What is AVOD? Definition, Examples, and Monetization Strategies

What is AVOD? At its core, AVOD stands for advertising video on demand, a streaming model that allows viewers to watch content for free, with ads appearing throughout.

Viewers can enjoy shows and movies without a subscription cost, making it an appealing option for those who don’t mind occasional interruptions.

The concept of AVOD dates back to the early days of streaming, before the rise of giants like Netflix, HBO, and Amazon Prime.

Back then, we had limited entertainment options, and catching up on our favorite shows required us to sit through endless commercial breaks. Then came Hulu, which allowed us to watch shows and movies for free as long as we were willing to sit through ads sprinkled throughout each episode or feature.

That was the very beginning of advertising video on demand (AVOD).

In this article, we'll explore the AVOD definition and discuss:

• AVOD features, benefits, and challenges
• SVOD vs. AVOD vs. TVOD differences
• Future trends shaping top AVOD platforms

You’ll also learn about AVOD monetization strategies and how businesses can leverage platforms like inoRain for effective AVOD solutions. Ready to uncover the world of advertising video on demand? Let’s jump in.

Key Takeaways

• What is AVOD? AVOD stands for Advertising-Based Video on Demand, a model that offers free video content supported by advertisements, generating revenue through ads instead of subscription fees.
• Top AVOD platforms such as YouTube, Tubi, Pluto TV, and Hulu offer viewers free access to a diverse range of content, with ads integrated seamlessly into the viewing experience.
• Viewers enjoy a broad selection of content for free, with ads playing at regular intervals, providing value to both users and platforms.
• Revenue for AVOD platforms comes from advertisements, with targeted ads enhancing effectiveness for advertisers and increasing income for platforms.
• Data analytics play a crucial role in AVOD, enabling platforms to deliver more relevant ads to specific audiences—improving ad performance and viewer engagement.
• AVOD offers free content, making it an attractive choice for viewers who prefer not to pay subscription fees.
• AVOD monetization strategies include various ad formats such as pre-roll, mid-roll, and interactive ads, allowing platforms flexibility in how they generate revenue.
• AVOD comes with several challenges, including managing disruptive ads, measuring ad effectiveness, and dealing with unpredictable revenue streams, which require strategic management.
• The AVOD market is expanding rapidly and is expected to compete with, or even surpass, subscription models. The market is projected to reach a value of $170 million by 2026.

What Does AVOD Stand For?

AVOD stands for advertising video on demand, which is a fancy way of saying that it's a streaming model where viewers watch content for free, but with ads sprinkled throughout.

So, what is AVOD in simpler terms? It's a win-win: Viewers get to enjoy their favorite shows and movies without paying a dime, and platforms make money from the ads that play during the content. This helps cover production and hosting costs without charging a subscription fee.

But what does AVOD mean exactly? It means unlimited access to a vast library of on-demand videos without any subscription cost. Unlike other streaming models where you have to pay to watch, AVOD in media is all about monetizing the sheer number of viewers through advertising.

The idea of watching great content for free is pretty appealing, which is why so many people are tuning in to AVOD platforms. To give you an idea, there were over 140 million monthly AVOD viewers in the U.S. by the end of 2023. That number is expected to jump to more than 170 million by 2026.

Knowing what AVOD means can help you reach a wider audience, create additional revenue streams, and build a loyal following.

Popular AVOD Examples

Did you know that about half of all internet users in the U.S. use an AVOD platform?

But what is an AVOD platform anyway? Think of it as a blend of traditional TV and modern streaming. You get to watch what you want when you want, but you’ll see some ads along the way.

One of the biggest AVOD platforms out there is YouTube, with over 2.5 billion active viewers. While it’s free to join and watch videos, you do have to sit through some ads before, during, or after your content. YouTube shares part of its ad revenue with content creators, encouraging them to keep making videos for the platform.

Besides YouTube, other top AVOD platforms include Tubi, Pluto TV, and Hulu. Hulu, for example, offers both a free, ad-supported plan and a subscription plan for those who prefer an ad-free experience. This flexibility is part of what makes AVOD so appealing to different types of viewers.

Key Features of AVOD

Now that you understand the AVOD definition, let’s dive into some key features that set AVOD apart from other streaming models.

Ad-Supported Content

As we’ve mentioned, AVOD streaming services offer a wide variety of video content for free, with ads playing at regular intervals. These ads are what keep the content free for viewers by generating revenue for the platform. It's a trade-off: You watch a few ads, and you get to enjoy your favorite shows and movies without any subscription costs.

