Net Neutrality: The Media Buying Impact for Marketers

Closed Internet

Net neutrality, as defined by TechCrunch, is the concept that Internet Service Providers (ISPs) and governments should treat the delivery of content and data on the Internet equally. Changes to net neutrality—such as those recently proposed—may have a significant effect on your digital media strategy as a marketer.

Understanding Net Neutrality

With net neutrality, all content comes at the same speed and cost regardless of the user, destination, site provider, and/or content type. Think of it like a highway: anyone can access any road they want for free with the same expectation of speed, service, and traffic as everyone else.

In a non-net neutral world, however, drivers with more expensive cars who are willing to pay for it can access faster lanes on the same road with light traffic. They can avoid construction delays, and, even in some cases, block certain roads to other drivers so that they are not accessible at all.

The recent debate has focused on whether:

  • A neutral Internet should be law, or
  • Internet service providers should be able to provide faster connections for companies willing to pay for it.

The latter option is called “paid prioritization.” In a controversial ruling earlier this year, the FCC allowed ISPs to charge popular tech companies like Facebook and Google to deliver their content faster. ISPs are invested in the outcome of cases like this due to the disproportionately large bandwidth and carriage fees incurred by video-heavy sites like Netflix, YouTube, and Hulu.

What Would the Lack of Net Neutrality Mean for Media Buyers?

Currently, there is no premium for content delivery speed. The website and advertising for Wal-Mart generally serves at the same speed as a mom-and-pop store (barring no technical issues). If additional site speed becomes a premium, ISPs could charge brands more for better-performing Internet with premium “fast lanes” that load faster, crash less, and deliver content more effectively.

The media buying equivalent to this proposed change can be found in TV media buying. Now, advertisers can pay broadcast channels more for access to a mass audience that is more diverse and less targeted, ultimately shutting out companies with smaller budgets.

As with TV, the adoption of proposed changes to net neutrality may increase media buying fees and advertising costs, decreasing the number of spots smaller business marketers and brands can afford to make.

The Impact on Media Buyers

Based on our media research, here are some examples of how changes to net neutrality may affect the way that you market through digital channels:

  • Decreased conversions: Page load speed factors significantly into how well your website or digital advertising converts. This is particularly true if you are an e-commerce site. Research shows that 46% of online shoppers cite checkout speed as the number one determining factor in whether or not they will return to a site. If you advertise on a site that has slower loading speeds, or if your own site is slower, your bottom line may suffer.
  • Higher cost to deliver content: Paid prioritization could mean that websites pay higher operational costs, such as new taxes and fees, to deliver content. Video and multimedia content tend to use higher bandwidth and may cost even more. Media buyers may experience a rise in their own expenses as websites pass the cost on and charge higher advertising rates.
  • Potential decline of content quality: The higher cost to deliver content may mean that websites and media producers cut back on their budgets, offering lower quality content. As a result, website audiences may tune out, and media buyers may find a lower return on their advertising investment. Slower loading speeds may also have this effect.

One potential benefit of net neutrality changes will be that they may open the door for new innovations in revenue models and inventory options. Advertising Age cited an example of brands subsidizing and sponsoring access to paid video sites like Netflix and Hulu Plus as a potential new ad inventory option for media buyers.

So, it may not be all bad news for marketers and media buyers, depending on which side your company lands on. Only time will tell what the future for net neutrality holds.

Capitol Media Solutions keeps marketers informed about technological and legislative changes that can impact how they buy media. Contact us about developing your digital media strategy.

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