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CBC “Ad-Free” ? A Media Agency Perspective

The CBC has introduced an ambitious proposal to go all-in on public broadcasting, dropping advertising altogether and investing in building Canadian culture, closely following the fully publicly funded BBC model. While the sky would not fall if CBC stopped selling advertising, it would mean a diminished paid media environment.

In summary, their proposal asks for $400 + million in additional funding. This includes $253 million for lost ad sales plus $105 million for additional Canadian content to fill the programming gaps. In addition, the CBC is asking for $100 million to offset consumer and technology disruption. However, there is a $40 million offset from cutting advertising selling expenses.

From a media planning and buying perspective, an ad-free CBC has important implications for advertisers. This move could lead to the reduction in advertising inventory; the potential loss of access to certain target audience segments; and the loss of access to local, regional and national audiences. These concerns apply to both broadcast and digital platforms.

Reduction in Advertising Inventory
Given no one media property reaches every audience segment across all product categories, advertisers benefit from multiple options amongst digital, broadcast and print platforms. Paid media options are critical for effective and efficient targeting, such as CBC’s valuable local/regional access, or the CBC’s truly national (E/F) reach, or even the high indexing CBC 50+ demo. Having competitive options also provides negotiation leverage and improves efficiency on behalf of clients. With the CBC out of the media mix, we would face diminished planning options and would not be in the best interest of advertisers.

The Eyeball Disconnect
The CBC suggests that, in an ad-free model, a significant proportion of its current ad revenues would migrate to other channels, thus benefiting private sector media. However, the economics of our business dictate that ad revenue (i.e. media spending) follows eyeballs, not inventory. With ad-free programming and more content (as envisioned by CBC’s document Strengthening Canada’s Culture in a Digital World) there may not be much eyeball shifting amongst CBC viewers at all.

In order to make up for lost CBC audiences, some advertisers may shift ad spend to other platforms – many already in their media plans. And, with the CRTC unlikely to grant TV broadcasters more ad minutes to sell, advertisers will chase a smaller pot of inventory (already tight in Fall and Spring), driving up ad prices.

Conclusion
As stated, the sky would not fall if the CBC stopped selling advertising, but we don’t believe it would be in the best interests of advertisers. It is also important to note that the CBC’s proposed direction appears to fly against two previous research reports, one by Deloitte and the other by Nordicity. Of note, the title of the Nordicity report is: Why Advertising on CBC/Radio-Canada is Good Public Policy

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