AVOD: What Is It and How Is It Changing the Game?

AVOD, short for Advertising-based Video on Demand, is transforming how you access video content, making it easier and more cost-effective for publishers and consumers alike. This model integrates advertisements into your viewing experience, appearing before, during, or after the content, making it a cornerstone of modern streaming services. With AVOD, the emphasis is on aligning content with the target audience, ensuring that advertisers effectively reach viewers, which is crucial in the age of digital consumption and video monetization.

As you navigate the digital landscape, AVOD platforms like YouTube and SlingTV offer a plethora of options for ad-supported streaming, standing out among various VOD monetization models, including SVOD and TVOD. Understanding what AVOD is and how it can help monetize your VOD platform is vital, as it not only influences viewer experience with video ads, but also shapes creator and advertiser strategies. This model’s appeal lies in its ability to provide wide-ranging content at lower costs or even for free. Let’s look more closely at how AVOD is changing the game.

 

The Rise of AVOD in the Digital Era

The digital era has ushered in a significant shift toward AVOD, marking a pivotal change in how consumers access video content. This transition is underscored by compelling statistics and trends that highlight the growing preference for AVOD platforms:

Consumer Adoption and Market Growth

• The U.S. will witness a surge in AVOD viewers, with an estimated reach of 157.1 million in 2023, and projections suggest this number will exceed 170 million by 2026.
• A remarkable 29% increase in U.S. households streaming AVOD services was recorded from 2020 to 2022, outpacing the growth of Subscription Video on Demand (SVOD) services.

Economic Factors and Advertiser Appeal

• The shift towards AVOD is propelled by economic considerations, including rising content costs and inflation, making ad-supported tiers an attractive proposition for consumers.
• The worldwide AVOD market is expected to reach $48.32 billion USD in 2024, the greatest portion of which is expected to come from the US itself.
• Deloitte Global’s survey revealed a strong consumer preference for ad-supported tiers, with 47% of respondents in developed markets regularly watching ad-supported streaming services.

Content Strategy and Viewer Experience

• AVOD platforms are not just about ads; they are increasingly investing in original content.
• The success of AVOD hinges on optimizing ad relevance and frequency to enhance the viewer experience, ensuring that ads are not intrusive but rather add value to the viewing experience.

These trends underscore the AVOD’s popularity, driven by consumer demand, economic factors, and a strategic focus on content and viewer experience.

 

Key Benefits of AVOD for Creators and Advertisers

In the burgeoning landscape of AVOD, both content creators and advertisers stand to gain significantly. For advertisers, the appeal is multifaceted:

• Targeted Advertising Opportunities – AVOD platforms provide advertisers with the ability to target diverse audiences, ensuring ads reach the most relevant viewers. This is bolstered by the platforms’ capabilities to offer detailed insights into viewer behavior, preferences, and demographics, allowing for enhanced ad relevance through precise targeting, measurement, and programmatic ad activation.

• Variety of Ad Formats – Advertisers can choose from a plethora of ad formats, including pre-roll, mid-roll, post-roll ads, display ads, or sponsored content. This flexibility ensures that ads can be seamlessly integrated at any point in the video, enhancing viewer engagement without being overly intrusive.

• Incremental Reach and Real-time Feedback – AVOD serves as a vital tool for reaching cord-cutters, offering incremental reach to advertisers. Additionally, the real-time feedback and adjustment capabilities of AVOD platforms enable advertisers to optimize their campaigns on the fly, ensuring maximum impact and ROI.

For content creators and distributors, AVOD platforms herald a new era of opportunities:

• Monetization and Audience Growth – AVOD allows content creators to monetize their offerings without relying on direct payments from viewers, increasing visibility and audience growth. The expanding viewer base on AVOD platforms translates into more advertising revenue, enabling creators to share in the growing pie of ad revenues.

• Content Distribution and Experimentation – These platforms offer wider content distribution opportunities and the flexibility to experiment with different types of content and formats. This not only helps in generating a bigger return on fixed investments but also provides more funds for the creation of new content, enriching the overall content landscape.

In summary, AVOD platforms are reshaping the digital media ecosystem, offering substantial benefits to advertisers and content creators alike by marrying targeted advertising with broad, diverse content distribution.

 

Understanding the Viewer’s Perspective

Understanding the viewer’s perspective on AVOD platforms reveals a diverse demographic inclination and changing content consumption habits. The following groups are particularly noteworthy:

Younger Audience Dynamics

AVOD streamers fall predominantly within the 18 to 34 age bracket, showcasing a younger demographic’s preference for these platforms. This trend highlights the appeal of AVOD services to generations that value accessibility and cost-effectiveness, possibly reflecting a not-as-affluent economic status compared to SVOD viewers. The inclination towards AVOD among younger viewers underscores the significance of ad-supported models in capturing the attention of digital natives seeking diverse content without a subscription fee.

