Will The BBC Running Adverts on Podcasts Affect You?

May 24th

The BBC has suggested running adverts on their podcasts for UK listeners using third party apps like Spotify and Apple Podcasts. This could increase the public broadcaster’s income – but why are audio production companies concerned by this move?

The BBC gets the majority of its income from a licence fee, which all UK households with a television have to pay, but there is currently an estimated £90m funding gap. This is why the BBC is considering placing adverts on their podcasts when people listen in third-party apps such as Apple Podcasts and Spotify. Whilst listeners can still get advert-free shows on the BBC Sounds app, this will be the first time that the broadcasters has considered running UK adverts as a source of the revenue.

The BBC still has a strong influence on the UK’s audio industry as a whole and so there have been concerns about how a step into advertising could affect other aspects of the industry. A group of audio production companies and public broadcasters have written a letter to Culture Secretary, Lucy Frazer MP, stating that this will have a “disastrous impact on the sector”.

This is not the first time that BBC’s moves to close the funding gap have been questioned by the wider industry. It follows on from concerns raised in the AudioUK manifesto about BBC Studios (the broadcaster’s commercial production studio) dominating the share of audio production in the UK.

So why are some audio production companies concerned about this move to advertising revenue? We look at some of the background to this decision, and how this move could have for podcasting and podcasters.

The BBC Already Has Adverts On Podcasts

It’s worth noting that the BBC has been running adverts on podcasts for years, this is just the first time they will be heard in the UK. Using geo-blocking technology, they have targeted these adverts to those listening outside the UK, “to commercialise audio and radio content made available to non-licence fee paying international audiences”. With this precedent already set, it is perhaps more a moral line being crossed – should licence-fee paying audiences be commercialised?

It Could Bring Ad-revenue Into Podcasting

Currently Acast have the licence to sell adverts on BBC podcasts outside the UK. It wouldn’t be surprising if this relationship continued when expanding to the UK, and assuming Acast takes a cut of the ad-revenue this could be a lot of money coming directly into the podcast industry via Acast. We don’t know the contract they have with the BBC, but the company currently takes 50% from podcasters’ advert placements according to their T&Cs. Hopefully Acast will want to reinvest any share of BBC adverts back into podcasters. They have previously run Amplifier schemes, and supported community events, so it would be good to see more of this.

Indirectly, the BBC are such a big player with such a reputation, there is a possibility of their shows being something of a ‘gateway’ for new advertisers. The UK’s podcast industry currently brings in ad-revenue of around £76 million – could the BBC help make that number higher? And if so, how will that be monitored?

Will The Profits Be Passed To Indie Producers?

It does bring about a question of how independent production companies that create work for the BBC will factor into the new format. We know that production contracts can be tricky to navigate, but advertising revenue adds a new aspect to working with the BBC – if a production company is contracted to make the piece, will they get a share of revenue? If this is shared, it could mean bigger production budgets for indies working with the broadcaster – something that could help bring pay up and create jobs.

It Might Split Advertising Revenue

As mentioned, the BBC’s reputation could bring more ad-revenue into audio as a whole, but one of the main concerns in the open letter is that the opposite will happen. There is the risk that this could create more competition for the advertising there is, and as the BBC’s total income is over £5bn, and the funding gap is larger than the entire podcasting ad-revenue, if the overall ad-spend doesn’t increase vastly, it is a legitimate concern.

It Could Mean Less Eyes On Non-BBC Podcasts

Because the BBC would only be running adverts on third party apps, people would be incentivised to use the BBC Sounds app to avoid them, which only carries BBC shows. BBC Sounds would not be the first to use this exclusive format – Wondery + likewise offers advert-free listening on their own app, which has only Wondery shows. But this would limit the chances for people to stumble across other content.

What is worth pointing out is that the BBC, along with other public broadcasters ITV and Channel 4, are fighting for more integration with streaming services for their terrestrial television offering. BBC Sounds currently carries a very select amount of non-BBC podcasts (No Such Thing As A Fish, Real Dictators, and Help I Sexted My Boss). It would be nice to see them do more of this integration and promotion of external content.

What Will Happen Next?

One thing that I think has been missed from the conversation so far is how much Acast (or the ad-sales company, if the standing contract isn’t expanded) is pivotal to the next phase of both the BBC plan and its effect on the industry. How much this benefits or hinders the podcast industry could depend on that middleman of ad-sales, and how they are speaking to advertisers who approach for BBC shows. As an intermediary, there is a space there for them to ‘upsell’ to other podcasts – and again, hopefully independent ones.

Advertising to UK listeners of BBC podcasts is still at the proposal stage currently. The open letter to Lucy Frazer MP is a good resource outlining the concerns and potential issues this could bring, but given the UK is now in a lead-up to a general election, this is likely to be lost in preparations.

If we have a new government and new Culture Secretary after July 4th, this might get completely lost in the changeover. As is often the case with arts and media, the national politics will trickle down to industry level – so keep an eye on places like the Radio Academy and AudioUK to help understand what is going on at the governing level.