your attention with animations, they shouldn’t cover up the content you are trying to read. And of course they shouldn’t waste your PC resources more than necessary, invade your privacy or try to make you download spyware – all issues that we are facing today.”

Ad blocking is a highly contentious issue. Some argue that it costs websites money, as they are serving you content but not profiting from showing you ads. Supporters of ad blocking argue that they wouldn’t take any notice of the adverts anyway, and certainly wouldn’t click on them. However, this argument doesn’t wash when you factor in brand awareness.


The main alternative to advertising is to charge subscription fees, often referred to as a paywall. The financial press have been very successful in implementing these. For example, you’ll need a subscription to the Financial Times to see its breaking news plus comment and analysis. However, a large percentage of these subscribers will undoubtedly claim back the cost from their employers as a business expense.

News Corp boss Rupert Murdoch has been outspoken in his support for paywalls on news sites. He recently attacked search engines for aggregating news stories: “We are going to stop people like Google or Microsoft or whoever from taking stories for nothing.”
Murdoch then went on: “I got a glimpse of the future last weekend with the Apple iPad. It is a wonderful thing. It may well be the saving of the newspaper industry.”

Mobile devices in general are a double-edged sword though. Apple’s business model certainly encourages owners to pay for content, but generally speaking portable devices such as smartphones are hurrying the decline of newspaper sales.

As mentioned earlier, News Corp has introduced a paywall to the Times and Sunday Times sites. The papers, which were previously on the same website, have split into two new sites: and Access to both sites will cost £2 a week, which sounds quite reasonable compared to around £6 for a subscription to the print versions. Those with existing print subscriptions will get access to the new websites for free. The success or failure of these launches is critical to the shape of the net to come.


We’ve seen how display advertising can compromise web design, track your web usage and even be a carrier of security risks. However, it’s undoubtedly an essential part of the internet as we know today. However, change seems to be on the way. We haven’t yet reached the tipping point, where print media falls away and leaves the internet to stand alone, but that day is approaching rapidly.

Recent developments such as the introduction of adverts into Twitter and the new iAd platform for placing ads into free iPhone applications show that the industry is continuing to come up with with new ways to place its products in front of us. It’s hard to say whether we should be supporting these efforts as funding for a free internet, or fearing the next interfering technology that might blight our favourite sites or services. In the end a balance needs to be struck, or else more web users will choose to block adverts entirely.

It’s easy to look good when you’re on top of the pile, but Google’s provision of excellent software tools, which then tie into and help drive its ad-based business model, certainly makes the company a poster boy for the industry (Click here for more details on how Google makes it money.). News Corp’s restrictive paywalls may seem like the big bad wolf at first glance, but remember that investigative journalism doesn’t come cheap and is a cornerstone of any democracy.

Looking into the future, we envisage an internet funded by both advertising and paywalls, with consumers voting with their clicks. The real changes that need to occur are in attitudes. Advertisers and website publishers need to see their readers as community members to be respected and advertised to with care, rather than simply a commodity to push products upon. But web users must also stop taking free content for granted, as no-one can expect high-quality content for free.

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