Adoption Among Older Viewers

Interestingly, the demographic over the age of 55 is increasingly turning to AVOD as a viable alternative to SVOD services. This shift, accelerated by the COVID-19 lockdowns, indicates a broader acceptance of ad-supported formats across age groups. Older viewers, traditionally less represented in digital platform consumption, are finding value in the cost-effective nature of AVOD, expanding the audience base beyond its younger core.

These insights into viewer demographics and preferences suggest a nuanced understanding of AVOD’s appeal across different age groups, highlighting its role in democratizing access to video content. The distinct characteristics of these viewer segments emphasize the importance of tailored content and advertising strategies in engaging a broad audience spectrum.

 

Challenges Facing AVOD Platforms

Despite the growing popularity and adoption rates of AVOD platforms, they face several challenges that need addressing to enhance user experience and operational efficiency:

Ad Experience and Viewer Engagement

• Making ad breaks enjoyable and minimizing ad avoidance requires innovative approaches, such as creating engaging and relevant ads that resonate with viewers.
• Balancing ad load and viewer tolerance is crucial; too many ads can lead to viewer dissatisfaction, while too few may not generate sufficient revenue.

Technical and Operational Hurdles

• Ensuring seamless ad delivery without technical glitches is vital for maintaining a positive viewing experience.
• Managing the content supply chain, including coordination with vendors and handling high production costs, demands efficient strategies to keep expenses in check while delivering quality content.
• Ad fraud prevention and data privacy are significant concerns, necessitating robust security measures and transparent data handling practices.

Market Dynamics and Performance Measurement

• Navigating a fragmented marketplace and a crowded advertising market requires AVOD platforms to select strategic partners and innovative ad formats.
• Accurate measurement of viewer statistics and advertising effectiveness poses a challenge, underscoring the need for industry standards and reliable analytics tools.

 

AVOD vs. Other Monetization Models

When comparing AVOD with other monetization models such as SVOD (Subscription Video on Demand) and TVOD (Transactional Video on Demand), it’s crucial to understand their unique characteristics and how they cater to different audience needs and preferences.

Monetization Models Comparison

• SVOD (Subscription Video on Demand):
  • Examples: Netflix, Hulu (ad-free plan), Disney+, Amazon Prime Video.
  • Revenue Source: Recurring subscription fees.
  • Viewer Access: Unlimited access to a content library.
  • Usage Pattern: Requires regular usage to justify the subscription cost.

• TVOD (Transactional Video on Demand):
  • Examples: Amazon Prime’s video store (pay-per-view basis).
  • Revenue Source: Revenue from content purchases or rentals.
  • Viewer Access: One-time purchase or license for a specific piece of content.
  • Usage Pattern: Occasional usage for specific content.

• AVOD (Advertising-based Video on Demand):
  • Examples: Pluto TV, Peacock TV, Freevee, Tubi.
  • Revenue Source: Ad revenue.
  • Viewer Access: Free content with advertisements.
  • Usage Pattern: Casual usage due to free content availability.

Understanding these models helps in recognizing the strategic advantages of AVOD, such as its ability to reach a wider audience by offering free content supported by ads. This contrasts with SVOD’s reliance on subscription fees and TVOD’s one-time payment structure.

 

What to Look for in an AVOD Platform Provider

When scouting for an AVOD platform provider, it’s essential to consider several key factors to ensure the platform aligns with your content distribution and monetization goals. Here’s a breakdown of notable features to keep an eye out for:

Content Management and Measurement

• How intuitive is the content management system (CMS)? You want one that’s not only easy for you to use but improves discoverability on the viewer side.
• Look for one with flexible and extensive API access to better customize or “white label” your VOD solution.
• Some platforms also offer AI-enhanced metadata and tagging to further improve organization and discoverability.
• Find a platform provider whose CMS has advanced video analytics for end-to-end tracking of performance, audience, and more.

Quality and Scalability

• Platform providers that allow for video transcoding and adaptive bitrate streaming will better maximize the quality of streamed content for a more enhanced viewer experience.
• Look for a platform provider with a high-quality, analytics-driven online video player.
• Does the video platform in question utilize an expansive and effective video content delivery network (CDN) to maximize reach and accommodate viewership surges?

Flexibility and Support

• The ideal VOD platform provider comes with flexible deployment options to help you stream in the cloud, on-premises, or both.
• What support options does your new streaming solution provide? Will you be able to resolve platform issues quickly?

Choosing the right AVOD platform provider involves evaluating these aspects to find a match that offers the right tools for content management, quality delivery, and innovative features. Finally, look for one with a history of customer-centric innovation so you don’t find yourself shopping for another as your needs evolve.

Ready to learn more? Find out how to kickstart your AVOD strategy (and who with).