Promotional Wars: Search Engines vs. Internet Providers

Today it seems that the hegemony of search companies like Google and Yandex in the world of online advertising is almost impossible to shake. However, if you dig a little deeper, it turns out that the search operators can compete with their data by cellular operators who have even deeper knowledge of users. But this is not all - another potentially very dangerous contender in the online advertising market can be (and sometimes already become) Internet service providers.

What are we talking about

Few people think that Internet providers can be extremely successful players in the advertising market - they have a significant reach of the audience, which even more search engines know about. Theoretically, all this may well allow them to become the largest sellers of advertising on the Internet.
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At the same time, despite today's peaceful coexistence of Internet providers and search giants, like Google, in the future the situation may well become much more tense.

Google vs Free

These are not empty words - the first such conflict has already occurred between Google and the French Internet provider Free.fr (on Habré there was a topic about this). The provider turned on all its subscribers (and this is 5.3 million users in France) to force the filter of online advertising, so that they no longer see banners on websites, contextual advertising AdSense and other ads.

Despite the fact that not only Google suffered from this step, but also other advertising systems, online media and Internet projects, observers say the target of the attack is the largest search engine.

An interesting point here is that the provider’s decision was supported even by the country's authorities - even the Minister of the Digital Economy of France approved it (despite this, after a few weeks the filter was turned off ). This fact alone speaks in favor of the fact that providers in other countries can make the decision to turn off advertising by search engines and other advertising companies in their networks. This is good for users - after all, in pursuit of advertising revenues, providers will be forced to attract an audience with various offers, including, possibly, free internet.

Internet hosts

Recently, the Internet exploded with the news that the American Internet provider Comcast plans to cover the whole country with its own WiFi, “handing out” which devices will already be installed in American homes. In addition to the private network, a public network will be created on the router, which anyone can connect to (if he is a Comcast subscriber).

The pilot project was launched in Houston - a new mode of operation of access points was activated remotely, users did not even notice anything. As a result, the entire city was covered by the Comcast WiFi network.



Comcast project is not the first of its kind. In Spain, since 2005, there is a community of WiFi networks managed by FON . Members of this network also provide wireless Internet to other users who have appeared in the reception area. For this purpose, a special WiFi access point is used. The system operation scheme is similar to that presented by Comcast - a private network is created for the device owner, and a public network for external users.

A noteworthy fact: FON investors are Google, Skype, Index Ventures, Sequoia Capital and British Telecom, who have invested $ 22 million in it.

The experience described suggests that if desired, Internet service providers can create the largest networks covering a huge audience. And given their ability to disable unwanted services from their networks, the situation emerges with the emergence of new hegemones of the Internet advertising market, which will be much more invulnerable than the current leaders (Google cannot but work with large providers, so they can disable its advertising ).

What do search engines

Apparently, the search companies understand that in the near future they may face serious competition. However, Internet providers can spend the resources available to them to expand subscriber coverage - the simple purchase of smaller companies will significantly increase the base, while search giants do not have such a way - they cannot simply buy themselves users, since a truly large Internet search engine It is very expensive.



That’s why Google is putting great efforts into providing people in areas where it doesn’t exist yet (for example, using balloons - Project Loon ) or creating network segments that are fully controlled by the company.

Google is well aware of its dependence on third-party companies that own communication channels, and strive to reduce these risks.

By the way, they understand this in another advertising giant, the Facebook social network, which plans using “unmanned drones ” to “distribute” the Internet in hard-to-reach places and allow its use to a wide number of people who cannot do it now.

Similar Google and Facebook projects cost millions (if not billions) of dollars that companies would not spend, if there is no understanding of the need for this action. Analysts say that one of the main reasons for such concern for people deprived of the Internet is the desire to show them their ads, depriving competitors of this opportunity. Internet from drones or balloons in the stratosphere is a matter for the future, IT giants hope that by this time the incomes of the population of these poor regions, which are planned to be covered with the help of the new Internet, will grow enough so that they can consume at least not very expensive goods. Given the billion population of such remote areas, a specific person living there, and will not need to buy expensive goods - the main thing is to be able to consume, then it will be possible and interested advertisers.

Who will win

Internet providers are often also mobile operators - in Russia, a vivid example of this is Beeline, MTS with Internet service providers of the same name and Megaphone with its Netbynet, which allows them to obtain a scale of user data that is incompatible with anything - even Google and Yandex with their services, they cannot find out so much information (often personalized) about a person. Cookies do not compare the accuracy of identification with official papers that are signed to receive Internet or mobile services.

The availability of resources (including financial and administrative) providers are also not inferior to search engines. The capitalization of Yandex in 2013 was at the level of $ 10 billion (after President Putin’s statements about the foreign hand in the company, capitalization fell to less than $ 8 billion), but at the same time, the capitalization of MTS in 2012 was $ 18.69 billion, and the figures Beeline in the same year amounted to $ 18.16 billion (data on capitalization at the end of 2012 can be found in the RIA Novosti rating ).

The cost of advertising in the world is growing so rapidly that many players will want to get their piece of this multi-billion dollar pie. The competition promises to be fierce and very interesting. But for users, the most important thing is that it pushes companies to innovate and create new services that were not there before.