Revenue Generation Through Ads

With AVOD, the primary source of income is advertising. This model is a win-win for both platforms and advertisers. Platforms benefit from ad revenue, while advertisers gain targeted exposure to specific audiences, making their ads more effective.

Targeted Advertising

Top AVOD platforms leverage data analytics to deliver ads that are more relevant to viewers. This means you’re more likely to see ads that align with your interests and viewing habits. For advertisers, this targeted approach boosts the effectiveness of their campaigns, ensuring they reach the right audience at the right time.

Free Access

One of the best features of AVOD is the free access to content. Viewers can enjoy a wide range of shows and movies without paying any subscription fees, which makes AVOD particularly appealing to budget-conscious audiences who still want quality entertainment.

Availability Across Devices

Another great feature of AVOD streaming services is their availability across multiple devices. Whether you're on a smartphone, tablet, smart TV, or computer, you can access your favorite content from anywhere at any time, adding to the convenience and flexibility of the AVOD model.

The 6 Top Benefits of AVOD

The advertising video on demand market has seen explosive growth in recent years, and it's easy to see why. More publishers, including major brands, are shifting their focus to AVOD and finding significant success. Take IMDb TV, for example. The platform tripled its active user base in just two years, which led to a major rebranding as Amazon Freevee and the launch of new in-house productions.

High Viewership

A whopping 84% of viewers say they don’t mind watching ads if it means getting free content. This is fantastic news for publishers. With the growing preference for ad-supported content, the AVOD market is projected to reach a revenue of $48.32 billion in 2024 as more viewers opt for this model.

Low Risk for Publishers

Unlike subscription-based services like Netflix or Disney+, AVOD streaming services don't need to invest heavily in creating or purchasing content. Instead, they serve as a platform where content creators can upload their videos, and the platform shares ad revenue with them. This approach minimizes financial risk while still offering a wide variety of content to viewers.

Incentives for Content Creators

AVOD platforms provide strong financial incentives for content creators. The more viewers engage with their content, the more ads are viewed, resulting in higher income for both the platform and the creators. This creates a mutually beneficial relationship where both parties profit as viewership grows.

Better Ad Targeting

AVOD offers effective ways for advertisers to reach a large, diverse audience. By leveraging publisher data, AVOD platforms deliver personalized ads that are more relevant to viewers, increasing their impact and effectiveness. This data-driven approach helps advertisers target their ideal customers more precisely.

Flexibility

This is what AVOD is all about—flexibility in how ads are presented. Publishers can choose different ad formats and decide when to show ads during a stream. This ability to test and tweak ad placements helps publishers strike the perfect balance between earning ad revenue and keeping viewers happy.

AVOD Monetization: Ad Options for Your Business

Earlier, we mentioned that publishers have several options when it comes to ad formats on AVOD platforms. These options are crucial for AVOD monetization—they provide countless ways for platforms and content creators to generate revenue from ad-supported content.

By leveraging a mix of ad types, publishers can maximize their earnings while keeping viewers engaged and satisfied. Let’s dive into the main types of ads you can use for effective AVOD monetization.

Pre-Roll Ads

Pre-roll ads play before the video starts. Viewers must watch these ads if they want to see the content they’re interested in. This format is effective because viewers are more likely to watch the ad, especially when they’re eager to get to the video. Plus, since pre-roll ads appear before the content begins, they don’t feel as intrusive or tiresome.

Mid-Roll Ads

Mid-roll ads pop up in the middle of a video, creating a brief interruption. These ads can often be skipped after a certain amount of time. For example, YouTube uses both pre-roll and mid-roll ads to maximize engagement.

To make mid-roll ads work well, it’s essential to space them out and avoid making them too frequent. The key is to match the ad frequency to the length of the video, ensuring a good balance between generating revenue and maintaining a positive viewer experience.

Post-Roll Ads

Post-roll ads appear after a video ends, typically when another video is about to start. These ads tend to be less popular because many viewers skip them once they’ve finished watching the main content. But they can still be effective if used strategically, especially when combined with engaging follow-up content.

Takeover Ads

Takeover ads are displayed on high-traffic pages or sections of a platform, where the advertiser takes over the screen space. This format allows advertisers to place ads over videos or across the website, capturing the attention of viewers who frequent these areas.

Companion Banners

Companion banners run alongside the main content, appearing above, below, or on the sides of a video. They provide extra ad space without interrupting the viewing experience. This type of ad can enhance brand visibility and complement other ad formats on the platform.

