CoLab x Co-Founder Matt Ford has worked at broadcasters, social publishers, production companies, both traditional and digital, and with talent & creator agencies – he’s seen it all. In this exclusive opinion piece for The Drop, he argues that there is a golden opportunity for traditional production companies to diversify their revenues on social platforms, and build new audiences for their content and their brands.
We’re coming out of the worst advertising recession since 2008. Recessions are obviously a challenging time for businesses, but they also provide great opportunities to diversify for future success. For production companies this opportunity is digital.
The TV ad market in the UK fell 13% in 2023. Commissioning budgets were reduced, and the broadcasters and streamers adapted their strategies to fewer, bigger, better. Production companies’ odds of winning commissions became a lot worse.
By contrast, the UK has the largest digital ad market in Europe. Digital advertising accounts for 80% of the £43 billion UK ad market, and it continues to grow (up 11% in 2023). Digital video advertising is worth an impressive £9bn. Earlier this year Meta, Google and Snap all reported Q1 growth that beat analysts estimates.
Putting it bluntly, if linear revenues are decreasing and digital revenues are increasing, then it’s obvious that all production companies need a digital strategy – now.
There’s no question the opportunity is there, but some traditional producers have been burnt in the past by approaching it in the wrong way. For firms that are new to the digital space, here are a few ideas about how to make the pivot work for them:
There’s no need to re-invent the wheel: There is a great opportunity to take content already made and distribute it across social platforms. Audiences love nostalgia. They also love quality. It’s also a lot more cost effective and requires less upfront investment. The growth opportunity comes from building on this IP via original content, shoulder content, working with creators or remaking shows for today’s audiences.
But it does require clarity about rights ownership: Production companies that have made hit shows will have agreed a deal for the digital rights of that show. So the first thing they need to do is work out the digital rights position of their content library. If the rights reside with a commissioning broadcaster, that will require a conversation about how both sides can benefit. It’s time for the industry to work together, as rights for shows gathering dust on a shelf at a broadcaster or a streamer are not benefiting anybody. It’s better for everyone if this pre-loved content is proactively being distributed to new audiences – from both an audience and revenue perspective. All ships rise.
Audience is everything: Diversifying content on digital platforms will lead to new revenue streams. However, it’s important to build an audience before focusing on monetisation, so an audience first approach is key. Once this has been achieved, the great thing about publishing your own content is that you are in control of monetisation.
Build brand partnerships: Whether it’s ad revenue direct from the platform, selling sponsorships, branded content or IP exploitation through merchandising, subscriptions, live events, books etc, there are several digital revenue streams available. But building relationships with brands is undoubtedly a priority. Producers need to learn how to develop bespoke content that achieves brand objectives and delivers ROI. It’s crucial to base creative on a killer insight, build a content plan and think multi-platform. It’s also important for the content to have a home which to scale distribution from.
Don’t be put off by upfront operational costs: There is an industry myth that producers need a big digital team to do this. They don’t. Not today. Resourcing a new digital-facing venture is straight forward – hire digital natives, start slowly and re-invest into building the team as digital revenues scale. And remember – investing in a bespoke digital strategy is not the only option for producers. Companies like Upstream Media and Little Dot Studios will set-up, publish and run YouTube channels in return for a share of the advertising revenue, thus taking away the risk and investment required by producers.
In summary: whether publishing for themselves or working with a third party, now is a great time for entrepreneurial production companies to build digital brands from existing IP, to find new audiences and unlock innovative monetisation models.
