Net Neutrality Repeal & The Digital Advertising Industry
As you may have heard, Obama-era Net Neutrality was repealed in late December. The concept of Net Neutrality might be difficult to understand so to put it simply, the regulation once required all ISPs ( i.e. internet service providers such as Spectrum, Comcast, or Verizon FiOs), to provide consistent/fair internet speeds across all digital content on the web, preventing them from giving preferential access to “fast-lane” service based on lucrative business deals with publishers, content producers, television networks, etc. Effectively, with Net Neutrality regulations now repealed we may begin to see wealthy digital companies paying-off the ISPs to ensure that their content is delivered to internet users over faster internet connections. At the same time, other less wealthy digital companies that cannot afford to line the pockets of big ISPs could begin to see their content delivered over relatively slower, less-than-optimal internet service. We could even end up seeing internet users being charged higher rates for data used to view particular content from certain creators.
In my professional experience in the AdTech space while working for a top video-streaming app, I personally negotiated a deal with T-Mobile through which users consuming videos on their mobile devices would not be charged for any mobile data used to stream content through the app. This type of deal has been fairly common and totally legal. Now however, we could begin to see a new type of deal where the content producer/publisher will actually pay extra money to Verizon or Spectrum in order to ensure that their content gets delivered over premium fast-lane, top-speed internet.
This groundbreaking change will certainly have massive effects on the digital space, including one particular sector for which the impact might be less obvious— digital advertising. Just like digital content (i.e. videos or articles), the accompanying online advertisements must also be delivered over the internet in order to reach audiences on the web. What does this mean in relation to the recent repeal of Net Neutrality regulations? It may mean that major advertising agencies, and ad-technology companies that put out Ad-Server products will also probably have to pay off ISP companies in order to ensure that their advertisements are delivered to users via the same top-speed connections. This could prove essential for advertisers, as providing a good user experience is crucial to projecting and maintaining positive brand-images. Also, digital publishers often hold their advertising partners to very high standards in terms of ad-related user experience, placing high priority on things like page latency and any slowdowns caused by the advertisements loading alongside their digital content. As such, how the Advertising industry handles recent changes could prove crucial to the continued successful operation of major ad agencies and technology companies.
Dan Jaffe, the Association of National Advertisers (ANA) group EVP of Government Regulations weighed in on the topic, pointing out that the FCC/FTC are “trying to develop a fair and level playing field for privacy regulation putting the FTC back in a primary position,” generally viewing the changes as a good thing. However, he goes on to express his concerns and mentions the ANA’s preparedness to monitor the impact of these changes, asserting that, “if any group in digital media tries to seriously skew the ability of advertisers to reach their consumers quickly, efficiently and cost-effectively, we will clearly step in to oppose those types of efforts forcefully.”
Since the repeal, some top digital companies like Netflix have such large user bases that they’ve absorbed the changes well, reporting little to zero negative consequences at all. Years ago, however, when Netflix was just a young budding company these changes could have proven devastating and might possibly have prevented the massive growth the company has experienced. As is evident, we could guess that it might be the young, up-and-coming digital companies who end up feeling the biggest impact from the repeal of Net Neutrality— both content producers, publishers and advertisers alike.
Now, more than a month after the FCC’s monumental repeal of Net Neutrality, some specific states like California and New York are working on imposing their own local, state-level legislation to recreate the original Federal Net Neutrality regulations. Further, with individual states beginning to take their own positions on the issue, I foresee that some additional federal legislation on this matter will eventually begin to surface as to avoid any inter-state complications. We will have to just wait and see.
Collaboration with John J Taormina our guest writer.