How the Repeal of Net Neutrality Could Impact Local Advertisers
December 20, 2017 | Contributed by: Sean Flavin
The Federal Communication Commission (FCC) voted last week to repeal net neutrality regulations. In 2015, the FCC passed the net neutrality mandate classifying internet service providers (ISPs) as “common carriers,” which required them to treat all internet traffic equally. This latest decision reversed that by classifying ISPs as “information services” which means they can block even lawful content (blocking), slow down specific services (throttling) and speed up service for businesses that pay more (paid prioritization).
In the time between the two votes, the topic of net neutrality went from relative obscurity to an all-out donnybrook pitting ISPs against a coalition of various groups backed by bipartisan public opposition.
The repeal still needs to clear the courts so it’s difficult to determine the full impact until it’s rolled out. Even if the repeal goes through, many ISPs have said they still won’t block or throttle sites. (The FCC’s Chairman also assured internet users they’d still be able to do the Harlem Shake. So, we got that going for us, which is nice?)
However, ISPs have practiced many of the activities banned by net neutrality in the past. For example, AT&T blocked FaceTime from iPhones in 2012 unless customers purchased a more expensive plan. These efforts gave users a simple choice: use AT&T’s products or pay more for the ability to use third-party tools.
The ISP industry has also spent massive amounts of cash to control these types of regulations. Net neutrality may very well end up on Capitol Hill. To make sure their interests are well-represented in Congress, the ISPs have contributed $101 million to members since 1989. These contributions already helped ISPs win a huge legislative victory last year to dismantle customer privacy protections.
So, it is likely the net faces a non-neutral future which could have major repercussions for many industries and businesses – including SMBs and multi-location brands who rely on digital advertising to reach local consumers. Here are four ways these changes could impact local advertisers.
Decreased traffic for websites
Without net neutrality, ISPs can charge online publishers for access to faster connectivity lanes or consumers for top tiers of service, resulting in a pay-to-play model like cable TV. Consumers could still quickly access major websites who pay for top speeds but would see much slower download times for smaller sites who can’t or won’t pay more.
This is a big deal because page speed has a significant impact on site traffic – when load time jumps from one to three seconds, the probability of a user leaving the site increases by 32 percent. Which means that local brands could see significant declines in traffic to their own sites.
Decreased ad performance on small and medium sized publisher sites
Brands advertising on lower-tier websites might have more to worry about than a decline in traffic on those sites. Without net neutrality, “an ad being served on a website might not load at a reasonable speed for a consumer, prompting them to skip ahead and therefore (mess) up a campaign’s metrics,” Joshua Lowcock, U.S. EVP and chief digital and innovation officer at UM, said in a recent Adweek article.
On the flip side, some industry pros are more optimistic. Shelly Palmer, the CEO of The Palmer Group, offered a counter-argument in a recent piece for AdAge.
“This (decision) could be a perfect opportunity to pair programmatic creative with programmatic media buying. There will be hundreds of different rate plans targeted at specific cohorts. There will also be opportunities to create new consumer and brand experiences that include ‘unlimited’ bandwidth or ‘free’ bandwidth offers.”
It’s too early to tell who will be right but don’t bet that ads on lower-tier sites would see an increase in performance – for every second delay in mobile page load, conversions can fall up to 20 percent.
The Duopoly grows stronger
Google and Facebook (a.k.a., the Duopoly) are expected to rake in 63 percent of all digital ad investments in 2017, according to eMarketer. While both companies support net neutrality, they have the cash to stay in the digital fast lanes if it goes away. But, not all digital properties are as fortunate. If internet traffic flocks to a few major sites, demand for ad impressions on those sites could skyrocket which would likely increase advertising costs.
Search results become a lot more competitive
On Google, search results live on the same domain as the search engine. Since Google would likely be a top-tier publisher, those results would remain in the internet’s fast lanes, making it easy for consumers to access. For local brands, this makes it more important to:
- Optimize local listing, paid search, shopping and organic results to get crucial business information in front of consumers.
- Enhance those results to provide consumers a direct route to contact the business rather than driving them to a brand website (e.g., enabling call extensions in Google AdWords so consumers can easily contact the business.)
A game changer?
Net neutrality provided a level playing field that allowed brands of all sizes to compete for consumers’ attention online. The decision to repeal it this month means that landscape is likely to change. But digital advertisers should be used to this. The fast-paced and innovative nature of the internet means there is no status quo. Post net neutrality, brands will need to evolve the same as they always have.
To steal a line from The Wire, the “game’s the same, just got more fierce.”