AVOD Monetization in OTT Media

AVOD Monetization

With consumers moving away from traditional methods of watching content – a trend called cord-cutting – content creators have to adapt to keep up, changing how they deliver their content and, just as importantly, monetizing said content in a way that suits their shifting audience. In today’s day and age, Over the Top (OTT) increasingly reigns supreme for viewers, and advertising video on demand (AVOD) is the most accessible means of monetization, requiring no monetary buy-in from the viewer whatsoever.

What is AVOD?

To understand what AVOD is, we first must explain what exactly OTT is, and how it differs from conventional broadcasting, such as cable and satellite television. Over the top content is delivered through the internet, a multi-use platform, rather than a dedicated platform like a satellite tv connection, which can only be used to watch the content pushed through it.

This poses a question about how you generate revenue from content. After all, people pay their internet providers for their connection separately, with no money flowing to publishers or networks. Between this and the non-scheduled format of most content accessed online, natural ad breaks don’t occur between programming like they would on traditional television. As such, this necessitates different methods of monetization – one of which is ad based video on demand, or AVOD. This method places ads before or during content, which allows consumers to access the content for free, whilst content creators still get compensated. Perhaps the most popular and well-known AVOD platform is Youtube, where anyone can open the app or go to the website and consume as much content as they want. While Youtube has in recent years added other forms of monetization, they primarily use AVOD, meaning the scalability and profitability of the strategy is very potent.

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Advantages and Disadvantages of AVOD

By using ads instead of charging a fee, be it subscription-based or a fee to purchase each piece of media, content is easily accessible to a broader audience. Some platforms don’t even require an account to view content. This allows content creators to build fan bases faster and to a greater overall size with no financial barrier to restrict people from engaging with the content. Word of mouth promotion becomes a large driver of growth, as people recommend a piece of content to their friends. They don’t have to convince them it’s worth their money, just their time, which is a much lower bar to clear. Meanwhile, the content creators, or publishers, are able to generate revenue to support the production of even more content for fans to watch without needing the financial backing of a corporate sponsor or having to sell a subscription service.

Advertising as a method of monetization is not without its drawbacks, however. Whilst putting as many ads in front of as many viewers as possible is the natural way to increase revenue from AVOD, if not careful, it could significantly degrade the viewer experience, which may then carry a larger negative impact on the content creator and publisher. This requires a delicate balancing act, as showing too many ads to a viewer, particularly if there is a lot of repetition of those ads, can lead to ad fatigue and prevent viewers from engaging with both the content and ads. The aim of the format is a video on demand, not ads on demand, after all. Additionally, there is also a smaller issue in viewers using browser extensions to block ads before they can be shown. This gives them a smoother viewing experience, but it means the advertiser is not creating impressions, and the content creator is not earning revenue from those users.

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The Takeaway

The audience for AVOD based media will only continue to increase – towards the end of 2020, 72% of US households were utilizing CTV or other OTT devices, which allow programmatic advertising to target them. That is a pool of potential consumers totalling in the hundreds of millions, along with a staggering amount of potential revenue for content creators and advertisers alike. 

With careful use of targeting and technologies like frequency capping to avoid ad fatigue in viewers, AVOD can be an extremely valuable part of your monetization strategy whilst offering high-quality content to the audience for free. As that 72% continues to grow every quarter, publishers and content creators would foolhardy to miss out on such a great opportunity.



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