The Rise of AVOD: A Game Changer in Streaming Entertainment

AVOD is an abbreviation for ad-supported video-on-demand. Instead of charging consumers for watching video material, they are provided advertisements. For example, if you are a YouTube content creator, advertisers might pay you a fee for each ad that appears in your video.

The revenue earned by this arrangement can then be used to cancel hosting and manufacturing costs or to invest in advertising. Although AVOD generates less money than TVOD and SVOD, it’s a terrific strategy for content creators who have a lot of views but aren’t sure if consumers would pay to watch them.

How does AVOD work?

AVOD, or Advertising-Based Video On Demand, is a video monetization approach in which advertising is introduced into the video to commercialise it, and consumers can consume the material for free (in virtually all situations) without paying or subscribing to the service.

AVOD is a business strategy that relies on a large number of people watching videos and advertisements to be financially successful. The publisher is only paid a few dollars for every 1000 ad impressions, and in order to generate a sustainable revenue, the publisher must attract a large number of users to his platform. AVOD is primarily appropriate for news websites and user-generated content (UGC) sites like YouTube and Vimeo, where the primary revenue source is advertising driven by enormous audiences.

Different ad options in AVOD

To ensure that the AVOD tactics function well, the commercials are inserted at different intervals throughout the programme. The placement of these adverts is critical and should be done with care since it impacts whether people will watch your advertising and the video or if they will become annoyed and abandon the entire video.

Let’s learn about various ad placements and how they work:

• A Pre-Roll Ad: As the name implies, the ad appears before the video begins. So, if a user wants to watch a video, they must first watch the advertisement. Pre-roll advertisements are effective because: When a person is engaged in a given video, they are more likely to watch the commercial rather than abandoning the video due to the ad. Pre-roll commercials are not annoying to viewers because they come early in the video, before ad fatigue sets in.
• A Mid-Roll Ad: Mid-roll commercials are those that show in between videos and interrupt them. A mid-roll ad can be skipped when a particular amount of time has passed. One of the VOD sites that offers pre-roll and mid-roll commercials is YouTube. Always keep the following in mind when deploying mid-roll ads: The advertisements are kept at a safe distance from one another. Ads that appear too frequently cause viewers to exit the video. Determine the frequency of advertisements based on the length of your video. For example, if the film is only 10 minutes long, you should not insert an ad every minute. Similarly, posting only one or two advertisements may not provide a reasonable share of revenue. Try to strike a balance between the two!
• A Post-Roll Ad: Such advertisements appear when a video stops and another video is about to begin. If your video player is set to autoplay, you may encounter such advertisements. Post-roll commercials are not very popular and are rarely watched because they come after the video has ended.
• Takeover Ads: Such ads are often featured on the most popular sites; the content owner grants the advertiser permission to display ads over the videos or website.
• Companion Banners: Companion advertising, as the name implies, are those that appear alongside content such as audio or video. Ads might appear below, above, or to the side of a video while it is playing.
• In-Video Overlays: Overlays can be used to display calls to action at the bottom and over the video.
• Interactive Ads: As the name implies, interactive adverts are interactive. This distinguishes them from conventional advertisements, and several brands employ the “interactive” feature to make these advertisements more appealing to the viewer.

Benefits of AVOD

AVOD is commended for being a low-risk method of monetizing videos. Platforms or content creators do not have to create or sell a product to profit; space in your content is simply offered up to a corporation or organisation for them to run an advertisement.

In a post-Covid world, AVOD viewership is expanding at an exponential rate. By 2025, it is expected that 61.2% of digital video viewers would be AVOD users, accounting for more than half of all digital video traffic. 

Conclusion

Because of the expansion in viewership, the race for customers, and the increase in consumer choice, AVOD has a very promising future in the next few years. AVOD has always been a good business model for VOD news, sports, and movie streaming providers, and I don’t see that changing anytime soon.

Ad insertion and targeting technologies such as VAST, VPAID, SIMID, SSAI, and CSAI are also gradually improving, which will stimulate the usage of ads and ad insertion in a more user-friendly manner.

Chandan Luthra - Director, Product Engineering, Enveu

Chandan Luthra is a co-founder of Enveu, and heads the Engineering department at Enveu. He is an early adopter of OTT tech and has been part of many OTT platforms across the globe. He is developing & building Products and SaaS platforms for more than 13+ years