How the end of Net Neutrality could affect Madison Avenue

As the internet carries more and more data-heavy content, carriers like AT&T and Verizon are turning to marketers and their advertising agencies to cover the higher costs.

By now most of us have heard the debate surrounding net neutrality. Under the current rules of the open Internet, ISPs aren’t currently allowed to distinguish between different kinds of traffic. But recent court decisions have opened the door to allowing Internet providers the right to charge more for the increased bandwidth required to stream bigger files like movies and music. And carriers are hoping new rules being established by the Federal Communications Commission will allow them to create new revenue streams that help them pay for all that extra bandwidth.
Some have suggested that members of Netflix and other services that use more bandwidth pay the extra costs of transmission through higher subscription fees.  A second idea is to create models that allow advertisers to pay for the extra costs, just as they sponsor TV programming and much of the content on the Internet.
As advertisers, this new landscape presents some opportunities – particularly when it comes to ad-supported bandwidth. Under this system, brands will have the opportunity to pay for consumers to access a certain site or content, particularly on data-heavy channels like YouTube or Hulu. For example, UnitedHealth Group recently agreed to sponsor the cost of streaming a branded video to a mobile device over AT&T’s 4G wireless network.  This could become the equivalent of the new homepage takeover, although at this early stage experts still aren’t sure if consumers will be grateful or spiteful.  While intriguing, advertisers must tread carefully as new policies unfold. The support of sponsored Internet is going to “come with the disclaimer that you’re now supporting this new world order,” according to Razorfish VP of Media Julie Weitzner.
There is also concern that the end of net neutrality will also cost marketers in a variety of ways. In a recent article, Ad Age reported that:
  • Loading a video ad could take longer than the page content around it, or vice versa depending on who pays for better service.
  • The proposed tiered-system could redistribute audiences, making it more difficult to target them.
  • Large firms able to pay for fast-tracking might prey on small ad tech firms and publishers.
While all of these change may come gradually, the recent court decisions may dramatically shift the way marketers and media buyers approach digital. Businesses may not only have to consider the cost of advertising, but the price of sponsoring the bandwidth that keeps a site or service free. Wherever you may fall on the issue of net neutrality, it’s clear that the Internet as we know it is changing. To retain at least the consumer facing benefits of what we now call net neutrality may require advertisers to sponsor not just content, but bandwidth as well.


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