You are here Decoding the Net Neutrality issue for the advertising sector -- Why care?
Submitted by Scott Cleland on Thu, 2007-02-22 19:06
While at first glance it may not be obvious how the public policy debate over "net neutrality" affects the advertising sector -- it does -- and big time.
Let me explain "net neutrality" in the context of advertiser interests.
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In simple terms, net neutrality is the politics of convergence.
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As "convergence" makes the tech and communications sectors collide, and creates more direct competition between the sectors than ever before, the big question is: will this new techcom sector be sorted out by:
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In "brand" terms, the main opposing "brand" players in this public policy fight are:
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The online giants like: Google, Yahoo, Ebay, Amazon, and IAC -- that want net neutrality regulation of broadband companies; versus
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The broadband companies like: AT&T, Verizon, Comcast, Time Warner, Sprint, which obviously don't want to be regulated.
So why should advertisers care who wins? There are three big reasons why that cut right to the advertising sector's bottom-line and future.
First, companies that advertise very little want to regulate some of the advertising sector's absolutely best corporate clients.
There is a second big reason net neutrality is not in the interests of the advertising sector -- net neutrality will only strengthen the online giants ability to disintermediate advertisers from their corporate clients.
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Google may be the single biggest threat to the traditional advertising business model.
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The practical effect of net neutrality is to prevent any verticalization of broadband competitors into Google's advertising market. Less competition to Google's growing chokehold on digital advertising is not in advertisers interests.
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If Congress passed the law that Google is backing it would freeze Google's current business advantage in place, while outlawing broadband competitors from innovating and competing with Google in search-related businesses. Google would be even stronger in being able to squeeze TV, radio, and newspapers.
A third big reason net neutrality is bad for advertisers is that it would effectively outlaw broadband from evolving into a two-sided market paid for by both consumer subscriptions AND advertising revenues -- like newspapers, magazines and cable currently operate.
How is it in the interests of the advertising sector for the Internet not to become at least partially supported by advertising revenues?
In conclusion, net neutrality may not be on the radar screen of the advertising sector, but it should be.
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