Fondness towards online content streaming over traditional TV is fiercely driving the growth of Ad-supported video on demand (AVOD) services. As the pandemic era dissolves, experts are expecting to see further acceleration in AVOD adoption in the coming years. This can be accounted from the fact, that almost 200 million American consumers used AVOD streaming services in 2019. US is the second largest market for AVOD; besides India being the first, with more than half a billion AVOD users!
Because of this increasing response for original streaming content, AVOD market size is expected to grow at an astonishing rate of 20% during the forecast period of 2020 to 2030. This is an increase of over 6 times in this time period.
This blog summarizes the fundamentals and functioning of an AVOD revenue model, to help business owners understand how they can leverage this monetization model to generate profits with video content.
What Does AVOD Mean?
AVOD or ad-supported video on demand is the most prevalent monetization model used to monetize video content through OTT platforms. This type of monetization model generates revenue through advertisements and lets the users watch the video content for free instead of having a subscription. It involves putting advertisements in the beginning or middle of videos, web-series, movies or any other video content.
This model attracts a large number of viewership due to free accessibility of the content. The revenue comes from the companies that collaborate with publishers for advertising their brand. E.g. When you tune into a YouTube channel, you are taking part in AVOD. The video ads that play during the YouTube video is the way through which YouTubers make their money.
Beyond YouTube, AVOD is used by other free streaming platforms like Facebook Watch, Vudu and Twitch etc.
Why Ad-Supported Monetization gets you Powerful Returns?
AVOD is one popularly adopted monetization model not just by content creators, but also by the advertisers and viewers for the reasons listed here:
- For the video content creators, AVOD is a low risk method to monetize videos.
- AVOD market growth is farfetched. The Influencer Marketing Hub quotes that online ad revenues rose by 15.9% in 2019 and is still on the rise. This depicts how placing digital ads is a pressing priority for the brand owners.
- It instantly allows access to a very large number of viewers and if the creator could strike the right note with their content, they can make a handsome amount of money. The AVOD market is massive and is ever increasing in size.
- It is an incredibly enticing model for the audiences too. They get access to endless amounts of free content and they can decide when and how to watch it. Also, this is the foremost reason that cable TV networks are getting serious upgrades, while many cable TV viewers have decided to cut the cords.
- AVOD is a preferred monetization model by advertisers too. They can measurably put their brands in front of targeted and massive numbers of users. That is why AVOD is the obvious choice for advertisers looking to reach directly to the consumers.
Pros and Cons of Advertising Based Business Model
- Large viewer participation due to free content
Viewers have free access to the content in AVOD business model. They simply have to sign up to get access to videos without paying any charge. Hence the audiences allocate more of their time on this platform, which further enhances the prospects of revenue for the publisher.
- Brilliant Revenue Prospect for both Publishers and Advertisers
Numerous advertisers and publishers have faith in investing more into AVOD based content. The statistics also show a favorable trend for those intending to invest in it. Statista, predicts that advertisement spending would reach around $36 million by 2025. Hence, this is an excellent time to leverage the potential of AVOD monetization model.
- Allows incorporating Variety of Advertising Methods
The advertisers and publishers have the discretion of choosing from a variety of ad models and formats without upsetting the user experience. Video ads in this model can vary in length; may be in the form of text overlays too. There is a flexibility of presenting the ads before the core video, in between the video or after the video concludes.
- Opportunity for Personalized Ad Delivery
Personalized advertising allows advertisers to reach their target consumers more precisely. AVOD lets the brands advertise on the video content by recommending ads to targeted audiences making it relevant for them. This converts into better sales for the brands working with the publishers. It also allows different ads to be run for different viewers.
- Simple Access
AVOD has kept entry to the video content simple. There is no need for cables, subscriptions or any type of device procurement before you start watching the freely available content. The audience for such videos is much broader and thus offers a scalable revenue potential.
- Poor Bandwidth Control
AVOD being free can draw millions of viewers together, when uploaded. This often leads to an increase in the bandwidth costs.
- Delayed Returns
As pointed out, bandwidth issues may arise when streaming with AVOD, delaying the optimization of ad parameters and content category. This can get delayed even for years bringing down the profitability.
- Technological Constraints
In AVOD, you need to personalize ads to attract bigger revenues. For this to be fulfilled all devices must be compatible with the video to be streamed. Since the viewers watch for free, they do not restrict usage from device to device. In fact, your technology must be sound enough to incorporate custom ads and allow ad personalization.
How to Launch Your AVOD Streaming Business?
When you want to get going with your idea of video streaming platform with AVOD, you would need to know a few things.
Start with appointing an AVOD provider who can match your business expectations and service you to help reach your fullest potential. So, what should you look for in your AVOD provider?
- An intelligent and easy to use video CMS
- Advanced privacy and security features.
- Steady resources and a dependable CDN
- Untroubled video streaming techniques
- Should conform to the accepted standards of video monetization methods. (Instream ads, Outstream ads, Ad Looping etc.)
- Third-party integrations or fully loaded API platform
Consult us to launch your AVOD streaming services. Build a profitability driven Ad based video-on-demand service to have in-depth insight into the online video platform market. Get in touch with product experts to build a state-of-art AVOD platform.
The exploding demand of AVOD space clearly signals that can drive content publishers, creators, viewers and advertisers together. It generates free traffic and an excellent revenue stream for those involved. YouTube is the best AVOD Platform that has demonstrated the profitability of this ad-driven business. But the success of your business lies in proper planning, intense marketing and choice of an upscale technology to stream videos flawlessly.