How Advertisers Could Be Hurt if Net Neutrality Dies

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Net neutrality often remains relegated to conversations among policy wonks and lawyers. However, advertising and media execs have a stake in its fate. A rollback in net neutrality -- essentially the rules preventing internet providers from slowing digital content or charging for preferential treatment -- could be costly.

And yet last week, the Federal Communications Commission voted to do just that: The agency has officially begun to unravel Obama-era regulations on internet service providers in a move toward repealing net neutrality regulations.

If put into effect, the array of targetable consumer audiences scattered across smaller websites could diminish. Brands with any type of content, from ecommerce sites to brand microsites, could be asked to cough up payments to telcos to enable the quick access to their content they take for granted today. Digital ads could take longer to load.

"Opportunities for advertisers are going to become more narrow and more expensive" if the FCC dismantles net neutrality, said Ferras Vinh, policy counsel for the Open Internet Project at the Center for Democracy and Technology. Open Internet rules, more often referred to as net neutrality, were adopted by the FCC in 2015.

"Consumers want to access our content and they should be able to do that without impediment," said Chris Pedigo senior VP of government affairs at Digital Content Next, a digital publishing trade group which has been a vocal industry proponent of preserving net neutrality. "From a publisher perspective it's a no brainer."

In particular, he is concerned that some publishers could cut deals with ISPs, meaning accessing their preferred content would not count against mobile user data plans. For example, without net neutrality, Verizon, an ISP that owns Yahoo and AOL, could let customers access Yahoo Sports content without docking their data plans, while they'd still use plan data if they visit ESPN or Sports Illustrated. In turn, advertisers could be prompted to spend more with media firms trafficked by incentivized mobile carrier customers. By extension, preferred media firms could hike up ad prices.

The official stances of advertising industry trade groups are tougher to nail down. The Interactive Advertising Bureau appears to be in favor of maintaining net neutrality, though when asked by Ad Age to comment on the issue, Dave Grimaldi, executive VP of Public Policy for the IAB left some gray area:

"As Congress and the FCC explore potential next steps related to the concepts around net neutrality, we urge them to consider the tremendous economic contributions that digital ads make to the national economy. Disruption or alteration to the current value exchange of the ad-supported internet would be bad for consumers and companies alike."

The Association of National Advertisers has been a vocal critic of the FCC's Open Internet decision, mainly because it enabled strict privacy rules for ISPs that the group opposed. As for net neutrality in particular, Dan Jaffe, the ANA's group executive VP, government relations, said, "ANA has gone out to its members to get their input on the various aspects of the net neutrality rule but have not as yet received sufficient input to give a reaction to the various specific issues" raised by Ad Age.

Ad agency trade group the 4A's also has yet to make up its mind. A spokeswoman sent the following comment: "4A's will be watching this topic closely as the new rules have yet to be written. We need to understand the impact on our members, the advertising industry and, of course, consumers."

It's worth noting that AT&T Ad Works, the ISP's mobile ad division, is a strategic partner of the ANA. Digital giants like Google and Facebook are partners as well, and are also members of the IAB. Although Google and Facebook are members of the Internet Association, a pro-net neutrality coalition, they are the very digital content behemoths that could benefit from the demise of net neutrality by consolidating even more power if smaller publishers and ad players can't afford potential ISP pay-for-play.

"There's not going to be a long tail anymore. It's just going to be a short, fat tail where those who can pay will pay," said Gigi Sohn, who served as senior counselor to former FCC Chairman Tom Wheeler, under whom net neutrality rules were adopted.

The FCC proposal now is open to public comment till July 17.

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