AVOD or Advertising-based Video On Demand is a VOD business model that generates revenue by inserting advertisements into the video streaming, either via Client-Side Ad Insertion or Server-Side Ad Insertion.
Typically, AVOD services are free-to-watch and can be bundled into Freemium services where you can watch ad-free streams if you sign up for a subscription (AVOD-SVOD hybrid).
In this article, we look at
- What is VOD?
- The AVOD monetization model
- How does AVOD work?
- The different types of AVOD, namely SSAI and CSAI
Table of Contents
What is Video On Demand (VOD)?
Video On Demand is a video delivery mechanism that allows users to watch a video whenever, wherever, and on whichever device they want to.
VOD is different from live streaming because you have the freedom to watch videos at your convenience instead of being restricted to a programming guide (EPG) or a broadcasting schedule. For a deep-dive into VOD, how it works, and the types of VOD, please read this article from OTTVerse.com.
VOD can be monetized in different ways – via ad insertion, subscriptions, transactions or pay-per-view, or by releasing premium content on VOD instead of or alongside theaters.
In this article, we’ll take a look at AVOD or Advertising-Based Video On Demand.
AVOD – Advertising-Based Video On Demand
AVOD or Advertising-Based Video On Demand is a monetization strategy in which advertisements are inserted into the video to monetize it, and (in almost all cases), users can consume the content for free without paying or subscribing to the service.
In What Situations does AVOD Work?
AVOD is a business model that depends on many people watching videos and ads to be financially viable. The publisher only gets paid a couple of dollars for every 1000 ad impressions, and to make a sustainable revenue, the publisher needs to attract a lot of people to his platform.
AVOD is typically suited for news websites and UGC sites such as YouTube, Vimeo where the primary income source is from advertising driven by large audiences.
How Can AVOD Go Wrong?
AVOD can go horribly wrong when you frustrate your userbase with a poor watching experience. How?
- Have you ever watched a video on YouTube with 20 to 30 ads inserted into it?
- Do you wait for the “Skip Ads” button to appear?
- Has the ad taken too long to start?
- Has the ad crashed and taken down the video with it?
- Have you been shown wrong or inappropriate ads?
- Have you been shown the same ad repeatedly?
Too many ads or a poor ad viewing experience will drive away your audience. You have to maintain a balancing act between making money and not frustrating your users.
Great – now that we know what AVOD is and where VOD companies can use it, let’s understand how the primary forms of ad insertion – CSAI and SSAI work in the next section.
CSAI and SSAI – How AVOD Works
CSAI works by the application making API calls to the ad server requesting it to serve ads. On the other hand, SSAI works by inserting (or stitching) the ad media directly into the video stream, avoiding the need for making calls to a server to receive ads.
Both CSAI and SSAI are used extensively in AVOD companies. So, let’s spend a couple of minutes understanding how they work.
CSAI: Client-Side Ad Insertion
CSAI (Client-Side Ad Insertion) is the method of delivering ads to clients (desktop, mobile, CTVs, gaming consoles, etc.) where the client (video player) requests the ad server for an ad when it reaches certain ad-markers in the stream or the manifest.
When the ad server gets a request from the client, it uses data to figure out the correct ad to serve that particular client and responds with the ad information. The video player then pauses the video, plays the ad, and then resumes video playback.
SSAI: Server-Side Ad Insertion
SSAI (also known as Dynamic Ad Insertion or DAI) is an ad-insertion technique where ad’s media (audio and video) are stitched directly into the video that is being streamed – at the server and not the client. It is very different from CSAI where the ad insertion is done at the client (player).
SSAI is a very popular way for AVOD with a lot of companies exploring server-side ad insertion and ditching client-side ad insertion.
Why is this?
The advantage of SSAI is that the client is not making any server calls to initiate the ad insertion. In CSAI, the client or application makes API calls to the ad server and it is easy to build software/plugins to block these API calls, thus, reducing the revenue of the publishers.
But, in SSAI, all the work is done at the server, and the ads are inserted directly into the bitstream, so it is impossible to block them using any client-side techniques. However, SSAI does have a more complicated workflow, and it is hard to provide the level of personalization and interactivity as CSAI.
Note: Click here for a full-fledged comparison of CSAI vs. SSAI.
Other VOD Business Models – SVOD, TVOD, PVOD
As you know, AVOD is not the only way for a VOD service provider to generate revenue. Other models such as SVOD, TVOD, and PVOD exist that use subscriptions, transactions, and premium movie releases to generate revenue.
While we won’t go into the details of these business models in this article, please go here for a comparitive study of AVOD, SVOD, TVOD, and PVOD.
AVOD definitely has a very bright future in the coming years owing to the explosion in viewership, the race for customers, and the increase in choice for the consumers. AVOD has always been a good business model for VOD news, sports, and movie streaming companies and its my opinion that this is not going to change any time soon.
The ad insertion and targeting technologies – VAST, VPAID, SIMID, SSAI, CSAI technologies are also improving steadily and this will encourage the use of ads and ad insertion in a more user-friendly manner.
Krishna Rao Vijayanagar
Krishna Rao Vijayanagar, Ph.D., is the Editor-in-Chief of OTTVerse, a news portal covering tech and business news in the OTT industry.
With extensive experience in video encoding, streaming, analytics, monetization, end-to-end streaming, and more, Krishna has held multiple leadership roles in R&D, Engineering, and Product at companies such as Harmonic Inc., MediaMelon, and Airtel Digital. Krishna has published numerous articles and research papers and speaks at industry events to share his insights and perspectives on the fundamentals and the future of OTT streaming.