In-Video Overlays

In-video overlays are semi-transparent ads that appear at the bottom of a video. They don't pause the content but instead provide a subtle call to action. These overlays can be highly effective for driving engagement without being overly disruptive.

Interactive Ads

Interactive ads invite viewers to engage directly with the ad content, whether through clicking, swiping, or even playing a mini-game. These ads are highly engaging and memorable because they encourage active participation, making them stand out more than the traditional AVOD examples mentioned above.

Key Differences Between SVOD vs. AVOD vs. TVOD

Now that we've covered the AVOD meaning, its purpose, and how it works, let's explore how it differs from other popular monetization models like SVOD (subscription video on demand) and TVOD (transactional video on demand).

Features	SVOD	AVOD	TVOD
Stands for	Subscription video-on-demand	Advertising video-on-demand	Transactional video-on-demand
Revenue Model	Subscription fees	Free access with ads	Pay per movie or episode
Content Access	Unlimited access to the content library	Free access with ads	Pay for individual titles
User Experience	Ad-free viewing, usually high-quality content	Ads may interrupt the viewing experience	No ads, but content is individually purchased
Device Availability	Available on multiple devices and platforms	Available on multiple devices and platforms	Available on multiple devices and platforms
Example	Netflix, Disney+, Amazon Prime Video	YouTube, Tubi, Pluto TV	iTunes, Google Play, Amazon Video

Each video-on-demand model—SVOD vs. AVOD vs. TVOD—offers unique advantages and caters to different audience preferences. SVOD appeals to viewers who prefer an ad-free experience and are willing to pay a subscription fee, while AVOD attracts those who enjoy free content supported by ads.

Meanwhile, TVOD suits viewers who prefer paying only for the content they want to watch on a one-time basis. Understanding these differences can help content creators and publishers choose the best monetization strategy to reach their target audience and maximize revenue.

Challenges Facing AVOD Providers

Users receive free content, all while publishers profit—sounds like a win-win, right? Although AVOD streaming services have a lot to offer, they don’t come without a few limitations.

Potentially Poor User Experience

If not managed well, ads can disrupt the user experience, potentially leading to a decline in viewership and even causing users to leave the platform.

While some consumers might be willing to pay for a premium, ad-free experience, it’s crucial for AVOD providers to get the timing and frequency of ads just right.

Poorly timed or overly repetitive ads can frustrate viewers, prompting them to switch to a different platform.

Attribution and Measurement Challenges

As we know, the passive nature of video streams often makes it challenging for advertisers to measure the true impact of their ads. Unless a user clicks on a call to action (which is unlikely if they’re in the middle of watching something), it’s hard to know if they’re paying attention to the ad.

They could simply be checking their phone or grabbing a snack while waiting for their video to resume. This can lead to uncertainties about the ad's effectiveness.

Uncertain Revenue

What does AVOD mean for revenue generation? Ad-based revenue can be unpredictable for AVOD platforms. Since advertisers often pay based on ad views or clicks, if ads are skippable or if viewers aren't genuinely engaged, revenue can be inconsistent.

There’s also the issue of advertisers paying for "views" when users aren't actually watching the ads, complicating revenue predictions even more. To stabilize income, some publishers may consider offering a subscription option alongside their AVOD model, providing a more reliable revenue stream.

Content Licensing and Acquisition Costs

While AVOD platforms don’t necessarily have to produce original content, they often need to license popular shows and movies to attract viewers.

The cost of acquiring high-quality content can be significant, especially as competition among AVOD streaming services increases. Ensuring a steady stream of fresh, appealing content without overspending is a constant balancing act.

Balancing Content Variety and Ad Load

AVOD platforms need to offer a diverse content library to keep viewers engaged while managing the ad load to avoid over-commercialization. Striking the right balance between providing a variety of content and not overwhelming viewers with ads is challenging but essential for maintaining viewer satisfaction and platform credibility.

Future Trends in AVOD

What is AVOD going to look like in the future? The model has experienced significant growth, with Kantar reporting a minimum 20% surge in the US alone between 2021 and 2022.

This upward trajectory is projected to continue in the coming years. In fact, Dentsu predicts AVOD streaming services will rival and even surpass SVOD in popularity.

Statista echoes this optimistic outlook, forecasting that the AVOD market will attract 3.4 billion users by 2027. The US is leading the charge, contributing over $24 million to the total revenue in 2024.

