How AVOD Can Get a Seat at the Premium Ad Sales Table

Consumers ditched cable — but then their streaming subscriptions started piling up too much. Now they are reassessing; they are looking for new ways to enjoy premium content while reducing costs. Now is the perfect time for ad-supported video-on-demand (AVOD) to get a head start on the market, says Smaato’s Matthew Deets – as long as providers and advertisers are able to overcome a few common challenges .

The media landscape is approaching a significant inflection point that will forever alter the balance of power within a fragmented television landscape. For ad-supported video-on-demand (AVOD) players, this moment represents an unprecedented opportunity to elevate their place in the global media planning and buying environment, provided they can offer the experiences that today’s consumers and advertisers demand.

For many AVOD players, this will require some strategic pivoting. Let’s take a closer look at why the television landscape is changing in favor of ad-supported models and how AVOD publishers can better position themselves to be part of the windfall.

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Why AVOD — and why now?

To understand the disruption, most of us need look no further than our own experiences with subscription video-on-demand (SVOD) services.

For many consumers, what might once have been a monthly fee or two for Netflix and Hulu has quickly turned into seemingly countless subscriptions to juggle. The consumer experience is becoming frustrating and costly, and many who have turned to SVOD as a way to “cut the cord” are finding their monthly charges rise to as much – if not more – than they ever spent on cable.

While SVOD and AVOD have made significant inroads into the traditional linear TV market, SVOD players have been the frontrunners in terms of adoption. However, as costs pile up, consumers are beginning to take a critical look at their video subscriptions and make strategic cuts where they can. In fact, Deloitte predicts that streaming services will see 150 million cancellations this year as churn increases. We’re already seeing that prediction come to fruition, with Netflix forecasting a loss of 2 million subscribers in the second quarter.

When consumers cancel, they look to other places to find the content they love. Increasingly, they are reconsidering ad-supported services that offer premium content without the premium price tag. For specialty AVOD providers and ad-supported cable channel offerings, this presents a tremendous opportunity to grow viewership in addition to ad revenue.

Obstacles to overcome for AVOD

That said, to capitalize on this moment, AVOD providers must ensure that their content and ad experiences deliver what viewers expect. Here are some common reasons why audiences and advertisers have disconnected from AVOD experiences to date – and how providers can address these issues:

1. Too much fraudulent traffic

Ad fraud, especially in connected television (CTV) environments, has become a growing concern for advertisers and publishers. From a marketer’s perspective, CTV fraud represents a risk of paying for impressions that go nowhere. From a publisher’s perspective, fraud presents the risk of bad ads, disruptive user experiences, and damaged relationships with advertisers; unfortunately, many AVOD providers have come up against all three. Fortunately, this is a solvable problem.

Most of the fraud risk comes from third-party server-side ad insertion (SSAI) services that sit between AVOD providers and their ad servers. By leveraging a platform that manages SSAI in-house, it is easy to eliminate the risk of fraud and thus increase appeal to viewers and advertisers. As a bonus, the in-house SSAI saves publishers the expense associated with using a third-party provider.

2. Repetitive Ads

When it comes to user experience, one of the most common complaints plaguing AVOD providers is repetitive ads – simply the same ad played over and over again during commercial breaks. When this happens, not only do users get disconnected, but brand sentiment also takes a hit.

If AVOD providers want to provide a comparable experience and advertising opportunity to premium television services, they must work with platforms that offer creative deduplication services to ensure that the same ad is not played more than once in a given commercial break.

3. Competitive Messaging Dilution

Beyond ad repetition, AVOD ad experiences are also prone to competitive message dilution, which occurs when ads from competing brands run consecutively, say four car ads in a row. When this happens, viewers receive mixed messages about the best product or the best solution, and advertiser impressions have little impact.

By leveraging a platform that allows separation from competitors, AVOD providers can ensure they serve a balanced mix of ads to viewers, preserving the impact of impressions for advertisers.

4. Discordant Advertising Experiences

Finally, let’s talk about the context. Today’s viewers don’t want ads that disrupt the mood created by their favorite shows and movies. Unfortunately, that’s precisely what happens when commercials don’t match the tone of the programming they’re airing alongside – whether it’s funeral services promoted during Saturday morning cartoons or litter for cat during a Friday night horror movie. Buyers today want show- and episode-level targeting, which is supported by the Interactive Advertising Bureau’s OpenRTB protocol. However, publishers generally do not share this data to enable programmatic buying.

To avoid these scenarios, AVOD providers need to offer contextual targeting that can help create a more consistent and seamless experience by matching the content and mood of an ad with the content the user is watching. On the publisher side, this means sharing the data needed to enable smarter programmatic buying in the open market.

As viewers continue to reduce their subscriptions, today’s AVOD players stand a chance of attracting new viewers and advertising dollars, provided they can avoid the common pitfalls above. By implementing internal SSAI, creative deduplication, competitor separation and contextual targeting solutions today, AVOD providers can position themselves as the premium platforms of tomorrow.

Matthew Deets is Managing Director of Smaato, part of the Verve Group.

About Florence L. Silvia

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