Hitwise Intelligence - Sandra Hanchard - Asia Pacific

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Implications of Net Neutrality for Online Marketers

June 23, 2006

Net neutrality, which relates to the concept of all data passing through networks being treated equally in terms of bandwidth and cost, has come to the fore with an overhaul of US telecommunication laws. The debate is whether net neutrality which is the Internet model of today, will be protected by legislation - or if carriers will be able to charge for tiered network services.

This issue is as likely to affect Asia Pacific Internet website owners and users as much as those in the US. In Australia for example, 57% of all online visits were directed to overseas websites, for the week ending June 17, 2006. An excellent local article from ITWire considers the implication of net neutrality on global Internet usage:

The very reason the internet works so well is that it is a huge ecosystem of symbiotic relationships between the web powerhouses and the smaller players. If the smaller players were suddenly relegated to a second-tier low-bandwidth back road, the relationships would be broken.

For business owners and content providers, this argument relates directly to affiliate marketing which is based on referral traffic between website properties. Here are some Hitwise Industry statistics which may put in perspective the necessity of net neutrality for online marketers.

Hitwise currently tracks visits to over half a million websites. To be exact, in the Australian market, there were 617,881 websites measured for the week ending June 17, 2006. Traffic Distribution analysis indicate that the Top 500 websites accounted for 50.3% of all Internet visits. That means the remaining long-tail of web properties, i.e. 617,381, accounted for the remaining 49.7% of traffic. The spread of traffic share over this number of websites is one indicator of the shear diversity of Internet content today.

The below figure shows Traffic Distribution statistics for AU, US and UK markets, with similar patterns across all three markets:

In the scenario where carriers could favour data based on higher subscription rates, or in fact carriers' own content, the spread of overall traffic could show a completely altered distribution pattern.

Hitwise Clickstream data, which measures movement from one website or industry to another, indicate that for the top 100 websites in Australia, the average amount of upstream traffic referred to all categories was 0.55%, for the week ending June 17, 2006. In the US the average was 0.61%, and 0.59% in the UK. The fact that the top online properties attribute a minimal amount of total referral traffic is another indicator of the democracy of the Internet.

This democracy is essential to the major search engines which rely on the multitude of small and medium publishers for contextual search revenues, such as Google AdSense. The large spread of visits across all websites and low concentration of overall clickstream traffic may be further considered a symptom of the rise and popularity of consumer generated media. Businesses are still exploring the marketing applications of this, and it could be a great shame if this was nipped in the bud by lack of legislation to protect net neutrality.

Posted by Sandra Hanchard at 12:45 PM | (1) | (0)

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Comments

I'm not sure if I agree with everything in the (itwire) article.

It looks to be saying that the proposed system would deny access to sites. My understanding is that the lower tier would simply be a slower connection.

This would certainly have a huge impact on the small or emerging multimedia providers (think YouTube 9 months ago), however I doubt this would effect affiliates which are simply based on linking to another site.

Posted by steve | June 27, 2006 05:19 PM