Commercial proposition

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Infomir experts reveal the AVOD segment’s prospects for growth. Find out what kind of advertising is the most efficient.

The OTT sphere is growing at an incredible rate. Thanks to the advancement and accessibility of scalable technologies coupled with the low cost of drawing in new users, the active market operation is thriving, and not just for network giants like Netflix and Youtube, but also for many niche and regional services.

At the same time, there are an increasing number of providers who are choosing advertising as a source of monetization. According to analysts’ projections, this advertising model will become dominant in the market, overtaking subscriptions over the course of this year and the next.

The increasing popularity of AVOD services boils down to one simple reason: many viewers simply cannot or do not want to pay for video content. And so, naturally the next logical step is the use of Ad views in exchange for access to various content, a method viewed as being the fairest option.

It is worth mentioning that this method is far from new. It has become familiar to consumers for it’s many years of use in television and radio. Of course even though the idea of monetisation through ads is not a new concept, modern content providers have made it more effective and convenient.

The advantages of AVOD over traditional positioning methods (linear TV, radio)

  • The possibility of targeting

AVOD replaces quantity with quality. With far more accurate data about the audience, the advertiser is able to target their audience more precisely, so that only those concerned will see the advertisement.

  • High ROI indicators

With the efficiency being higher and the cost per impression being lower than on linear TV, an advertiser is able to reach more target customers for less cost.

  • Fast and accurate statistics

The ability to evaluate and quickly optimise the advertisement plan without having to wait until the end of the campaign, enables the advertiser to achieve better end results.

One of the main factors for the growth of the AVOD segment is the high demand from both users and advertisers. Since 2012, in the USA alone, the revenues of providers have increased by nearly five times and they are projected to continue increasing at an equally fast pace until 2021.

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In the article, we will consider the requirements for the development of the AVOD sector and the difference between the requirements of both the users’ and the advertisers’. Along with several different factors on which the success of your business depends.

The perfect payment model

The preferences of how and what advertising to watch greatly varies depending on the viewing group a particular user is in. For example, those who spend an average amount of time watching TV, the Average TV Joe category, would prefer sponsorship content. While, those in the fastest growing group the ‘Mobility Centrics’, are more content with watching ads that are customised and interesting.

There are almost a third of all users that are willing to pay a modest fee in order to disable or lessen advertisements.

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The focus on efficiency

The success of the AVOD service largely depends on the performance of the advertisements broadcast, since advertisers provide the main source of its revenue.

ROI is a key indicator for campaigns aimed at increasing sales. A campaign is considered a success when the revenue gained by means of it sufficiently exceeds the expenses paid for it. Thus, ROI is a key indicator for the campaigns aimed at increasing sales.

For reputational campaigns on the other hand, the building of brand awareness, the advertisement’s engagement and audience coverage are the most important attributes.

Viewability

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The effectiveness of video advertising can be determined primarily by the amount of time the video has been played, whether it has been played in its entirety. Of course in this case television is the undisputed leader, being ahead of mobile devices by over 30%.

Such a difference in results is due to the ability to disable ads. On the linear TV for example, you can only get rid of ads by changing the channel. Whereas, most commercials on desktop computers can be skipped after only five seconds of viewing. And on mobile devices, the advertisements are predominantly unskippable ones.

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As opposed to users of AVOD services, fans of linear TV are often forced to watch advertising. According to a study by Google and Ipsos, people who watch TV for more than five hours a week, see nearly ten times more advertisements than YouTube users.

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Engagement

Viewing and seeing are two completely different things. A kind of ‘blindness’ to advertising has become a ‘diagnosis’ increasingly observed among viewers. As advertising becomes more intrusive, we learn to ignore it. For example, simply watching a promo video without actually paying any attention to it or its message.

Unlike for regular views, the indicators of engagements are very different: Since we tend to perceive advertising on our gadgets as more customised because ‘we hold it in our hands’ while watching, mobile device users are able to remember commercials much better than viewers do.

Google and Ipsos have conducted a large-scale study using the eye-tracking technique, through the extensive study of users’ actions during commercial breaks.

The result of the study was the average duration of a certain type of behaviour or action in relation to the run time of the advertisement.

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The researches have also found that what gets the user’ maximum attention is unskippable videos. Nonetheless, they should not be abused. The overuse of unskippable videos and the inability to disable uninteresting ads are a cause of irritation for users and often leads to AdBlock installation and channel changing.

Skippable videos, as opposed to unskippable videos, are positively perceived by users and do not cause negative emotions.

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What should video advertising be like?

In a highly competitive environment, the uniqueness of your content and the kind of advertising you show, as well as the way you show it are key factors for your success. Here are some tips that will help you get the most out of each ad.

Find the right balance between advertising and content

If you were to insert a 30-second promo video every five minutes of a TV show, your service will rapidly lose subscribers. Users simply will not tolerate such a high amount of advertising. On the other hand, if you rarely broadcast ads, you risk, just as rapidly, losing your profits and advertisers.

The strategy with the most success is that of gradually increasing the advertising weight, which is dependant on the time during which a user is subscribed to your service. Loyal viewers will happily view two consecutive videos or perhaps simply not notice the reduction in the gaps between them.

Give the users the right to choose

Unskippable videos, pop-ups, and autoplay audio ads are all an annoyance to viewers, that’s no secret. Even commercials that are of interest and tempting to a particular user will elicit aversion if you show it unexpectedly to them and they can’t disable it.

If you let the user know that ad viewing is a special method of payment for the content or service your provide, they will accept it more readily, since the user themselves chose to see the ad in exchange for the service.

Advertising should be appropriate

You won’t be able to get the appreciation of many men by showing them a new lipstick from Oriflame, or advertising Android applications to iOS users. If advertisements aren’t interesting and relevant, that’s half your problem. Even worse if your video is perceived as offensive by your audience — in this case, you won’t be able to avoid complaints.

The demographics and interests of your users should be in the forefront of your mind. You need to give them reason to prefer your services.

Qualitative management system is the key to success

Convenient advertising management is important in any OTT project since it greatly facilitates the monetisation of your service. Through the support of the Adtelligent platform on MAG set-top boxes and through the Ministra TV platform, Infomir has managed to settle this issue.

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As a result of the organisation of the AVOD service on the basis of MAG and Adtelligent, we got:

  • A ready-made advertising solution developed for CTV/OTT providers and app and device developers.
  • Support of multi-channel and cross-platform campaigns: from global providers to niche solutions.
  • More than 250 applications integrated with the platform. For example, Pluto TV, Newsy, Wikia, and others.
  • More than 200 advertisers integrated with the Adtelligent platform.
  • An intelligent algorithm for optimising the profitability of Intelli. It analyses the data in real time and compares it with the information available on the platform, which helps to choose the best solution for each impression.

«Thanks to cooperation with Infomir and partner OTT services, we can offer our advertisers new audiences and positioning opportunities. The OTT ecosystem is closely related to the online-advertising industry. In addition to the high potential, the market needs fruitful cooperation between representatives of the service and technical sides to move to the next level.»

Oleksandr Borniakov, President of Adtelligent

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