Over the past year, industry analysts and journalists have highlighted an emerging "two-tiered Internet" and its far-reaching effects on digital marketing. Online content is bifurcating into two spheres: a public, open web, and a private, premium web.
Marketing professor Sam Ogborn describes the public web today as largely “AI-generated or recycled content” indexed by search engines. The private web is made up of “original insights locked behind paywalls or member-only forums.” She warns that this shift significantly impacts how marketers reach audiences because their attention is now split between free and paid content channels. Let's dive deeper into what the two-tiered Internet means for brand marketers and business leaders.
What is the Two-Tiered Internet?
The two-tiered Internet describes the growing divide between a premium, gated digital ecosystem ("walled gardens") and the free, open Internet. This split fundamentally reshapes how users access information, and marketers reach audiences.
The Walled Garden: A Closed, Premium Internet
A walled garden is a restricted-access digital environment. These platforms operate as self-contained environments, limiting external access. Users must subscribe, pay, or sign up to engage with content, creating a sense of exclusivity and privacy.
A walled garden includes:
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Exclusive Access: Requires subscriptions, memberships, or platform-based logins.
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Controlled Monetization: The platform owner manages all ad revenue and content distribution.
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User Retention and Data Control: Users interact within the ecosystem, generating first-party data for targeted advertising.
Examples of walled gardens are:
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App and Content Marketplaces: Apple’s App Store and Google Play Store
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Social Media Platforms: Facebook, Instagram, TikTok, LinkedIn
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Collaboration Tools: Microsoft Teams and Slack
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Advertising Platforms: Google Ads, Amazon Ads, Meta (Facebook) Ads
The Free, Open Internet: Public but Increasingly Challenged
The open Internet is a decentralized, publicly accessible network where users can access content and services from multiple sources. However, the open Internet is becoming cluttered with:
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Ads and Sponsored Content and reduced visibility of organic material.
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Lower-quality, AI-driven Content that floods search engines and social feeds.
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Privacy Trade-offs, as free platforms rely on user data collection to monetize content.
Characteristics of the open Internet include:
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Accessible and Unrestricted: Anyone can browse content without paywalls.
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Ad-Supported: Revenue is collected through programmatic ads rather than direct subscriptions.
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SEO-Driven: Websites rely on search engines for visibility, but AI-powered search may reduce organic reach.
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Vulnerable to Content Dilution: With AI-generated content rising, distinguishing quality sources from misinformation is becoming more complex.
Drivers of the Two-Tiered Internet
A mix of economic pressures, AI-backed content shifts, regulatory changes, and evolving consumer behavior drive the emergence of a two-tiered Internet.
Economic Pressures on Content Monetization
Declining Ad Revenue for Publishers
Traditional digital advertising models have become less sustainable due to factors like ad blockers and reduced ad revenues. In addition, brand safety concerns from automated ad-targeting tools flagging news content as "unsafe" make it difficult for publishers to rely on ads alone.
Growing Subscription-Based Business Models
The Reuters Institute reported that news organizations doubled down on subscription income in 2024. Publishers and content platforms use paywalls and memberships with greater frequency to maintain steady revenue
Thriving Creator Economy
Independent content creators are monetizing their work through platforms like Patreon and Substack. They’re curating membership-based niche communities rather than relying on traditional social media distribution, accelerating the fragmentation.
AI and Low-Quality Content Saturation
Explosion of AI-Generated Content
A recent AWS study found that over 57% of online content is most likely produced by AI, raising concerns about quality and accuracy.
Algorithms Promoting Engagement Over Quality
Many digital platforms prioritize content that results in high engagement, often at the expense of quality. A flood of low-quality, mass-produced content (aka “AI slop”) is the result. To get away from AI slop, consumers are shifting to trusted, gated platforms for high-quality, curated content.
Platform and Policy Changes
End of Third-Party Cookies and Stricter Privacy Laws
Reduced third-party data usage and stricter privacy regulations have made targeted advertising less effective. Platforms and publishers adopt paywalls and subscription models to maintain their revenue streams. Read more about this development on our blog.
The Rise of Pay-for-Privacy Models
Platforms like YouTube Premium, Meta’s ad-free EU subscription, and ad-free news memberships offer users privacy in exchange for payment.
Net Neutrality and Infrastructure Costs
Threats to Net Neutrality
Internet service providers are contemplating the creation of fast and slow lanes, meaning they'd prioritize certain types of traffic over others. This may widen the gap between premium and open online experiences. It could also give paid platforms a competitive edge.
Rising Infrastructure Costs for Content Delivery
Maintaining high-performance, ad-supported websites is becoming expensive. Some companies are limiting free access to content or relying on paywalls, sponsorships, and premium memberships to keep their channels active.
Changing Consumer Behavior
Shift to Alternative Channels and Influencers
Younger consumers are moving away from traditional news websites or brand websites altogether. Many get their information from YouTube creators, podcasts, or TikTok commentators. In addition, online consumer behavior has become more community-oriented. For example, consumers join Discord groups for topics they care about, follow email newsletters from thought leaders, and discuss favorite products in Reddit threads, instead of scrolling social media or launching Google searches.
Willingness (or Lack Thereof) to Pay for Premium Content
An increasing number of consumers are happy to pay for quality content and experiences. This change has boosted the success of subscription services like Netflix and Substack. It also means that people who can't afford or decline to pay for these platforms consume content in easily digestible bites designed to inspire engagement without educational or informational context.
Declining Trust in Brand Ads
While 90% of consumers encounter digital ads, only 37% pay attention to them. Ad fatigue is real and leads to "banner blindness." Also, consumer trust in traditional paid media is rapidly declining. Ads that blend seamlessly into the platforms where their audience is already engaged perform better.
