Video streaming service providers have multiple ways to monetize their content with the right OTT solution. They can utilize subscriptions, pay-per-view, advertising, and a hybrid monetization model. Over the last few years, AVOD platforms (advertising-based video-on-demand) have gained popularity.
Researchers predict that 2 out of 3 users will consume at least one ad-based streaming service by the end of 2023. So, the growth of ad-based streaming services is expected to continue. Let’s give a closer look at AVOD services.
What is AVOD or Advertising-based Video-On-Demand?
Video-on-demand (VOD) streaming services are content distribution platforms allowing viewers to choose when, how, what, and where they want to watch videos. Content is pre-stored on servers, and everything a user needs to do is click on a video to play. The transmission starts and the user enjoys the content.
VOD services set various types of access to videos. It can be paid or payment-free. Among paid access types are subscriptions and pay-per-view. Subscriptions allow users to purchase monthly or yearly access to content, while a pay-per-view model requires payment for every video on the service. An example of a pay-per-view model is iTunes, while TVALB is a great example of a subscription-based service.
Advertising allows providers to make content available on a free basis. Users don’t need to pay anything. Instead, they watch ads during the video playback. It’s what makes ad-based streaming services appealing to viewers.
With the ad-based monetization model, providers make revenue by running ads on the videos. It is better to run different ads as it will help you attract various advertisers and meet different needs of viewers.
You can place ads before a video starts, during the playback, or at the end of the content. Ad placement is an essential question to consider as it has a different impact. For example, pre-roll videos can capture viewers’ attention better, while mid-roll ads interrupt the playback. However, you should test to find out when to run ads better and when viewers are likely to watch it till the end.
What are the Benefits of Advertising-based Video-On-Demand for a Business?
Ad-based streaming services are usually free for viewers, which makes them accessible to any kind of audience. If you want to reach more customers directly, AVOD can be of great help here. Why is AVOD an effective alternative?
#1 High-level user acquisition
Subscriptions make content affordable and accessible for people. They cost less than cable or satellite — that’s why viewers switch to streaming services. Still, users cannot purchase all the subscriptions they want. They need to choose the services they want to watch the most. Moreover, not all viewers are willing to pay for content consumption.
Advertising-based services are a win-win situation both for businesses and consumers. Consumers don’t need to pay for content, while businesses generate revenue by advertising.
#2 Customization of ads
Professional OTT solutions for video streaming services allow providers to personalize ads. As a result, viewers watch ads that they might be interested in. Based on their interests and behavior, the platform targets ads. As a result, the chance that a viewer clicks on an ad video is higher, which means the revenue you generate can also be higher.
#3 Promising forecasts
Researchers predict that the AVOD revenue will reach $70 billion in 2027, up from $33 billion in 2021. In the USA alone, the revenue will reach $31 billion by 2027.
Final Thoughts
Advertising-based video-on-demand services are gaining popularity among businesses and viewers. While customers don’t need to purchase anything, companies generate revenue through advertising. It is beneficial for all sides involved: viewers, businesses, and advertisers. It indicates that AVOD services will continue to grow.
