What Net Neutrality’s End Means for Advertisers

It sounds like the plot of an 80’s movie about the technology of the future… The End of Net Neutrality.

You’ve undoubtedly heard about the controversial decision made by the FCC late last week. In a 3-2 decision, the commission voted to end the neutrality regulations that have been in place since 2015. I won’t get into all the ins and out of the net neutrality repeal, but you can read more about that here.

In the simplest terms, the newly repealed regulation stated that all websites, large and small, should be treated equally and specifically prohibited:

  • Blocking: Broadband providers may not block access to lawful content, applications, services or non-harmful devices.
  • Throttling: Broadband providers may not deliberately target some lawful internet traffic to be delivered to users more slowly than other traffic.
  • Paid prioritization: Broadband providers may not favor some internet traffic in exchange for consideration of any kind. Internet service providers are also banned from prioritizing content and services of their affiliates.

For weeks leading up the ruling, celebrities, tech leaders and non-famous social media users bemoaned what the potential repeal would mean (somewhat ironically since the platforms potentially most impacted by the decision were social sites) and what these “free” sites would cost in the future.

I haven’t seen any indication that these social sites are going to start charging users. However, the example (remember, that’s all the above image is for now) does raise a lot of questions about online traffic, website usage and social media activity in the future. And of greatest concern to me, what does the decision mean for marketers and online advertisers?

Look, it’s understandable if you’re confused by the whole issue. In May, AdAge published an article entitled “How Advertisers Could Be Hurt if Net Neutrality Dies,” but then seemed to change course in November with a piece bearing the headline “The End of Net Neutrality Could Be Good for Marketers – and Bad for Almost Everyone Else” That story actually was published to their online version the very same day that AdWeek dropped their story “Marketers Fear the FCC’s Plan to Kill Net Neutrality Could Increase Advertising Prices.” With mixed messages like that being thrown around by some of the biggest names in advertising, it is easy to be left wondering what the future holds.

The simple truth is we don’t know just yet. But the concerns that were raised prior to the vote were all based on predictions about large companies now having the legal right to provide limited or even slower access to competitors’ pages. As an example illustrated by Kate Kaye in her article for AdAge, Verizon, which owns Yahoo! and AOL, could choose to allow their customers to access Yahoo! Sports and not have it count against their data plan. They could also, in turn, require customers to utilize data to access ESPN’s page (Yahoo! Sports competitor).

As certain pages see the increased traffic benefits of these partnerships (Yahoo! Sports in our example), they will in turn see an increase in advertisers’ desire to be on their page. Inventory will become a commodity and prices will increase. The entire model has the potential to negatively impact smaller sites, regardless of their content quality, since they aren’t likely to be part of these partnerships. In addition, advertisers are likely to see an increase in ad prices since they are now competing for limited space on sites that are seeing boosts in traffic due to this new structure. And remember, the FCC’s ruling also removed the prohibitions on both throttling and prioritization. So some content, including your digital ads, may load more slowly on sites dependent on partnership agreements, ad spends and other factors that may be out of your control. The level playing field created by digital marketing, the very essence of the medium that gave small, community credit unions a chance to compete against big banks, may be going by the wayside. Soon, it may come down to a simple matter of the companies (and banks) that are big enough to afford to pay for the fastest load times or have a national presence that allows them to enter into these big-time agreements, will dominate the digital marketing landscape as they have the traditional one in years past.

So, where does that leave us? The FCC’s decision has been made but the issue isn’t settled. There has been a call to put the issue in front of Congress who could potentially overturn the repeal.†

Call it coincidence or irony, the net neutrality decision that has the potential to impact the entire basis of internet usage in the future occurred in 2017, the first year in history that digital ad spends surpassed the amount advertisers spent on traditional television buys.* Even if the neutrality repeal stands and forces out some smaller advertisers, digital spends are unlikely to go down, if for no other reason than costs are likely to increase. The only things we can be certain about are digital marketing strategies are going to have to be rethought and redesigned as the entire industry figures out what comes next, and that we’ll be here for you to help navigate the process.

As a postscript, it is worth noting that both Google and Facebook, two of the largest advertising platforms in the world, were against the repeal of net neutrality prior to the vote*. What will happen with their ad platforms post-FCC decision remains to be seen.

*source: https://www.recode.net/2017/12/4/16733460/2017-digital-ad-spend-advertising-beat-tv
† https://arstechnica.com/tech-policy/2017/12/there-will-be-a-senate-vote-to-reinstate-net-neutrality-schumer-says/

Marne Franklin is the Digital Director at YMC and consumes the internet like most people consume air. Want to talk more about digital marketing, net neutrality or why the designated hitter is ruining baseball? Drop her an email at marne@yourmarketingco.com.