AVODs: A Win-Win Scenario?

September 2, 2020

In recent years, the ways in which TV is produced, bought and sold have all radically changed in order to adapt to a world in which audiences now watch TV wherever, however and whenever they want. The explosion of streaming services has been essential to TV’s revolution, with ad-supported video on demand (AVOD) platforms playing a critical role. Even amid the ongoing COVID-19 pandemic, eMarketer data reveals that the ad revenue for five of the major AVODs alone has increased 31% year-over-year, while Nielsen has found that AVODs are now earning a significant share of total viewing.

The appeal of AVODs—VOD platforms that are free to users and also include ads— isn’t new. In fact, a 2018 study from the IAB revealed that 45% of people 18 and older who watch over-the-top (OTT) content choose to watch the ad-based services most. Still, it warrants repeating why AVODs can provide an ideal “win-win scenario” for advertisers and audiences alike.

For savvy brands, airing across AVOD services offers advertisers the opportunity to have a strong presence in the continually growing OTT landscape, reaching audiences they no longer would through linear TV (namely the cord-cutters and cord-nevers) or even online-based subscription services. This environment also allows for experimentation with new, interactive ad formats that are ultimately designed for viewers to have more control over which ads play and how they engage with them. For example, Peacock (which includes a free tier in its offerings) has begun serving voice-activated ads.

For consumers, especially those who have tighter budgets due to the economic impact of COVID-19, AVODs are a cost-effective way to enjoy thousands of hours of free TV and film content. Also, while viewers aren’t necessarily against ads themselves, they do dislike ones that are repetitive and irrelevant. This is why real-time attribution is so important. Advertisers need to consistently measure and optimize campaigns to ensure that their spots are reaching highly engaged, responsive audiences—and to guarantee the optimal frequency range (aka how many times an ad should air before it reaches the point of diminishing returns).

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