Advertising-supported video on demand, or AVOD, has often been the weak little brother of smart subscription-based billing services, like Subscription video on demand, SVOD. It has apparently swept everything before it, fueled by the expansion of companies- such as Netflix and Amazon Prime. The conventional belief in business is that consumers have been thrilled to get rid of the commercials in exchange for a monthly subscription.
According to the Audience Project poll, 57% of Netflix members said they would cancel their subscription if commercials were ever introduced.
Popular streaming services are gradually switching to ad-based revenue in order to enhance profitability and audience engagement.
What is AVOD?
AVOD or Advertising video on demand is a business model in which viewers “pay” with their eyes by watching free material that is financed by commercials. The money is entirely derived from the sale of advertisements on videos, just as it is on broadcast television.
Roku, YouTube, Dailymotion, etc. are some instances of AVOD platforms.
Solo ad views require enormous numbers for meaningful income; hence, AVOD is best for cable television with a wide audience. AVOD is also suited to a bigger audience because of its minimal entry hurdles.
Is AVOD Poised to Take Over the OTT Market?
AVOD is expected to grow by 144% in 138 countries by 2026. According to experts, the rise of addressable advertising is one of the key causes. The fact that AVOD viewership is often an addressable television audience that can be reached is one of the major benefits for the business. It offers targeted advertising, that a number of growing businesses desire. It means that AVOD channels can have reduced ad loads while still delivering the same quality of content. While SVOD revenue might not approach worldwide Pay TV subscription in the next 5 years, the ad-supported industry is predicted to overtake them by the end of 2022, with $174 billion in revenue. AVOD has already carved out a sizable chunk of the streaming market and is continuing to expand.
Advertising in online streaming, on the other hand, is more than just stapling a commercial onto a show. It is now expected to be supplied in a way that provides a seamless TV-like viewing experience while also satisfying the target and measurement requirements of marketers and brands. Viewers are understandably hesitant to pay in an atmosphere when there is so much free but premium content accessible. That’s why many subscription-based billing services are shifting to ad-based revenue models.
What Differentiates AVOD as a Prominent Entrant?
The Tivo’s Video Trends Survey witnesses that half of the viewers don’t mind or prefer to enjoy viewing advertisements while watching television- especially if they promote free programming. If the choice is between paying a greater price and continuing with commercials, most consumers will prefer the ads.
While more than half of those surveyed indicated they would not pay more for ad-free entertainment, only 26.3 percent said they would.
Many businesses have already realized that AVOD services are becoming popular with each passing day. Marketers are increasingly following suit and shifting to AVOD.
AVOD services will need to keep improving their user experience to succeed against the SVOD behemoths. Broadcasters and media organizations are ecstatic about the potential of more revenue streams from advanced advertising. Though, they must guarantee that their video archives are well-equipped to take advantage of the opportunity.
AVOD has a bright future ahead of it, but the concept is still in its infancy.