AVOD Definition And Best Practices For Advertisers

As more and more households make the shift over to digital streaming from traditional TV, AVOD (advertising-based video on demand) services are crucial for advertisers when it comes to reaching target audiences on the most premium household device, the connected TV (CTV). 

As the global coronavirus pandemic relegates people to their homes, there is an overall increase in media consumption and in particular, consumption of streaming content. This creates more opportunity for agencies and media buyers to get in front of their target audience, especially with AVOD, as consumers develop subscription fatigue.

After all, why remain constrained to a single-channel, committed membership with pay-wall managed content when there are countless options and alternatives available for free? This logic holds true and is reflected in the sharp increase in AVOD streaming ad revenue seen in the second quarter of 2020. 

What in the world is the AVOD definition and why does it matter?

How many different acronyms are there to keep track of? We get it. There’s a lot. But we have to throw a few more at you. Not to be confused with SVOD (subscription-based video on demand such as Netflix or HBOMax) or MVPD (multichannel video programming distributors such SlingTV, Hulu Live, Peacock ), AVOD refers to streaming services that require viewers to watch advertisements as part of the viewing experience.  In other words, the content is not locked behind a paid paywall (or it might be a hybrid AVOD/SVOD, where there is a cheaper subscription cost that includes ads). As a result, the tradeoff accepted by consumers is advertising within episodes and between shows in exchange for free or discounted content. 

If you have difficulty remembering the different acronyms, try to think of AVOD as “A for Available / Accessible” without monthly commitment. SVOD and MVPDs on the other hand generally have a subscription fee associated. 

At a high level, this is a breakdown of the core things every marketer should know about AVOD: 

Examples of AVOD services

There are countless AVOD services available, but like all other inventory offered up to advertisers, some will be more desirable than others. The following are the services that Strategus has access to and stand behind as premium inventory. This list is not exhaustive and it will continue to grow into the future as the space matures.

• Sling (and slingTV and all derivations), AT&T Now, Hulu, Roku (and Roku channel), Pluto TV, Xumo, Vudu, Tubi, Fubo, Amazon IMDb TV, Crackle, Plex, STIRR, Samsung TV Plus, TiVO+, WatchFree

If you’re confused by some of the names on this list, it’s important to emphasize that AVOD refers to the version that includes advertising as part of the viewing experience, this may still include a subscription fee or not. For example, Hulu offers a low-cost subscription version ($5.99 a month) that is not ad-free. Vudu on the other hand is a popular video streaming platform with an extensive library of content that is “free with ads” or you can buy/rent on a one-off basis. This is known as TVOD or transactional video on demand.

What does programmatic mean in terms of AVOD?

You may want to take a seat for this one. In terms of AVOD, programmatic OTT advertising is heaven-sent for marketers. Think about campaign planning–remember the days where you had to appeal to a wide audience just to try to have a chance at gaining the “eyeballs” of all the diverse consumers of your business? Or maybe you’ve lamented not being able to filter out the “noise” in the audience demographic when launching an ad campaign.

What if we told you that not only can we give you access to your exact, desired audience, but you are able to deliver your ads to only that audience? Read that slowly. Then read it again. Sounds nice right? Programmatic in terms of AVOD is a game changer; it’s fiber versus dial-up, it’s super-car versus horse and buggy It’s Oculus versus Atari… Well that may not make sense because Atari is pretty darn fun… Anyways, this advantage not only saves budget, but helps increase overall ROI and conversion. Let’s break this down a bit further:

• Access to your exact audience: Instead of a “shotgun approach” where you are forced to cast a wide net just to reach the entirety of your diverse customer base, advertising on AVOD services allows marketers direct access to the exact demographic that they are targeting. 
• Market only to your exact audience: Programmatic, like its name implies, means leveraging technology so you can “program” the purchase of an ad as opposed to manually purchasing a spot in real-time. This gives marketers the ability to lean on algorithms and big data so the ads are reaching only the desired audience without “wasted impressions” per se.

CTV’s are the premium device in the AVOD spectrum

Let’s talk about device inventory for a moment. In the current day and age, it is possible to stream content from a wide host of devices. When thinking about AVOD advertising, we have to emphasize that not all devices are equal. As a matter of fact, there is one device that reigns supreme over all others–the Connected TV. Commonly referred to as CTVs, these are the absolute premium device in the AVOD spectrum for a few key reasons;

• Largest device in the household: The CTV, which encompasses both smart TVs and internet-connected TVs, is the largest device in the household. Streaming a video ad on a large screen has a much higher impact than on a smaller viewport. 
• Actively engaged audience: Unlike other devices where it is easier to multitask, consumers watching a show or a movie on a CTV are most likely engaged in the content they are watching. This gives stronger impressions in general and results in a near 100% view rate for the ads that are displayed. 
• Ads are non-skippable: Yes! The advantage of having non-skippable ads is clear and a huge win for any advertiser. Compared to other devices, it’s important to note that with CTVs in particular, there is an added bonus. The consumer can still hear your ad even if they walk out of the room because they will listen for when the ad is over and the show returns. 

4. Make sure you are Attributable and Actionable when AVOD advertising on CTVs

Now that we know CTV is the crème de la crème of device options for AVOD advertising, a crucial item to keep in mind is ensuring the ads are both attributable and actionable. While it is great that ads are non-skippable on CTV, the downside is that they are not clickable, and therefore, not actionable. 

• Making ads attributable: As advertisers, it’s important to know what happens after an ad is displayed. We want to know who saw an ad and what actions did they take (or didn’t take) after the fact. Currently, the most robust way of doing this via online and offline attribution is through Strategus’ Attribution Suite, which offers six different ways to track and attribute the behavior of your viewers.
• Making ads actionable: The worst thing you can do is not offer options for consumers to take action when they are engaged and interested. We’ve addressed this issue with our campaign enhancer, the Encore Omnichannel. Immediately after the audience watches an ad to completion, this tool instantly re-targets the viewer with relevant, clickable calls-to-action on their mobile phones, tablets, laptops and desktops. 

5. Leverage Audience Hyper-Targeting 

Last, but not least, one of the most exciting aspects about AVOD advertising is the ability to hyper-target your audience. If you are not already doing this, you are losing out on one of the best technological perks that come with AVOD advertising. Think of AVOD as a turbocharged engine packed with features–it would be a real shame to let those unique tools go to waste!

We discussed having access to your exact, desired audience. The question is whether you’ve taken the time to narrow that audience down. Here are a few ways to truly refine your target viewers:

• Behavioral Targeting – What is your audience’s interests, online activities, hobbies, lifestyle preferences, and perhaps their diet?
• Contextual Targeting – What is their viewing history? Does it change? Do they binge watch shows?
• Demographic Targeting – Beyond age and gender, what is their income, hometown, education level, profession?
• Technographic Targeting – What devices are they using? Are they team iOS or team Android?
• Time of Day Targeting – When are they active? Are they a morning person or a night owl with streaming content?
• Purchasing Targeting – What are their spending habits? Are they impulse buyers or do they make calculated purchases? 

The Bottom Line

Given the economic uncertainty, there are a lot of consumers who are opting to save costs where they can by eliminating monthly subscriptions. But similarly, under the New Normal, consumers are also spending more time than ever before streaming content. AVOD is one of those bright spots during this time that marketers should be focusing on for their advertising strategy. If you are confused or have any questions about how to approach advertising on AVOD services, feel free to contact us today! We’d love to help with your next campaign.