While AVOD gains momentum, top AVOD platforms are also expanding. Netflix anticipates a 4.9% average revenue per user (ARPU) increase, amounting to approximately $2.2 billion globally, as reported by ScreenDaily.

The Roku Channel is joining the race, estimated to reach a viewership of 20% of the total US population by 2025.

With the advertising video on demand market growing, below are a few trends we can expect to become prominent in the future.

1. Increased Personalization and Targeted Advertising

As AVOD streaming services continue to grow, there will be a stronger emphasis on leveraging advanced data analytics and artificial intelligence to deliver more personalized and targeted ads.

By analyzing viewer behavior, preferences, and demographics, AVOD providers can serve highly relevant ads that resonate more with specific audiences. We can expect to see the market leverage more advanced AI-powered tools as artificial intelligence continues to permeate every industry.

This trend will not only enhance the user experience by making ads less intrusive but also improve ad effectiveness, leading to higher engagement rates and better returns for advertisers.

2. Expansion of Original Content and Hybrid Monetization Models

To stay competitive and attract more viewers, many AVOD streaming services are likely to invest in original content production, much like their subscription-based counterparts (SVOD). YouTube is already doing this.

More platforms may also adopt hybrid monetization models that combine ad-supported content with subscription tiers, offering viewers the flexibility to choose between a free, ad-supported plan or a premium, ad-free experience.

This trend will allow AVOD providers to appeal to a broader audience base while diversifying their revenue streams. A study conducted by Kantar revealed that one in every four SVOD subscribers are considering AVOD options.

3. Integration with Connected TV (CTV) and Cross-Platform Advertising

The integration of AVOD with Connected TV (CTV) is expected to accelerate as more viewers shift to streaming content on smart TVs and other connected devices.

This trend will enable AVOD platforms to deliver a seamless viewing experience across different devices, from smartphones and tablets to TVs. Additionally, cross-platform advertising strategies will become more prevalent, allowing advertisers to create cohesive campaigns that reach audiences across multiple screens and formats, maximizing their reach and impact.

Leveraging inoRain for AVOD Solutions

Looking for a reliable partner to elevate your AVOD monetization strategy and drive revenue growth? Look no further—inoRain offers comprehensive end-to-end solutions to meet the unique needs of your business.

Whether you're focused on boosting viewer engagement or unlocking new revenue streams, inoRain offers the flexibility and efficiency you need to thrive in the AVOD market with a range of robust, budget-friendly solutions and benefits, including:

• Customizable OTT Platform: Launch your own branded OTT platform with inoRain’s white label solutions, providing a fully customizable experience that reflects your brand identity while offering a wide range of features.
• Diverse Monetization Options: Choose from over 10 monetization methods like AVOD, SVOD, TVOD, and HVOD, allowing you to select the best model for your business strategy.
• Seamless Ad Integration: Effortlessly incorporate ads into your on-demand content, ensuring ads are both engaging and effective without compromising the viewer experience.
• High-Performance Streaming: Benefit from lightning-fast streaming speeds and stunning video quality, delivering a superior viewing experience across all devices.
• Multi-Platform Compatibility: Reach your audience wherever they are with support for smartphones, tablets, smart TVs, and desktops, maximizing your content’s accessibility.
• Advanced Content Management System (CMS): Easily manage, upload, and organize your content with our intuitive CMS, streamlining your operations.
• Robust Analytics and Reporting: Gain deep insights into viewer behavior and ad performance with advanced analytics, helping you make data-driven decisions to optimize content and ad strategies.
• Scalable Cloud-Based Infrastructure: Utilize a reliable, scalable cloud platform for efficient content delivery, ensuring your service can grow alongside your audience.
• 24/7 Customer Support: Access dedicated 24/7 support to help resolve any issues quickly, ensuring your platform runs smoothly and your viewers have an uninterrupted experience.
• Tailored Solutions for Various Industries: From TV operators to content creators and hotels, inoRain provides customized solutions to meet the unique needs of different industries:
• For TV Operators: Enjoy features like multi-screen delivery, customizable user interfaces, and advanced middleware for smooth content distribution, including monetization tools and billing management.
• For Content Creators: Leverage tools for live streaming, flexible monetization, and detailed performance analytics to maximize revenue and audience engagement.
• For Hotels: Enhance guest experiences with in-room entertainment solutions, personalized content recommendations, customized display advertising, revenue management, and more.

