Why is AVOD booming, and what opportunities does it present?

Advertising has always been the added spice to any broadcast or distributed content. Since the dawn of linear TV programming, adverts have been integral to successful businesses, complementing the broadcast, if not – in some cases – becoming ‘a show within the show’. The descent of streamed TV and OTT platforms was accompanied by the promise of a wholly customised experience. One where the consumption of content would be brand new, without interruptions brought by advertisements during a programme. One where the user can feel like the real owner of what runs through the screen.

A saturated digital space

OTT and SVOD have always walked hand in hand, being the core monetisation strategy of all the traditional major OTT players, but this one size fits all strategy no longer fits.

Monetisation opportunities – so far a prerogative of subscription-based video-on-demand services (SVOD) – are looking different today. Especially in the last couple of years, amid the pandemic, subscription services have marked ground-breaking steps forward and monopolised the entire OTT and streaming landscape. However, with an estimated 40% of the entire world population accessing OTT services in 2022, and a natural saturation of the SVOD landscape, services are looking to a slower pace in terms of growth, with growing competition from advertising VOD suppliers. Audiences, indeed, are willing to ‘accept’ regular adverts during their on-demand or live streaming, in exchange for a free-to-access service.

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Undoubtedly, streaming is the present and future of content distribution. And one of the main reasons why advertising-based video-on-demand (AVOD) is booming can be found in the higher CPMs the AVOD landscape brings to the picture, if compared to the linear broadcast world. Not being involved in ad-supported models, today, means content distributors are missing out of a core and growing monetisation window.

Technology

How do you tackle the rising demand for AVOD systems from a technological point of view? At Simplestream we make it possible for any customer to implement an ad-supported business model through a dedicated module that lives within Media Manager, the powerful backend that allows to manage content for distribution.

Through the easy-to-navigate dashboard, operators can seamlessly integrate any advertising service, and oversee the adverts workflow, end-to-end. Bespoke advertisement is made available by:

➡️ Client-side Ad Insertion (CSAI), the method of delivering ads to clients (desktop, mobile, CTVs, gaming consoles, etc.) where the video player (client) requests the server for an advert as it reaches certain ad-markers in the stream or in the manifest. This method leverages in-app SDKs.

⬇️ Server-side Ad Insertion (SSAI), the more dynamic way of stitching an advert directly into the video that is being streamed. The workflow – more complex in this case if compared to the CSAI method – unfolds entirely in the cloud, as opposed to within the end users’ device. Unlike CSAI, finally, this solution is SDK-less, but still allowing for personalised ad requests and ad tracking/analytics.

Finally, the monetisation of video content cannot do without pre-, mid-, and post-roll ads, segments of adverts that play automatically either before, in the middle, or after a video, no matter if it’s short-form or longer-form content.

Closing thoughts

Invaluable opportunities lie ahead for content owners and distributors. With the saturation of the SVOD segment and the growing feeling of ‘subscription fatigue’ amongst OTT users – together with less disposable income in the hands of end-users to subscribe to additional OTT services for their content of choice – ad-supported services are booming. They are bringing the concept of watching TV perhaps a step back to what we were used to yet projecting it into a future that speaks the language of streaming.

Industry analysts are forecasting exponential growth for AVOD services going ahead. Both from an on-demand perspective and ‘live’ FAST channels, stakeholders are licking their lips at the prospect of enhancing additional revenue streams, by leveraging the rollout of advanced, bespoke advertising. Think of hyper-targeted audiences, where ads work in a much smarter way than they used to in the traditional, linear content distribution. In-depth targeting opportunities are now available to distributors (behavioural, contextual, technographic, demographic, etc.). And a lack of attention to even the smallest of details, would certainly mean leaving money on the table today.