It was not too long ago that CTV (Connected TV) and OTT (over-the-top) were considered new terms. The explosive growth of both CTV and OTT in the last few years is absolutely remarkable. From being a small subcategory in advertising, to being the hot topic front and center, the evolution of the digital TV space is showing no signs of slowing down.
In fact, after the onset of the global coronavirus, CTV flexed its dominance in the ad industry with being the least impacted by COVID-19 in all of digital video. OTT adoption is also on the rise, increasing 17 percent year-over-year. It should come as no surprise then, that despite its relative infancy, CTV and OTT have spurred a new wave of acronyms as it continues to evolve at a rapid pace. AVOD, SVOD, MVPD–talk about an acronym overload! Let’s break it down.
What every marketer should know about AVOD services for CTV and OTT advertising
AVOD stands for advertising-based video on demand and is different from SVOD, which stands for subscription-based video on demand. Then there’s also MVPD which stands for multichannel video programming distributors. Don’t worry–it’s a lot to take in, but we’re here to break it down.
Strategus has been hot on the tail of all the various CTV/OTT innovations since day one, and we know better than anyone else how overwhelming it is to stay on top of so many new developments. Even trickier is knowing how to recognize which “hot topics” are simply fads and which are actual trends that are here to stay. We’ve taken the time to sort through all the noise and simplify the topic so you can remain ahead of the curve.
1. What exactly is the difference between MVPD, SVOD, and AVOD?
Acronyms mean nothing without context. Even knowing the words that they stand for offer little insight if you aren’t familiar with the ecosystem that the terms belong to. Let’s dive into each of these in detail.
A) MVPD = Multichannel Video Programming Distributor
Think of MVPD by focusing on the last two words of the acronym: programming distributor. MVPD is used to describe services that offer “live” programming. We use the word “live” loosely because we don’t mean that the program is live in the sense that it is a talk show happening in real time. Instead, it means live in the sense that it is predetermined programming for the day that is available on-demand. Or simply put, television channels.
- MVPD and virtual MVPDs: To further understand MVPD, we need to distinguish between traditional MVPD and virtual MVPDs. MVPDs are familiar cable or satellite services such as Comcast or DirecTV which offer multiple channels as a program distributor.
In the realm of CTV/OTT advertising, you’re most likely working with virtual MVPDs or vMVPDs for short. These refer to services that offer channels through the internet, therefore not requiring cables or hardware like a satellite dish. Common examples include Hulu with Live TV and SlingTV, where on-demand programs and channels are offered.
B) SVOD – Subscription-based Video on Demand
When thinking of digital streaming platforms, you’re most likely thinking of an SVOD service. Like its name suggests, SVOD are subscription-based with a membership or monthly commitment. The most well known of SVOD services is probably Netflix. But other popular examples of this category include, Disney+, AppleTV+, and the ad-free premium version of Hulu.
Notice the emphasis on ad-free? In case you missed it, it’s important to reiterate that point. Many providers will offer different tiers for their streaming services. When we are discussing SVOD services, we are only referring to the ad-free versions, which are often at a higher subscription price point.
C) AVOD – Advertising-based Video On Demand
Last but certainly not least, AVOD services is where the advertising magic takes place. These streaming services are advertising-based, and a gold mine when leveraged correctly by the modern day marketer. The key distinction here is that most AVOD services are largely supported through ad revenue. A majority are free to viewers without any type of subscription or paywall, making the interruption with ads seem like a fair trade off.
This does not mean that all AVOD services are free. There are some that are simply lower tiers of popular streaming platforms such as the base level subscription of Hulu for $5.99. Other AVOD services include SlingTV, Roku Channel, and Vudu. If you dig into any of these platforms, you’ll likely notice that paid or premium content might be offered. To drive home the point, we are not referring to those add-ons or services if being “ad free” is one of the selling points!
- List of various other AVOD services for reference: AT&T Now, Pluto TV, Xumo, Vudu, Tubi, Fubo, Amazon IMDb TV, Crackle, Plex, STIRR, Samsung TV Plus, TiVO+, WatchFree
2. What advantages do AVOD services have when it comes to advertising?
Besides the fact that AVOD services are completely driven by ads, there are few extra benefits that come with the terrain. Here are the areas we’d like to highlight.
- Ads are non-skippable and semi-frequent: Now that’s an obvious win! Because AVOD services are often free or the lowest priced tier offered by the streaming platform, the ads are an expected part of the experience. They are non-skippable and there can be a few different ad spots throughout the duration of one episode.
- Audience is actively engaged: Another bonus with ads on AVOD services is that the audience is already captivated by the show. The ad may be interrupting the programming, but it is usually a 30-60 second spot. Long enough to get the brand message across, short enough that the viewer will pay attention so they don’t miss when the show comes back on.
As an added note, some AVOD services will serve new ads when you rewind or skip ahead during a show. This gives even more motivation to the user to pay attention to the video ad the first time around instead of walking out of the room, to avoid further interruptions.
- More audience data is available than ever: Since AVOD services are part of the greater CTV/OTT ecosystem, they also come with the same technological advantages i.e. big data! There is more information available about the viewers than ever before, including, but not limited to, their interests and hobbies, lifestyle habits, income and education level, purchase behavior, and taste in TV shows. Getting your ad in front of the ideal, exact audience has never been easier.
3. How should I approach advertising on these AVOD Services?
Now we’re getting to the interesting part! But with so much information, where do we begin? If you are new to the realm of advertising with AVOD services, the best place to start is with our comprehensive guide to CTV advertising.
In this guide, our team covers everything from overall campaign strategy, to which devices make most sense, to audience targeting, and much more. While every brand and campaign will require some specificity, it is a great way to establish a foundation of best practices.
The Bottom Line
There will never be a one-size-fits-all solution for advertising on any platform. The same goes for AVOD services. As a firm, Strategus has been on the forefront of all the advances and innovations that have happened in the OTT/CTV space since the very beginning. As the digital advertising space steadily expands, we are rapidly adapting and gathering data to ensure that we remain trailblazers. If you have any questions about advertising with AVOD services, we’re happy to chat. Contact us today and feel free to pick our brains!
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