AVOD (Advertising-Based Video On Demand): Opportunities and Challenges in the Streaming Era

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The marketing industry is chock-full of acronyms including AVOD, short for advertising-based video on demand. AVOD and subscription-ad-supported video on demand (SVOD) create the majority of revenue from ad sales that play when viewers consume streaming content.

Why AVOD is Here to Stay

AVOD will likely have a long-term impact on the industry as it is flexible. AVOD is either offered at no cost or on a subscription basis (SVOD), creating the potential for two streams of revenue. Technology has advanced to the point that the devices used for streaming online video content allow for targeted advertising to individual devices. Moreover, tech has also improved to the point that it measures viewership with more accuracy than possible in previous years.

The challenge lies in getting ads in front of streaming audiences. Non-skippable advertisements on streaming video are a highly effective means of presenting content to an audience for maximum impact.

Though some such ads have the potential to disappoint or even backfire if they annoy audiences, what matters most is the fact that they are seen and heard. As industry veterans often say, all publicity is good publicity. Some streaming services have even gone as far as empowering viewers to pause ads midstream as desired.

Streaming Service Advertising Strategies are not Completely Uniform

There is a common misconception that all streaming services employ similar advertising strategies. However, those who subscribe to multiple streaming services and pay close attention to their advertising models understand some employ an AVOD model while others employ an SVOD model.

As an example, Pluto TV uses the AVOD model. Alternatively, Amazon Prime Video employs the SVOD model. Additional streaming services such as Hulu employ a blended approach, offering subscription plans with a small monthly fee and others without ads for a premium.

AVOD is Making Inroads Across the World

Platforms are racing to capture market share throughout the world. AVOD has quickly become an essential tool for accessing the corners of the global market. Successful streaming companies recognize that consumers at home and abroad have varied interests. Some cannot afford to pay a monthly video streaming subscription fee while others are willing to pay such a fee to access content across a variety of streaming platforms.

The AVOD strategy makes it easier for streaming services to maintain an international reach. However, most streaming services probably won’t fully convert to strictly AVOD models. Most viewers are willing to watch ads at intervals throughout streaming video content as they can watch such video at no cost, ultimately generating more revenue for the streaming service without shelling out their hard-earned money for ad-free viewing.

The Many Advantages of AVOD

There are numerous advantages to the AVOD approach. For one, those who create and present streaming video to audiences through the internet obtain revenue from advertisers. AVOD advertisers are willing to pay to present their audience to an expansive audience. Premium streaming content is presented to viewing audiences at no cost or little cost, ultimately benefiting the viewers, streamers, and advertisers.

Ads are placed directly into video streams, guaranteeing the viewing experience flows without interruption. What matters most is that streaming service subscribers have a choice between no-cost streams with ads and premium streaming services without ads or few ads.

As long as the model has a steady stream of ads placed by businesses and other organizations willing to pay to present their message, AVOD will likely prove successful. It is such advertisers that serve as the lifeblood of AVOD.

The only potential downside is an economic trough that leads to annoying ad repetition that alienates viewers. Furthermore, an economic lull also has the potential to lead to too few ads. However, the viewing public has made it clear that it is willing to sit through ads to reduce or eliminate the cost of video streamed on the internet.

The Different Approaches to AVOD Ad Insertion

The AVOD business model empowers video content specialists to monetize streaming content through server-side or client-side insertion. The server-side ad insertion approach transmits ads to viewing devices by placing them in the stream on the server side.

Ads are transmitted to the viewing device as a component of the video stream. This approach is optimal for video content that is on-demand as it is unnecessary to insert ads in real time.

Alternatively, server-side insertion is more straightforward. Moreover, server-side ad insertion requires fewer resources than that of client-side ad placement. Perhaps most important is that server-side ad insertion is more likely to reach the intended audience as there is less delay and interference from buffering, latency, and other potential issues that compromise the viewing experience.

The server-side ad approach also allows for personalization and geographic targeting. The only potential negative to the server-side approach is that it lacks ad delivery flexibility and options, necessitating more resources. As an example, specific infrastructure such as ad-stitching and content transmission networks are required for the server-side ad approach.

  • Post published:January 20, 2024
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  • Post category:Technology

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