While it’s still not clear what internet service providers will do after Ajit Pai’s FCC voted to repeal net neutrality rules, it’s certain that many online business models will be facing major upheavals.
Of special concern is online marketing, which is largely dependent on fast and reliable access to content publishers and consumers, a requirement that was fairly met under net neutrality rules. Online advertisers will now be at the mercy of internet service providers (ISPs), who can decide who gets (or doesn’t get) to see their ads.
Here’s what you need to know about the potential changes that can overcome online advertising landscape, and how you can adapt to avoid damage to your business.
How the repeal of net neutrality will affect online advertising
Gone are the good old days that ISPs were required to treat all traffic equally. With no regulation to hold them back, telecoms and broadband providers are free to block or throttle traffic coming from competitors, or to give companies with deep pockets “fast lanes” or prioritized access to their communication infrastructure. At the very least, things will become more complex and harder to manage.
ISPs might decide to launch their own advertising platforms or cut deals with big advertisers such as Google, Facebook, and Microsoft now that they have free rein to treat their traffic as they see fit.
What this means for you as a brand or advertiser is that you might find your ads blocked or slowed down on some networks. Users hate slow internet experiences, so publishers will become discouraged from displaying your ads to avoid losing their audience. Advertising platforms might be forced to pay up to ISPs to remove blocks and limitations on their ads. They will naturally transfer those costs to you. This can put your advertising under strain if you’re a small business.
Without net neutrality rules, nothing will prevent big advertising platforms from doling out extra money to prioritize or speed up their ads. Previous FCC decisions also lifted any limitations to ISPs’ ability to collect customer data. This means advertising giants can pay ISPs extra to get access to their customers’ data. This pay-to-play model will be advantageous for the bigger players. But smaller platforms that can’t pay up will be left out of the race, eventually leading to a more limited choice for advertisers.
ISPs might also want to take advantage of their newly acquired power to impose content delivery fees on publishers. Publishers will, in turn, raise the price on digital ads.
Long story short, brands and advertisers will be facing a much more complex landscape and will have to cope with pricing that dynamically changes per ISP. This will create further tension between advertisers, publishers, and ad agencies. Transparency in digital advertising will drop to abysmal levels. In a foreseeable future, advertising channels might dwindle and costs will skyrocket if nothing is done to mitigate the changes that are lying ahead.
How advertisers can adapt
While the repeal of net neutrality might threaten old business models, savvy brands and advertisers can turn disadvantages into new business opportunities. With online content delivery becoming costlier, publishers might turn toward subscription-based offerings to support their services, or they can directly approach brands and advertisers to help subsidize their hosting in exchange for organic brand mentions. This could be a “brought to you by” message at the beginning of a video or a sponsored post on a news website.
Advertisers will also have the chance to leverage new technologies. Artificial intelligence will play a key role in helping advertisers make the best use of their ad space without incurring extra costs. Custom-made machine learning algorithms will help find the most opportune time and place to display ads, leaving little room for bad ad placement or lack of coverage. This can be a boon to small advertisers that can’t afford the high costs of large advertisers or obtain the organic reach of the bigger brands.
Post-net neutrality era, the online advertising market is headed for a dramatic overhaul. Size might not be as much as a decisive factor as ingenuity. Those who can adapt to the new dynamics of online marketing will get ahead of the game. Those who stick to old models are in for a big surprise — and it’s not a pleasant one.
by YOAV OZ