This post is part of our larger “AVOD vs. SVOD vs MVPD vs OTT – The Ultimate VOD Guide for Advertisers,” click here to learn more.
We really can’t say we’re in the dawn of a new era in marketing if new trends and terms aren’t popping up seemingly every day or two. Suffice it to say, there are a lot of acronyms to keep up with in the current realm of digital advertising. First and foremost, before we dive into the details, let’s be clear about one thing. SVOD AVOD OTT CTV vMVPD… It is all OTT! And for the purpose of this article, we will be discussing these terms as they relate to OTT (over-the-top) video in particular.
To dramatically oversimplify things, OTT describes how video is delivered and accessible directly through the internet (as opposed to traditional cable or satellite broadcasts). It is an umbrella term that refers to all the different platforms, methods, and devices in which digital content is accessed via the internet. This makes SVOD (subscription video on demand), AVOD (advertising video on demand), and CTV (Connected TV) all subsets of OTT.
Why is it important to understand the role of SVOD and AVOD in OTT/CTV advertising?
While OTT as a whole is considered a new sector in advertising, the adoption rate has been nothing short of remarkable, given its relative newness. In fact, as more consumers continue leaving traditional TV services in favor of streaming platforms, Roku has boldly predicted that half of all U.S. households will be cord cutters or cord nevers within the next 5 years.
The unexpected disruption from the onset of the COVID-19 pandemic has only accelerated this trend, as officials across the country issue social distancing orders and stay-at-home policies, forcing consumers to spend more time at home than ever before. This new normal has caused consumer behavior and viewing habits to shift before our very eyes. And advertisers who hope to survive the industry transformation will need to be both cognizant of and adaptable to the changes.
What exactly are the differences between SVOD, AVOD, vMVPD, and CTV?
The best way to think of this acronym overload is to view it in a hierarchy. OTT is the overarching medium — it’s all encompassing and covers any media that is streamed over the internet. So technically, OTT is more than just video and can be used in reference to things like audio and messaging services too. In our industry however, OTT has become synonymous with OTT Video. From there, the way to think about the rest is like this:
1. CTV is a subset of the entire OTT video ecosystem
The television has long been a household staple and a coveted, premium device for ad spots. This is because marketers and advertisers understand that video is far more effective in terms of resonance, brand recognition, and emotional impact when compared to other forms of advertising i.e. banner ads, radio promotions, influencer marketing, etc.
Traditional televisions are generally linked to some type of ad-supported broadcast, be it satellite dish or cable. The term connected television, or CTV, is used in reference to any television that can stream content from the internet. That’s right, it covers the entire device category, regardless of whether it is a smart TV, with pre-installed apps that can connect directly to the internet, or a standard TV that is used as a display for devices like Amazon’s Fire Stick, AppleTV, Roku, etc.
2. SVOD is Subscription-based Video on Demand
The key word to remember when thinking about SVOD is subscription. Streaming services such as Netflix, HBO, or Hulu where a monthly commitment or membership is required to access content are all considered SVOD, or subscription video on demand, services. Simple enough, right?
What’s important to emphasize about SVOD services is that they are typically premium, ad-free subscriptions. Ah, now you’re probably thinking: Wait a minute! What about platforms like Hulu, where there are both ad-supported and ad-free versions of the service? SVOD for our purposes refers to the version that is ad free. This is applicable for any streaming service that offers multiple pricing tiers.
3. AVOD is Advertising-based Video on Demand
As you might have already guessed, the distinguishable trait to remember when thinking about AVOD services is advertising. This is where we will place the bulk of our attention as marketers, because AVOD services are where the audiences can actually be reached! Platforms such as Vudu or Roku Channel, where content is free or offered at a low price in exchange for ad interruptions, are considered AVOD, or advertising-based video on demand.
There are countless services that fit into the AVOD category and a large majority of them will be free to viewers, a big part of the appeal. However, it’s noteworthy to mention that not all AVOD services are free. For more popular platforms like Hulu, AVOD references lowest tier subscription packages ($5.99/month in Hulu’s case) where ads are still supported.
For reference, here are some AVOD services that Strategus works with: AT&T Now, Pluto TV, Xumo, Vudu, Tubi, Fubo, Amazon IMDb TV, Crackle, Plex, STIRR, Samsung TV Plus, TiVO+, WatchFree
4. A vMVPD is a virtual Multichannel Video Programming Distributor
A virtual MVPD (vMVPD) is a service that provides multiple television channels through the internet without supplying its own data transport infrastructure (think: coaxial cable, fiber, or satellite technology). These services are also sometimes called “skinny bundles” as they often contain fewer channels than traditional cable or satellite subscriptions. Some examples of vMVPDs are Sling TV, AT&TNow, PlayStation Vue, Fubo, and Philo.
What are the best ways to execute a successful campaign on AVOD/CTV platforms?
Similar to marketing on any medium, there is rarely a one size fits all solution for guaranteeing success of any campaign. We’re often asked for “sure fire” tips for advertising on AVOD or CTV, but the reality is, these best practices will continually evolve as the landscape shifts and changes. For that reason, it’s more important for advertisers to understand the concept behind each suggestion, rather than looking for a recipe to follow.
At a glance, there are a few foundational concepts that are important to understand and apply where applicable across all campaigns.
- Audience Targeting – The easiest way to reduce the effectiveness and efficiency of a campaign is to skip out on hyper targeting. One of the big advantages of internet based streaming services is the sheer volume of data points being collected, at every moment. Understanding how to leverage that information to refine a campaign is one of the first things any digital marketer needs to master.
- Online & Offline Attribution – As the age-old saying goes: if you can’t track it, you can’t measure it. Since most streaming happens on CTVs, where it is notoriously difficult to track conversions, many advertisers will forget this 101 rule of thumb and accept it as a disadvantage of running an AVOD/CTV campaign. This is a big mistake and can make it very difficult to strategize. It’s important to find ways to properly track both online and offline attributions.
- Flexible Strategy – We are living in a fast-paced digital world. Just like us, the targeted consumer is constantly being overloaded with information and ads from countless brands. It is absolutely crucial to take a semi-personalized approach to all campaigns. Having a one-size-fits-all approach will be detrimental. Similarly, monitoring active campaigns and being ready to pivot and adjust will optimize the overall effectiveness.
To get a deeper understanding of how to approach your next campaign, our team has assembled a comprehensive CTV advertising guide outlining all of the relevant, current fundamentals.
The Bottom Line
It’s incredible to think that “OTT” was considered a new term just a few years ago. The rate of growth that the digital advertising world is witnessing is truly astonishing. That said, it can be overwhelming to stay up-to-date with the latest and the greatest. We’re here to support and assist. If you have any questions regarding SVOD, AVOD, CTV, or OTT, feel free to reach out to our team at any time.
Posted by Strategus
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