In the realm of advertising, shifts in best practices, new trends, and constant change, are all to be expected. Over the past half decade, marketers have observed the transition from traditional television over to digital as more and more consumers “cut the cord” in favor of streaming services. The onset of the COVID-19 pandemic has only accelerated this trend, with AVOD (advertising-based video on demand) – also referred to as FAST (free ad-supported TV) – platforms seeing strong growth in ad revenue beginning Q2 2020.
Advertising-based video on demand references the category of streaming services that provide content for free or at a low price point in exchange for interrupting shows and movies with periodic video ads. With the pandemic relegating many people to their homes, the combination of economic uncertainty coupled with limited entertainment options is creating a unique shift in consumer behavior.
Individuals are finding themselves spending more time in front of the television than ever before, and as popular streaming services like Netflix become increasingly saturated and are increasing their prices, viewers are turning to more cost-efficient AVOD options.
The growth of the advertising-based video on demand market is great news for advertisers. Instead of relying on assumption and anecdote to get in front of an ideal audience, marketers are able to reach the viewers with ease. This “pivot” away from ad-free subscription services (e.g. Netflix) towards AVOD is actually not new. Fascinatingly enough, it’s a return to the old stomping grounds many advertisers are familiar with.
Between five of the major ad-supported streaming platforms (Roku, Hulu, Peacock, Pluto TV, and Tubi), the year-over-year ad revenue shot up 31 percent in 2020, a trend that is expected to hold. To fully capitalize on what’s happening, it’s important for marketers to understand why this growth in AVOD ad revenues is taking place.
As viewers experience subscription fatigue and willingly turn to AVOD services, we can expect an audience that is more engaged and readily prepared for ad campaigns. With the right tactics, advertisers can anticipate higher conversions and attributions with a lower average spend.
When we discuss AVOD ad revenues, we are inherently referencing OTT and CTV advertising. As an overview, OTT (over-the-top) is the term used to describe all media which is delivered through the internet, as opposed to conventional cable or satellite. In order to access any OTT content, an internet-supported device is necessary. In the case of OTT video (which includes content from AVOD services), it is most optimal to view on a smart/connected TV (CTV) versus a mobile device or laptop.
For marketers and media buyers, it is best to approach AVOD in the context of OTT/CTV advertising in order to drive leads. There are several advantages exclusive to CTV advertising that should be leveraged when planning your next AVOD campaign:
With the amount of data available for OTT/CTV advertising, advertisers have concise information to work with and can be highly selective with their ad budget. By targeting and retargeting only to engaged individuals, the leads are of higher quality with a better likelihood of converting or taking action. With proper reporting and performance attribution, AVOD advertising can be a consistent ‘win’ for your clients.
In the last decade, we’ve witnessed a slow acceptance of brands leveraging personalized data to market to consumers. From physical location to online behavior to hobbies and affiliations, there are so many data points available that can be readily used. Unlike traditional TV advertising where targeting was limited to age, gender, and location, advertising on AVOD services allows opportunity to hyper target to an exact, ideal audience. This is a game changer.
Instead of casting a wider net with hopes of capturing the target audience within it, advertisers can hyper target individuals in a number of ways. This is one of the most powerful advantages that come with the shift to digital streaming. Not utilizing any of the following would be the equivalent of leaving money on the table:
When there is change, there is opportunity — especially for the individuals who adapt quickly and stay ahead of the competition. The unprecedented circumstances brought about by the global pandemic have created a new shift towards AVOD services. While this trend is steadily growing, it has yet to become hyper saturated, which indicates that there is room for advertisers to lead the charge. Strategus has made it simple to take action with this article of best practices.
As this space continues to evolve and grow, the industry will adjust accordingly. The advertisers that will thrive through the various transformations are the ones that can keep up with the rapid shifts, which is a lot easier said than done. If you have any questions on any aspect of AVOD, OTT, or CTV advertising, contact us for insight from our team of experts.