Hold on to your seats, because I'm about to make a shocking statement... In 2024, most revenue for most broadcasters still came from linear revenues.
Incredible, isn't it? The commentators and experts here on Linked-In want you to believe that that the world has already shifted to its bright new digital future (and I would be daft to suggest that isn't happening), but in their June 24 accounts, even the owners of ITVX demonstrated that traditional advertising revenue was 360% greater than all digital revenues (£889M versus £244M).
There are a couple of reasons for this, which I want to explore here, and I also want to offer an answer to the questions I've raised, which is to explore how broadcasters re-focus to maximise bankable revenues for 2025.
FAST Channels Can Quickly Become DAFT channels.
The UK isn't the USA, and the mechanism to monetise eyeballs in the FAST space is rudimentary at best, and non-existent at its worst. The launch of Freely channels wasn't accompanied by a platform-wide launch of a sales platform that aggregates households to enable them to be sold by premium demographic or financial segment data.
Launching FAST channels and hoping to sell the ad space as a solus product, or as BARBish currency is not, in our view, likely to succeed. For the model to work you need huge content library access, and most importantly, you need to be able to sell against real and valuable audience data.
The UK, even with SKY Adsmart in the market, has been a very slow mover in driving significant programmatic advertising or selling audience-segmented IP-addressable homes. The exception is for platform owners like ITV or Channel 4 who have a direct data relationship with the IP address, and can seek the sort of permissions required, but for single channel operators, what exactly is the market they are selling into? How big is it? Where is it? How is it measured? How is it reported?
Frequent comparison with the USA is frustrating, because the FAST platforms across the pond aggregate and create ad markets across multiple channels. They are also operating in a market with no significant free-to-air proposition: the real comparator in the UK market for Roku or Peacock is Freeview, in our view. Have a look now, though, if you think I'm wrong...
If you Google 'advertise on Roku' you'll find a comprehensive platform to buy from, if you Google 'advertise on Freely', you'll find some blogs. To start advertising on Peacock, you simply need to open an account. To start advertising on UK FAST channels? Hire an agency and guess.
Premium Linear is MORE Valuable This Year
The shift from linear has arguably made the remaining linear channels more profitable as the remaining spend is captured by fewer channels. With less competition, the capability for what might described as average content channels has also increased. There are a few smaller broadcast groups now picking up the ratings and mopping up the linear budgets with content strategies that would have failed in the big multi-channel boom of the Noughties.
Even as major broadcaster's strategy away days have focused on the magic future of capturing new digital spend on linear FAST and streaming channels, the number of new traditional channels launching on Sky, Freeview and Virgin has slowed down, and the audience, whilst still shrinking, significantly slowed that decline in 2023 according the the Ofcom Media Nations data. In the 35 - 44 age group, for example, 76% of the population watched broadcast TV every week. This has made the importance of strong prominence on the mainstream platforms as important, if not more important, than ever. Brand advertisers aren't going to ignore 76% of the audience on one platform, not in 2025.
How to Refocus and Win?
The fastest way to measure and deliver a reliable investment return on broadcast platforms remains an investment in greater linear prominence: channel 10 will always deliver more than channel 50 on an EPG. If you want to win at FAST revenues, you need to find away to aggregate and sell impacts together across whole platforms of channels - and persuading the platforms that they need to be in the ad selling game would be part of it. This raises major questions for OFCOM regulation, which still views suspiciously any direct links between media/advertising agencies and broadcasters. The truth though, is that it is only by the ROKU or Peacock-like aggregation, data gathering and sale of these audiences, that the UK's burgeoning IP-delivered channel market can have a USA-like future. In the meantime, if you want to bank more cash in 2025, you need to buy a better channel number.
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