What is AVOD and How does it work?

AVOD or ad-based revenue model is one of the most popular revenue options for content creators. Many businesses and individual creators are swearing for their effectiveness, and the amount of traffic AVODs attract.

The reason is simple: AVOD doesn’t charge viewers anything! It is free and lets them stream the videos without paying any subscription fee.

As a result, when a content provider utilizes ad-based monetization, they attract traffic more quickly than other methods where payment is a compulsion.

Today we’ll dig deeper into AVOD’s meaning and explore its many aspects. Let’s read along, and gain a more profound idea about this revenue method.

An Overview Of VOD [Video on demand]

As it sounds, video on demand brings videos to the viewers on their demand. There are streaming platforms that provide viewers with their favorite movies, web shows, and more whenever they want and wherever they want.

After selecting their preferred VOD platform, users can stream the video content on their devices. GUDSHO, Prime, HULU, and Netflix are some of the best VOD platform examples. Such platforms offer different kinds of content in different niches; some VODs also allow viewers to download the content offline.

For content creators, such VODs bring different monetization options via which they can monetize the videos they upload and earn money. 

Creators can hence utilize revenue options like AVOD, SVOD, and TVOD. Viewers can hence choose their VODs as per their preference, and they can subscribe to their favorite VOD platform, take their favorite shows and movies on rent, or just view the advertisements and stream the content for free.

To get the best returns on their investment, creators should always choose the best revenue options that suit their content.

What is AVOD Advertising?

AVOD is one of the revenue models that online video streaming platforms provide to their content creators. AVOD allows creators to earn money by letting them place advertisements in between their videos.

So instead of paying with money, the viewers of these content creators pay with their time. For every ad watched and clicked, these creators receive money. The amount of money they earn per view or per click depends on the ad provider, geography, and other factors.

AVOD makes one of the easiest and most effective revenue methods because it can generate a steady flow of income while being easy to maintain. Since it doesn’t need the viewers to pay anything, it attracts traffic more easily. 

With AVOD, creators can predict their income once they start getting regular traffic. Such prediction is not possible in SVOD and is almost negligible in TVOD.

Types Of Ads in AVOD

The ads are placed at different intervals in a video to make the AVOD strategies work well. Placement of these ads is vital and should be done mindfully since it determines if viewers will watch your ads and the video or if they will get annoyed and abandon the overall video.

Let’s get to know different ad placements and how they work:

➡️ A Pre-Roll Ad

Pre-roll as you can get an idea; the ad displays before the video begins. So if a user wants to watch a video, they must watch the ad first. 

Pre-roll ads work because:

• When the user is interested in a specific video, they are more likely to watch the ad instead of leaving the video just because of the ad.
• Pre-roll ads don’t seem tiresome to viewers since they appear initially when the ad fatigue hasn’t set in.

➡️ A Mid-Roll Ad

Mid-roll ads are the ones that interrupt the videos and appear in between. Once the certain time of a mid-roll ad is over, it can be skipped. YouTube, for example, is one of the VOD platforms that bring pre-roll and mid-roll ads.

While using the mid-roll ads, always ensure the following:

• The ads are kept at a distance and not close to each other. Too frequent ads make viewers leave the video.
• Determine the frequency of ads as per the length of your video. For example, you should not place an ad after every minute if the video is just 10 minutes long. Similarly, placing just one or two ads might not bring a fair share of revenue. Try to make a balance of both!

➡️ A Post-Roll Ad

Such ads are displayed once the video ends, and another video is about to start. So if your video player is on autoplay, you might see such ads. 

Since post-roll ads appear after the video is finished, they are not very popular and are rarely watched.

➡️ Takeover Ads

Such ads typically are displayed on the pages with the highest traffic; the content owner allows the advertiser to display ads over the videos or website.

➡️ Companion Banners

Companion ads, as they sound, are the ones that run along with the content, such as audio or video. So while playing a video, such ads can run below, above, or on the side of a video.

➡️ In-Video Overlays

Overlays can be used for calls to action, usually displayed at the bottom and over the video.

➡️ Interactive Ads 

Interactive ads as their name, are interactive. This makes them different from other ads, and different brands use the “interactive” factor to make these ads more attractive to the audience.

How Does AVOD Work In Different Terms?

AVOD revenue model allows streaming the content free of cost and instead pays the content creators via advertisements. The audience watches the ads during their videos, and that’s how the creators earn.

Let’s get to know AVOD in terms of creators, advertisers, and viewers.

➡️ Content Creators

Content creators sign up on a streaming platform and upload their content regularly while choosing the AVOD revenue method. By marketing their channel, they attract an audience and subscribers, allowing them to generate revenue.

Advertisers become interested in running their ads on creators’ videos when they start to have a decent count of subscribers or traffic.

➡️ Advertisers

The advertisers want to promote their products and services, and to do the same, they approach creators who have a decent amount of traffic. Advertisers pay the creators as per the number of impressions, ads clicked, or the overall duration of the display.

➡️ Viewers

Viewers or audiences are the people that watch the videos and advertisements. A channel’s overall success depends on the number of viewers and their watch duration. Viewers work as a bridge between creators and advertisers to make them meet their financial goals.