Economic shifts, AI-fueled content saturation, regulatory changes, infrastructure costs, and evolving consumer preferences are driving the split of the Internet as we know it. Going forward, marketers, publishers, and brands must balance public digital marketing with private, premium content options.
How Will The Two-Tiered Internet Impact Digital Marketing?
To keep up with the evolving digital ecosystem, your digital marketing strategies must evolve to maintain visibility, engagement, and trust. Here are some important changes that experts think will impact your marketing efforts in the very near future.
SEO Will Become Less Effective
AI-powered search engines are now answering queries at the top of search engine result pages (SERPs), reducing the need for users to click through to websites. This trend, fueled by Google's AI overviews and chat-driven search experiences, means that traditional SEO tactics may not produce as much traffic as before. It also means that your organic search visibility will shrink as AI-generated answers dominate the top of search results.
Brands Will Need a Stronger Owned Media Strategy
With organic search traffic declining, it's not a good idea to depend on Google or any other search engine for discovery and engagement. Instead, develop direct relationships with your target audience through owned media channels. These channels include email newsletters, podcasts, private social media groups, and membership-based content hubs.
Paid Search and Ads Will Become More Expensive
With fewer opportunities to reach audiences through organic means, brands will turn to paid search and social media ads to maintain visibility. This’ll drive up ad costs for everyone.
Authentic Content is Essential
As low-quality, AI-generated content floods the Internet, original and credible brand content will be more valuable than ever yet will be challenging to find on the public web. Content marketing strategies will become even more critical for brands to build and keep customer confidence.
Google is Shifting to Pay-to-Play
Google is reducing the opportunities for organic search visibility and prioritizing pay-to-play search advertising models. Google Ads is likely to shift from keyword-based bidding to AI-optimized campaigns.
A divided Internet is pushing digital marketing into a new era. Investing in deeper customer relationships, high-quality content, and diversified marketing channels will enable your brand to authentically engage with your audience.
Five Steps to Prepare for the Two-Tiered Internet
As the Internet fragments into free and premium content ecosystems, here are the five actionable steps the Phase 3 team suggests you take to protect your brand visibility, engagement, and trust.
Step 1: Invest in Direct Customer Relationships
With organic reach declining and search becoming more AI-backed, it’s more critical than ever to own your customer relationships.
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Focus on first-party and zero-party data collection. This information is critical to informing successful engagement strategies.
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Build and nurture email lists to establish direct and personalized prospect and customer communications.
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Develop exclusive communities, such as Slack groups, Reddit channels, LinkedIn groups, or private forums, where customers engage with your brand beyond traditional channels.
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Build loyalty programs that create brand advocates and incentivize repeat interactions.
To start investing in your customers, go back to basics. Listen to them. Read more here.
Step 2: Shift to Multi-Channel Marketing
Relying on a single organic traffic source, like Google Search, is risky. Diversify your acquisition channels to maintain reach and resilience. Invest in brand-building and recognition campaigns outside of search engines.
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Invest in alternative search and social platforms like YouTube, Substack, TikTok, and Reddit.
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Leverage short-form and long-form video content for authentic engagement and boosted
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Develop influencer collaborations and podcasts to help you reach niche, engaged audiences outside of traditional digital advertising.
We published a comprehensive article about multi-channel marketing just last year. Read all about it here.
Step 3: Emphasize Content Authority and Trust
Credibility and authenticity will be crucial ranking factors in an AI-dominated search landscape. Brands that demonstrate expertise and trustworthiness will be more likely to appear in AI-generated summaries.
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Prioritize expert-driven content with original insights, case studies, and data.
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Leverage employee advocacy and thought leadership [link to recent blog] to establish real human connections.
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Use trust signals (like certifications, testimonials, and media mentions) to reinforce brand authority.
Step 4: Adapt to Paid Ad Models
With organic traffic becoming more challenging to sustain, you may need to increase your ad spend to remain competitive.
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Optimize for AI-driven ad placements. Google and social platforms are shifting toward machine-learning-based bidding and targeting. You'll need to refine your targeting strategies to keep up with the competition.
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Use precise targeting: Leverage every bit of data on your target audience to ensure your ads hit the target every time. Read more here.
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Explore sponsorships and premium content partnerships with trusted media, influencers, and industry experts to build your online community.
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Redirect ad budgets to high-intent ad platforms. This improves the chances of conversions and engagement. Avoid relying on broad-reach or untargeted campaigns.
Here’s our guide to measuring success in paid media.
Step 5: Explore AI Tools for Personalization and Targeting
With proactive thought and tool vetting, AI can help you enhance customer experience, optimize campaigns, and stay agile as the Internet evolves.
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Strategically use AI-powered content creation tools to scale unique, high-quality content while maintaining authenticity.
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Leverage AI for personalized email marketing, customer service chatbots, and recommendation engines to improve audience engagement.
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Analyze audience insights using AI-backed analytics to refine your targeting and messaging strategies.
Here’s our Guide to Thoughtful AI in Marketing.
The new two-tiered Internet presents both challenges and opportunities for every brand marketer. Building direct customer relationships, diversifying digital marketing channels, emphasizing audience trust, and embracing AI can help you future-proof your marketing strategies and remain competitive in the new, evolving digital environment.
The Bottom Line on a New Digital Normal
The Internet's shift toward a two-tiered structure redefines how brands connect with audiences. Success requires direct audience relationships, diversified marketing strategies, and trust-building content. Brands that embrace owned media, focus on authenticity and credibility, and provide premium digital experiences will lead the next era of digital marketing.
Is your brand ready for the two-tiered Internet? The time to adapt is now. Phase 3 can help. Schedule a discovery call today.