Ad Supported Video on Demand (AVOD)

With the growth of the streaming industry, monetizing its content presents an opportunity for advertisers to reach the audience while they are already interested. Ad-supported video-on-demand capitalizes on the consumer’s will to have free access to video content. Let’s explore more about what AVOD is and its key benefits. 

What is Ad Supported Video on Demand? 

Ad-supported video on demand (AVOD) is a popular monetization model in the streaming industry that provides viewers free access to video content in exchange for watching advertisements. Unlike subscription-based services (SVOD), AVOD platforms generate revenue by serving targeted ads during the streaming experience. 

This model appeals to cost-conscious viewers and allows advertisers to reach engaged audiences in a non-intrusive manner. With many platforms adopting ad-supported tiers, AVOD is shaping the future of video consumption, offering affordable entertainment options while generating income for content providers.

Actors in an AVOD Ecosystem

The ad-supported video-on-demand (AVOD) ecosystem is a complex network where various stakeholders collaborate to deliver seamless, ad-funded video content to viewers. Each actor in this ecosystem plays a distinct yet interconnected role, ensuring the efficient creation, delivery, monetization, and consumption of video content. 

Below are the key participants in this system: 

Advertisers

Advertisers are the backbone of the AVOD ecosystem. They purchase ad inventory to promote their products or services to targeted audiences. By leveraging sophisticated ad tech solutions like programmatic advertising, they can optimize ad placements and ensure their messages reach the most relevant viewers. Their investment funds the AVOD platforms and helps publishers and content creators sustain free or low-cost services for users.

Publishers

Publishers own and operate the AVOD platforms, hosting a wide range of video content for viewers. They manage the ad inventory, ensure smooth ad delivery, and maintain a high-quality user experience. Publishers utilize advanced ad-serving technology to match advertisements with appropriate content, ensuring relevance and profitability. They often partner with advertisers and content creators to curate adverse libraries, keeping their platforms appealing to a broad audience. Publishers play a critical role in the monetization process, striking a balance between maximizing ad revenue and minimizing user disruption. 

Users

Users are the end consumers of AVOD services, accessing video content for free or at a minimal cost. In exchange, they engage with advertisements integrated into their viewing experience. While their primary role is content consumption, users’s preferences and behaviors provide valuable insights for advertisers and publishers. By analyzing user data, such as viewing habits and ad interactions, stakeholders in the AVOD ecosystem can tailor offerings to enhance engagement. Ultimately, users drive the demand for content, making them pivotal to the system’s sustainability. 

Content Creators

Content creators supply the videos that populate AVOD platforms, ranging from independent producers to large media companies. Their role is to produce engaging, high-quality content that attracts and retains viewers. Content creators often work with publishers to distribute their videos, earning revenue through ad-sharing agreements. 

In the AVOD ecosystem, they balance creative expression with the need for monetization, often tailoring content to fit advertiser requirements without alienating viewers. 

How does AVOD Work? 

There are two main ways AVOD platforms use to deliver ads to viewers: 

Server-side ad insertion (SSAI) involves tying ads directly into the video content on the server before streaming it to the user. This process creates a seamless viewing experience, as the ads are indistinguishable from the main content. SSAI reduces buffering and ensures ads are not blocked by ad blockers, making it highly appealing to advertisers. Additionally, it benefits the user experience by delivering them an uninterrupted video stream.

Client-side ad insertion (CSAI), on the other hand, occurs when ads are delivered separately from the video content. The video player on the user’s device requests ads from an ad server in real time, displaying them alongside the content. This method offers greater flexibility, enabling dynamic ad targeting based on user behavior and preferences. 

CSAI, however, is more vulnerable to ad blockers, which cause delays in ad delivery. 

Choosing between SSAI and CSAI depends on priorities such as user experience, ad-blocker resilience, and the need for real-time targeting. Both approaches are essential tools for monetizing video content effectively. 

When is AVOD Used?

Ad-supported Video on Demand (AVOD) is widely used by content providers to balance free access with revenue generation through advertising. It is typically employed in the following scenarios: 

Reaching a broader audience: AVOD is ideal for expanding viewership by offering free access to video content and attracting users who may not subscribe to paid platforms. This model appeals to cost-conscious users and those in markets where subscription models are less suitable. 

Monetizing niche content: Smaller or niche content creators often use AVOD to generate revenue while providing free content. It allows them to attract audiences while funding production and distribution costs. 

Providing diverse revenue streams: Media companies use AVOD alongside other models like SVOD (subscription video on demand) to diversify their sources of revenue and target different audience segments. 

3 AVOD Examples

The AVOD model is very popular among streaming platforms. Here are three examples: 

• YouTube: The most well-known AVOD platform, YouTube provides free content supported by pre-roll and mid-roll ads, offering creators monetization opportunities. 

• Tubi: This platform streams movies and TV shows for free, and generates revenue through ad breaks during streaming. 

• Pluto TV: Owned by Paramount, Pluto TV offers live and on-demand video content funded by advertisements. 

The versatility of AVOD makes it very suitable for established companies and emerging creators to reach audiences while sustaining profitability. 

AVOD Benefits 

Ad-supported video on demand (AVOD) is transforming how viewers, publishers, and advertisers intersect with digital content. This model offers free access to a vast library of content for viewers while providing opportunities for advertisers and publishers to thrive. 

Below are some key benefits that make AVOD an appealing solution across the streaming ecosystems: 

High viewability rate – AVOD platforms achieve high viewability rates by offering free, on-demand content that attracts broad audiences. Viewers are more likely to engage with ads since they receive access to premium shows or movies without paying a subscription fee. Thus, advertisers’ messages can reach a wider audience, enhancing the return on investment for ad campaigns. 

Low risk for publishers – Unlike subscription models, AVOD minimizes financial risk for publishers. Revenue is generated through advertisements rather than relying on retaining paying subscribers. This allows publishers to focus on expanding content libraries and reaching diverse audiences without the pressure of maintaining high subscription rates. 

Better ad targeting – AVOD platforms utilize advanced data analytics to deliver personalized ads based on user preferences and behavior. This approach improves the relevance of advertisements, ensuring higher engagement rates and increased efficiency for advertisers, making it a win-win for both consumers and brands. 

Flexibility – AVOD supports various ad formats, including pre-roll, mid-roll, and banner ads, giving advertisers the flexibility to choose the best format for their campaigns. Publishers also benefit by creatively structuring content to maximize ad revenue while retaining viewer satisfaction. 

AVOD Challenges

Advertising-supported video on demand ( AVOD), offers numerous benefits, but it also presents significant challenges for platforms, advertisers, and users. From balancing ad placement with viewer satisfaction to addressing revenue uncertainties and complex attribution models, overcoming these hurdles is essential for optimizing AVOD’s potential. Below are the main challenges associated with AVOD models. 

Impacts the user experience. Ads on AVOD platforms can disrupt the viewing experience that users desire. Poorly timed or repetitive ads may frustrate viewers, leading to platform abandonment. Platforms must carefully curate ad placements, ensuring relevance and limiting interruptions to retain audience satisfaction while meeting advertiser demands. 

Uncertain revenue. Advertising revenue is variable, influenced by market dynamics, ad pricing, and viewer engagement. Viewers can skip or ignore ads making it further unpredictable and challenging for platforms to project consistent income. Strategies such as premium ad placements or precise targeting can mitigate uncertainty. 

Attribution challenges.AVOD may also present attribution challenges. Determining the effectiveness of ads is complicated by fragmented customer journeys and limited tracking capabilities. Integrating advanced analytics and cross-platform tracking tools can help achieve accurate attribution.