In 2017, marketers will be at the mercy of politics. Net Neutrality, a pillar of Cloud-based content, apps, and services, faces extinction under the Trump administration. If the Web becomes a pay-for-performance utility, Cloud strategies could become prohibitively expensive for small and midsize businesses. So, where might marketing dollars go instead?
Cloud-based content strategies are enticing because they enable marketers to own an audience rather than rent one. Most social networks, newspapers, and magazines are in the rental business, and therefore poor substitutes.
Thus, an end to Net Neutrality may push marketers toward open publishing platforms, which combine traits of paid, owned, and earned media. LinkedIn, Quora, Medium, podcasting, and their kin could rise meteorically on an un-neutral Web.
RIP, Net Neutrality
On February 26, 2015, the Federal Communications Commission (FCC) adopted Net Neutrality rules designed to protect free expression on the Internet. The FCC banned Internet service providers (ISPs) from blocking or throttling any Web-based content, applications, or services. They also ruled that broadband providers cannot create "fast lanes" for their partners or companies willing to pay up.
Although a federal appeals court upheld Net Neutrality in June 2016, it probably won't survive 2017. On December 19, 2016, Ajit Pai and Michael O'Rielly, two FCC commissioners, wrote a letter to ISP trade associations promising to "revisit" Net Neutrality "as soon as possible." FCC Chairman Tom Wheeler, a Net Neutrality advocate chosen by President Obama, stepped down on January 20. The Senate did not reconfirm Wheeler's closest ally, Commissioner Jessica Rosenworcel. The anti-Net Neutrality crowd will have a 2-1 majority on the commission and two empty spots to fill.
President Trump will likely support the dismantling of Net Neutrality. The best indication of his position is a tweet from November 2014: "Obama's attack on the Internet is another top down power grab. Net neutrality is the Fairness Doctrine. Will target conservative media." According to the Electronic Frontier Foundation, Trump's FCC transition team members—Jeffrey Eisenach, Roslyn Layton, and Mark Jamison—are critics of Net Neutrality, and all of them contenders for the open chairman and commissioner posts.
The Biggest Loser
Typically, the media frames Net Neutrality as a conflict between ISPs, such as Comcast, AT&T, and Verizon, and bandwidth hogs, such as Netflix, Amazon, and Google. In reality, the biggest winners of Net Neutrality were small and midsize companies that wanted to deliver their content, applications, and services via the Cloud. The rules ensured that they could deliver rich media at the same speeds as tech giants.
If Net Neutrality dies, Netflix, Amazon, Google, and their peers will pay ISPs to maintain their performance. They can't afford not to. Even if they pass the cost on to customers, most will choose to retain their services. ISPs might even charge consumers for high bandwidth use, but that won't stop Netflix addicts.
Among small and midsize businesses, however, self-publishing and owned media will take a hit. Smaller companies tend to provide content free as a marketing strategy. A business with a massive video library or interactive mobile app would struggle to pay ISP fees and still see an ROI. As a result, the death of Net Neutrality will nudge many marketers away from their Cloud and toward external channels.
Where Do the Dollars Go?
If Net Neutrality goes down and pulls owned media down with it, marketers will turn to external platforms that can afford to pay ISPs for performance. Open publishing platforms are poised to benefit most.
Digital newspapers, magazines, and blogs are the weakest contenders. Newspaper advertising revenue fell from $50 billion in 2000 to just $12 billion in 2016, says Bloomberg's Gerry Smith. Recent articles in the New York Times and Wall Street Journal warn of massive layoffs, consolidation, and last-ditch efforts to replace print ad revenue with digital.
Toward that end, outlets like Forbes, Fast Company, and Fortune have dramatically expanded their digital contributor networks (because free articles = traffic = ad revenue). But contributors can't shamelessly promote their companies as they might with owned media. Marketers can either pay for weakly targeted ads and sponsored content or contend with gatekeepers on the contributor networks.
Social networks and Google, conversely, have dominated digital advertising by providing personalization and targeting that standard media outlets can't match. Facebook, for instance, can leverage users' likes, groups, shares, content interactions, demographics, and social connections to target the right people. Newspapers lack that data. And whereas digital newspapers have to meet standards of journalistic integrity, Facebook can customize "news" feeds to increase engagement and ad exposure.
But Facebook is a better aggregator than publisher: It accumulates quality links rather quality content. In recent years, open publishing platforms have tried to fill a gap between traditional media outlets and aggregators. LinkedIn and Medium, for instance, have become sources for news and commentary, often written by qualified experts. Podcasts have attracted well-respected voices like Malcom Gladwell, Freakonomics' Steven Dubner, and Dan Carlin of Hardcore History. Quora, too, has built a reputation for reliable information (granted, Yahoo Answers set a very low bar).
Unlike professional news outlets, open publishing platforms don't have to pay writers, editors, fact-checkers, and others costly staff. On LinkedIn, Medium, and Quora, contributors are willing to provide content for free in exchange for publicity, and top podcasters make independent deals with advertisers. Unlike standard social networks, most open publishing platforms do not depend on ad revenue or force creators to pay for reach. LinkedIn, for instance, funds its publishing with premium accounts, business services, and, yes, ads, but good content can still reach a giant audience for free. Podcasts make no direct revenue for Apple.
Open platforms are relatively fragmented. Expect partnerships or mergers between platforms that can target and monetize well (e.g., LinkedIn and its owner, Microsoft) and platforms that excel in visibility and reach (Medium and Quora).
If the end of Net Neutrality raises the costs of owned media and Cloud strategies, open publishing platforms could benefit most. They have the potential to offer marketers the editorial control of owned media, the visibility of earned media, and personalization of paid media.
For years, the Web has blurred distinctions between news, marketing, entertainment, fact, and opinion. The post-Neutrality Web will bring this content melting pot to a boil.
Whether you lament or embrace that future, be prepared for it.
Take the first step (it's free).
You may also like:
- Six 'New Normal' Marketing Tips for Reopening Businesses
- Three Ways to Personalize Your Next ABM Campaign to Close More Deals
- The Biggest Challenges With Executing Account-Based Marketing Programs
- Business as Unusual: Shifting Live Events to Digital and Hybrid Experiences
- How COVID-19 Is Affecting the B2B Exhibition Industry