Ready to elevate your streaming and maximize your monetization? Discover how inoRain can transform your advertising approach with innovative AVOD capabilities that boost your revenue and enhance viewer satisfaction.

Get in touch with us today and see how inoRain can take your content revenue to new heights!

FAQs: Understanding AVOD

Is Netflix an AVOD platform?

No, Netflix is not an AVOD platform. Netflix operates under the SVOD (subscription video on demand) model, where users pay a monthly subscription fee for access to a vast library of ad-free content. In contrast, what is AVOD? AVOD stands for advertising-based video on demand, where users can watch content for free but with ads.

What is the best-known AVOD platform?

One of the top AVOD platforms is YouTube, which provides a wide range of free content supported by ads. Other notable AVOD examples include Tubi, Pluto TV, and Amazon Freevee (formerly IMDb TV), all of which monetize their content through advertising rather than subscriptions.

Who pays more, Twitch or YouTube?

When comparing earnings, streaming on YouTube generally offers higher earnings potential than Twitch due to its AVOD monetization model, which shares ad revenue with content creators. However, Twitch remains a popular platform with a highly engaged, diverse audience, especially for live streaming.

Can content creators earn money on AVOD platforms?

Yes, content creators can earn money on AVOD platforms by sharing in the ad revenue generated from their videos. inoRain also offers tailored AVOD monetization and OTT platform solutions specifically for content creators.

How do AVOD platforms target ads to specific audiences?

AVOD streaming services use advanced data analytics to track user behavior, preferences, and viewing habits. By analyzing this data, they deliver personalized ads to specific audience segments, increasing engagement and improving ad effectiveness.

What is the difference between SVOD vs. AVOD?

AVOD offers free access to content with ads, while SVOD requires users to pay a subscription fee for unlimited access to ad-free content. In the debate of SVOD vs. AVOD, AVOD appeals to viewers who prefer free content with minimal interruptions, while SVOD attracts those who are willing to pay for an ad-free experience.

Are ads on AVOD platforms skippable?

It depends on the AVOD platform and the ad format used. Some ads, such as pre-roll or non-skippable mid-roll ads, must be watched in full. Other ads may allow viewers to skip after a few seconds, depending on the platform’s ad strategy.

Why are AVOD platforms growing in popularity?

AVOD platforms are growing in popularity because they offer free access to a vast library of content, making them an attractive option for budget-conscious viewers. Additionally, they provide advertisers with the ability to reach large audiences through targeted ads, making them a compelling choice for content monetization.

What does AVOD stand for?

AVOD stands for advertising video on demand. This term refers to a type of video streaming service where content is monetized through advertisements rather than subscription fees or pay-per-view charges.

What is AVOD in media?

AVOD in media refers to the use of advertising video on demand as a strategy to deliver free video content supported by ads. It’s commonly used by streaming platforms and content creators to reach a broad audience without requiring a subscription fee.

What is an AVOD platform?

An AVOD platform is an OTT streaming service that operates under the AVOD model. These platforms offer free access to a variety of video content, ranging from movies and TV shows to user-generated videos, and monetize this content by displaying ads. Top AVOD platforms include YouTube and Tubi.

What are some AVOD examples?

Some popular AVOD examples include Pluto TV and Amazon Freevee (formerly IMDb TV). These platforms provide free video content to viewers and generate revenue through advertisements shown before, during, or after the videos.

How does AVOD monetization work?

AVOD monetization works by displaying ads to viewers who are watching free content on an AVOD platform. Revenue is generated based on ad impressions and clicks, which are tracked and reported to advertisers. The more viewers watch the content, the more ad revenue is generated, making it a scalable monetization model.

What are AVOD streaming services?

AVOD streaming services are OTT platforms that offer free video content supported by ads. These services use the AVOD model to provide a wide range of content to viewers while monetizing through advertisements.

What is AVOD? Now You Know

AVOD has emerged as a major player in the video streaming industry, creating a win-win situation for both viewers and content creators.

By offering free access to a vast array of content supported by targeted ads, AVOD platforms appeal to a broad audience while driving significant revenue.

As the digital landscape continues to evolve, the potential for growth in the AVOD sector is enormous—making it a critical opportunity for businesses and content creators looking to stay ahead in the future of video consumption.

What is AVOD going to do for your business? Find out today—partner with inoRain to enhance your video monetization strategy and boost your revenue.

Create your demo account or chat with one of our experts to discover how inoRain’s innovative AVOD solutions can deliver the flexibility, efficiency, and success you need to thrive in the competitive streaming market.