Will the BBC go ad-supported? Marketing experts assess broadcaster’s ‘radical’ options as licence fee increase looms | Analysis

In the midst of the growing popularity of connected TV (CTV), traditional linear channels are facing a decline, prompting players in the industry to come up with innovative solutions to retain their audiences. For the BBC, iPlayer has been its response to competing CTV platforms like Netflix, Disney+, Amazon Prime, and others.

However, CTV itself is not without its challenges. The plethora of streamers, channels, and viewing options has led to fragmented audiences, making it harder to capture their attention—potentially resulting in the emergence of advertising solutions like retail media.

Creative advertising strategies have been implemented in the CTV space to attract consumers in a fiercely competitive market. Recently, several streaming services have introduced both ad-supported and ad-free tiers, with Netflix also offering brands the opportunity to purchase ad space on its platform.

The BBC finds itself at a crossroads, straddling the line between being a traditional linear TV channel and a streaming service. According to the BBC, its TV licence contributed to around 65% of its income in 2023, generating £3.75 (US$4.75) billion of its total income of £5.73 (US$7.26) billion.

As the BBC explores various strategies to generate new revenue streams, such as partnering with Disney to sponsor its popular show Doctor Who, the UK Government announced a £10.50 (US$13.30) increase in the price of the BBC’s TV licence from £159 (US$201) to £169.50 (US$214.73) per year starting April 2024.

There is also an ongoing review of the licence fee and alternative funding options, along with plans to overhaul and enhance its online offerings, potentially leading to the elimination of the licence fee altogether.

‘It’s important to ensure that accompanying ads are both relevant and personalised to resonate with the target audiences.’

Paul Briggs, SVP Europe at Silverpush

Discussing the potential impact on audiences and advertisers, Paul Briggs, SVP Europe at Silverpush, stated: “The plan to ‘radically transform and renew’ is a significant step towards achieving sustainable growth beyond public funding. The key lies in engaging with an evolving audience that is becoming younger and potentially skeptical about the TV licence in the face of increasing channel options.

“The BBC’s influence in terms of content and loyalty is unparalleled, but with the reassessment of the licence fee, they must leverage these strengths to drive profitability by exploring how advertising revenues can support their initiatives.

“This potential success aligns closely with audience engagement with the BBC’s plans to enhance its online presence with British content; it is crucial to ensure that accompanying ads are relevant and personalized to connect with target audiences. This is why we are seeing ITV and Sky investing in contextual advertising—the BBC can do this on a global scale.”

Liz Duff, Head of Commercial and Operations at Total Media

Liz Duff, head of commercial and operations at Total Media, added: “For the BBC to thrive for another century, it must break away from some traditional practices and modernize its offerings to compete with newer market players. While content should always serve the public that supports it, a different commercial model should not deviate from its original mission.

“For advertisers, partnering with a trusted and globally recognized media entity provides an unparalleled opportunity to showcase their brand in front of premium, brand-safe content.”

‘Ad-supported options to access BBC content would plug this budget hole.’

Guy Meyers, Regional Director of Customer Success, EMEA, Recurly

Regarding alternative funding solutions, experts have proposed various options, some involving the TV licence and remaining public, while others suggest abandoning it in favor of a commercial approach.

Guy Meyers, Regional Director of Customer Success—EMEA at Recurly, noted: “Many streaming services have turned to ad-supported models to stay competitive and maintain revenue, and the BBC could follow suit.

“Many consumers are open to a few ads in their content in exchange for lower prices, as evidenced by the success of Disney+’s ad-supported tier. If the BBC moves away from the compulsory licence fee as a revenue source, advertisers may step in to fill the gap. Ad-supported options for accessing BBC content could address this budget shortfall.

“For advertisers, this presents a unique opportunity to advertise on a platform that has not previously featured commercial ads, giving them a first-mover advantage in the market.”

‘There is a right way and a wrong way to go about it.’

Geoff de Burca, Chief Strategy Officer, EssenceMediacom

Geoff de Burca, chief strategy officer at EssenceMediacom, offered a different perspective. He stated: “It is evident that the entire TV sector, both public and commercial, is facing challenges in the current economic climate, which explains why the BBC is looking to adopt a more commercial approach.

“There is a right and wrong way to approach this. Increasing advertising or sponsorship within their core channels may seem appealing at first—expanding supply would likely counter media inflation—but this could be a short-sighted strategy. Diverting advertising revenue from commercial broadcasters and publishers could diminish their ability to invest in content, weakening their competitiveness against the BBC.

“The bulk of the anticipated income growth for BBC Studios is expected to come from strategic partnerships with international content producers, such as the existing collaborations with Disney+ for Doctor Who and with Discovery for the BBC’s Natural History Unit.

“There are also ample opportunities to further commercialize their talent and intellectual property beyond their primary channels, through events, co-branded products, and marketing initiatives—many brands would be eager to collaborate with some of the BBC’s flagship shows.

“Moving towards commercialization is a logical step for the BBC. However, to safeguard its reputation and content quality, proper safeguards must be put in place.”

On the other hand, Briggs concluded: “Just as the saying goes, ‘if you build it, they will come,’ brands will invest in the BBC whenever possible.

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