How AVOD Works in Insertions – CSAI & SSAI?

By now, you know how AVOD works and how it generates revenue. Let’s now talk about how the display of ads from the client side and server side happens in AVOD.

➡️ CSAI (Client-Side Ad Insertion) 

This kind of ad insertion happens on the client’s side, then displayed on their devices, such as phones, laptops, and more.

When the client watches a video, the video player requests the server for the ads once it reaches the marker where the ad is supposed to be displayed.

The server then feeds the video player with the advertisement, and hence the client plays a role in the preferences of the ads they get to watch.

Once the ad is completed, the video resumes and the viewer begins watching the content again.

➡️ SSAI (Server-Side Ad Insertion)

SSAI is a little different and a bit more complicated than CSAI. However, SSAI eliminates the client’s side and relies on the server heavily for the advertisements.

This approach has both advantages and disadvantages. For example, SSAI doesn’t let the ad blockers block the ad since it considers no data from the client’s side.

As a downside, SSAI has little customization and interactivity and is more complicated.

Why Should You Choose AVOD?

AVOD is one of the best revenue options and sometimes even better than others. There are many reasons for AVOD working as the most effective monetization method. Let’s uncover these reasons here.

➡️ Higher Viewership

Since AVOD doesn’t charge viewers any payment or subscription fee, it attracts a larger audience than other revenue methods. Especially when you are a new creator and haven’t created a fanbase or many subscribers, AVOD will be the easiest to let you earn money and get traffic easily.

➡️ Easy To Implement

AVOD doesn’t need any technicalities, and it is pretty simple to understand and operate this revenue method. This is also one reason why most novice creators opt for AVOD.

➡️ Works Well With Other Monetization Models

AVOD doesn’t restrict you from adding other revenue options as well. You can hence utilize a hybrid revenue method to earn using more than one revenue model. For example, you can put your video content under the AVOD category and can also put some premium content under the SVOD category.

Viewers will choose the category as per their content preferences and stream accordingly.

➡️ Variety Of Ad Video Formats

Just like we discussed above, different kinds of ads fall under AVOD. Creators can choose any ad format, such as takeover ads, companion banners, or interactive ads.

AVOD also gives the flexibility to set the ad anywhere in the video, such as in the beginning, middle, or at the end of the video.

Benefits Of Advertising Video On Demand (AVOD)

Till now, you have a fair idea about what AVOD is, the types of advertisements it provides, and how it can be used from the client and server sides.

Now, let’s uncover some benefits with regard to publishers, creators, and advertisers.

➡️ Benefits To Publishers

Since AVOD is now growing more than ever, publishers have given it serious thought. Most publishers are inclined toward using AVOD, seeing its numerous benefits.

AVOD also lets creators invite more brands or advertisers to connect with them. This ensures a solid profit-making opportunity for publishers where they only need to advertise their channel well and gain their audience.

Since AVODs don’t charge any money, people prefer choosing a streaming channel with AVOD over other options such as SVOD and TVOD. 

➡️ Benefits To Content Creators

With AVOD rising and blooming, content creators also get their share of the profit. The revenue method allows them to approach advertisers, and they can earn on their uploaded content. With AVOD, creators can expect financial returns, which makes them create more videos and expand.

➡️ Benefits To Advertisers

The growth of AVOD also ensures that advertisers get a large number of viewers who would be watching their ads and getting introduced to their services and products.

With every view, it means more revenue, and hence AVOD is a great support for advertisers.

➡️ Benefits To Viewers

Viewers benefit from AVOD as they don’t pay a penny to stream the content. They just need to watch a few ads and can freely watch any movies, web series, shows, or such video content.

Viewers only want to pay for some streaming services they use, and that is why they choose AVOD over other options, such as SVOD and TVOD.

AVOD Stats, Predictions & Trends

Let’s now get to know a few stats about AVOD and what the predictions say about the growth of AVOD in the coming future.

• AVOD showed growth of at least 20% in the US between 2021 and 2022. Such was reported by Kantar and predicted to continue growing in 2023 and years beyond.
• Dentsu also predicted the AVOD rise in 2023 and stated that AVOD would be equally and even more popular and adopted than SVOD.
• As per Statista, AVOD will cover the revenue of US$1.41bn in the current year, 2023.
• By 2027, the number of users will increase to 465.50m.
• Most of the revenue will come from the United States, which will be approximately US$19,990.00m in 2023.
• A news article published on Screendaily shows that Netflix will also increase its revenue by 4.9% and will grow approximately $2.2 billion globally.
• The Roku Channel is expected to be streamed 25% more and increase its user base by 12% by 2026.

Final Thoughts

Content consumption has increased significantly, as have the mediums of content transmission. Today, everyone is active on streaming platforms and relies on them for their favorite movies, web shows, live events, and more.

The audience is also more inclined toward utilizing platforms with AVOD streaming than SVOD and TVOD. This is because of the pricing factor, where the viewers don’t want to pay for every streaming platform they stream.

This is your chance to create your channel and employ the AVOD monetization option. Provide your content for advertisements, market your channel properly, and start earning.