To the dismay of businesses and consumers across the US, the prospect of a net neutrality repeal is closer than ever before. While I have not personally given up hope that the FCC will reverse its current position, I am still relatively realistic about the fate of the internet in Ajit Pai’s hands.
Regardless of what happens, it’s critical that businesses and marketers alike prepare for the potential impact a repeal of net neutrality may cause. And, as a business owner and marketer myself, I’d prefer to assume the worst only to be pleasantly surprised. Here’s what to consider.
Expect an Increase in the Cost of Marketing
If Internet Service Providers (ISPs) like Verizon or Comcast take advantage of the net neutrality repeal there are two main scenarios that could happen (among others that will likely come to light in the future).
- ISPs productize the web into packages and charge premium rates to the average user who wants to access different sites or packages.
- Websites may also have to pay a premium to ensure their site operates in the “fast lane” so consumers don’t experience a poor performing site. Here’s a Forbes article from Steven Salzberg that provides some more context.
Regardless of the outcome, the result will be an increase in price for both users of the internet and web companies that live on the internet.
So what does that mean for marketers? If digital marketing is a critical component of a marketing strategy, then marketers should expect to spend more to reach the volume of users they are currently reaching today. The impact of scenario 1 means that the potential audience reach will be limited to whatever sites the target audience can afford to pay ISPs. The reach on specific channels such as LinkedIn may decrease causing marketers to spread out their dollars to more channels to obtain the same reach they are used to, thus, potentially increasing the cost-per-lead.
Similarly, if scenario 2 occurs, the websites that marketers usually advertise on will experience increased costs for “fast lane” access, which likely means a price hike to advertisers to cover the increased costs.
What about non-paid advertising such as one-to-one marketing or social selling? The same impact from scenario 2 would occur on free promotion. Say your company dabbles in social selling and your sales team makes connections on tools such as LinkedIn. ISPs could potentially charge a premium to access social sites making it more expensive to find and contact people using these digital channels.
Expect an Increase in Time to Market
Both scenario 1 and 2 can easily impact the time to market. What if the company doesn’t have the right internet access levels to access appropriate advertising sites? That means a call to IT → a meeting to explain why additional access is needed → waiting around for access to be granted → and ultimately, a delay in go-to-market promotions. Those companies with a higher budget for IT may be able to afford to pay for unlimited access from day 1 if they are aware of their team’s marketing needs but the bootstrapping or lean startup with a limited budget will be at a disadvantage further impacting disruption and change.
Funny enough, the costs to run a business have actually decreased in today’s digital world but a net neutrality repeal stands to hamper those declining operational costs.
How to prepare for the impact of a net neutrality repeal
While the impact of a net neutrality repeal is still hypothetical it is unfortunately, quite realistic based on past ISP behavior
- Verizon Violation: In this instance Verizon asked Google to block 11 apps from the marketplace because they competed with Verizon’s offering.
- Verizon v. FCC: Oral arguments show that Verizon would, in fact, explore alternative monetization of the internet if there were no rules. Click on 11-1355 and listen if you have the time. Verizon counsel Helgi Walker states, “I’m authorized to state from my client today that but for these rules we would be exploring those types of arrangements.”
So, how can marketers prepare?
Marketers will need to prepare their executive teams on the cost impact to marketing. The first step is to prepare executives on the impact of a net neutrality repeal will have on the marketing program and the bottom line. This will help the executive team prepare for operational changes that may come with internet access as well as encourage ownership to contact the FCC on preserving access to the internet with the current rules.
Marketers will need to get their budget in order. To fully understand the cost impact, it’s important for marketers to understand their current budget and return. For those that don’t have a good handle, then it’s time to use a budget tracker or work with the finance team to gather these metrics. Next, they should plan for 5% increase to CPL on top of whatever test marketing campaigns they have planned for next year.
Marketers will likely need to focus on lead generation. The cost and time impact will encourage marketers with limited budget to rethink their expansive marketing campaigns. Marketers will have to be smarter with their marketing dollars and that means focusing on what’s going to deliver, which they should be able to easily identify using marketing analytics.
Perhaps the repeal of net neutrality won’t be as terrible as we all think but there will be a cost impact on marketing and it may be time to start preparing for that.