With the time for public comment about net neutrality long gone, the Internet’s only forceful advocates for this issue are politicians in high office, and those voices enlisted or commissioned by private enterprise — that is the opinions of dedicated lobbyists, trade groups and their ilk. These groups can and will continue to find ways to get a word in with the FCC and exert their influence over the next several weeks. And in this case, that’s actually a good thing.
To date, venture capitalists, technology conglomerates, civil liberty groups, the leader of the free world, and even comedians have famously come out against the FCC’s proposed rules regarding traffic on the Internet. The FCC proposal, which would to allow Internet service providers (ISPs) to change the way the current Internet traffic is allocated by creating fast (and consequently slow) lanes for Internet traffic rather than treating all traffic the same, has, with the exception of the telecom and cable companies that will benefit, been nearly universally panned.
One prominent stakeholder that’s been all too quiet in the debate about Internet fast lanes has been digital marketers — or rather, the associations that represent them. While marketing isn’t necessarily an area of the tech industry that has had much to say about net neutrality, today’s endorsement from President Barack Obama is a perfect place to start. Here’s why this particular group should be worried about the damage that an Internet without net neutrality would cause to their overall business aims.
Access to content means access to ads
The Internet is the wellspring of contemporary content. Content drives views and views are where marketers want their messages to be. Whether it’s fiction or nonfiction, social media, games, or video, advertisements drive many businesses on the Internet. With the FCC’s proposed rules in place, nearly all content would be forced to pay up or take a speed or performance hit. Speed is incredibly important on the Internet — and without it, users leave sites and apps to pursue their interests elsewhere online. Needless to say, a smaller pot of accessible content is a serious problem for digital marketers. It means more competition for the same spots, driving up the costs of ad placements or CPMs industry wide, making the overall market smaller.
It’s not just the web, either. As serial television shows and broadcast news content moves to the Internet, so do the advertisements that sponsor them. MSNBC and FX are just two examples of content providers that offer a robust digital video stream of their content to their users. If it becomes too expensive for content providers to stream their product without slowdowns and interruptions, the video pro-roll commercials MSNBC and FX make use of to fund these services will vanish.
Targeted ads are the future, and they rely on a neutral Internet
The FCC’s proposed net neutrality rules pave the way for an Internet where only those corporations and entities that can pay for faster Internet access to users will be suitable online destinations. Network TV was built on mainstream audiences, but the Internet’s rise and adoption was not. Small niche products and services drive small, lucrative niche user bases. Whether it’s so-called mommy bloggers debating nutrition, firearms enthusiasts comparing magazines, or fashion-loving users looking for sample sales, these smaller groups deeply follow their passions, which allows marketers to find them and present them with the types of goods and services that they may want to use. Not only do marketers find such placements cheaper and more effective, but users are presented with relevant advertisements rather than products and services that don’t mesh well with the context of the content that they’re consuming or engaging with.
On top of both of these gains, it’s important to remember that the cost of these ad placements is built into the cost of the service or good being promoted. Cheaper ad placements means cheaper products and services, which means more units sold at better margins.
Infrastructure requires bandwidth, too
Content companies aren’t the only ones using loads of bandwidth. Ad servers, microsites, DSPs, DMPs, Video Exchanges and all of the underlying support mechanisms that deliver ads onto a webpage or an app screen require significant bandwidth in order to work properly. Not only do these ads have to display on various bits of content around the Internet, they have to load quickly and reliably, despite being bogged down by cookies, tags, nested iFrames or any other tracking techniques one can imagine. As video grows as a content medium, marketers are growing the volume of pre-roll and mid-roll sponsorship spots. J. Allen Dove, CTO of SpotXchange, a top-tier video ad network, told VentureBeat, “SpotXchange contracts each month for well over 100Gbps of bandwidth globally.” Dove continues: “That number is growing as we experience increased demand for our video advertising services.”
These smoothly loaded creative assets require as much bandwidth as possible. Should these infrastructure systems suffer under the FCC’s proposed net neutrality scheme, the cost of the speed they require to function properly is going to be passed along to the digital marketing agency that’s buying the ad media. That agency will, in turn pass it onto the advertising client, who will then either need to cut their margins or raise their prices to properly absorb these new costs, hurting both themselves and their consumers. Those advertisers who don’t want to cut margins or materials will cut staff, which could possibly degrade product quality, leading to less consumer demand, which would force marketers to spend more hours to drum demand up for the suffering product. It’s a cycle that leaves marketers, product creators, and consumers spending more time and more energy for less return.
A brand’s success revolves around a controlled, positive experience for the user. While the Internet is anything but controllable, the idea that the beautifully produced video spots on the landing page the marketing agency spent months creating for the new product roll out won’t work properly because of bandwidth issues is a huge problem. In fact, in an age where FCC sanctioned speed lanes cause the cost of bandwidth, and thus placements and pre-roll, to be more expensive, marketers will likely be forced to cut down on asset quality in order to meet the volume demands of their clients. This means lower-resolution video and poorer-quality images in an age where high-resolution “retina” displays are all the rage. What about sending compressed data? While new compression algorithms are always around the bend, it takes years for them to be implemented as standards across the Web or even within app development circles. As corners are cut to satisfy the new cost of bandwidth, the brand will suffer, which means its margins (and consequently growth) suffer.
How marketers can take action
Digital marketers should understand that one thing is clear: Virtual billboards, pre-roll, audio, and even product placement and native advertising will all become more costly and resource-intensive if the FCC’s current proposed rules on net neutrality move forward without significant changes. If you want net neutrality, it’s within your power to leverage the IAB, iMedia, and others to have these concerns raised. If this debate has taught us anything, it’s that policy follows pressure. Stand alongside powerful VCs like The Foundry Group, corporations like Google, and civil liberty groups like the ACLU and EFF to show the Internet how you intend to contribute to its continued success.