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what is avod

What is AVOD? Past, Present, and the Future of Ads on Your Own Terms

Dig deep into your memories of pre-Peacock, pre-Netflix, pre-HBO Max— AKA, pre-history— and recall the times when Hulu was free as long as you watched the ads shown four times an episode. This was the very beginning of something called “advertising video on demand”, or AVOD.

What Does AVOD Mean?

AVOD, or advertising video on demand, is the reason you didn’t have to pay for Hulu until 2016, when they exchanged ads for a subscription paywall. In short, advertising video on demand is a video monetization strategy that is now one of the most popular ways to make money off of videos posted on online platforms. It is the practice of putting ads at the beginning or middle of videos, movies, and TV shows.

AVOD is just one of the ways to monetize on-demand videos. Instead of having a subscription that viewers purchase, their stream of revenue comes directly from companies that buy ad space during their shows. This model keeps viewership free, and theoretically a more attractive proposition to an audience.

What are Some Examples of AVOD?

You take part in AVOD every time you watch a video on YouTube. Advertising in the beginning or middle of videos is the main way this platform makes its money. The outcries about YouTube’s strict regulation of video content and overwhelming placement of ads seemingly every five minutes ring far and wide, and rightfully so. They’re disruptive, distracting, annoying, and just simply not what we signed up to see.

Facebook has also started to use and offer AVOD as a way to turn a profit on their user’s content and as a way to allow users to profit off of the content they post. Though not without some negativity. They have undergone a lot of scrutiny in recent years due to allegations of tampering with traffic metrics, ownership problems, and algorithm roadblocks. Similarly, TikTok has gone under fire for concerns about advertising to children and user privacy issues. 

Advantages & Disadvantages of AVOD

Sure, AVOD is a popular way to make a profit on your viewership, but is it the best way to make money? 

AVOD is praised for being a very low-risk way to monetize videos. Platforms or content creators don’t have to create or outright sell a product in order to profit; space in your content is merely offered up to a company or organization during which they can run an advertisement.

AVOD viewership is growing exponentially in a post-Covid world. It’s projected that by 2025, 61.2% of digital video viewers will be AVOD users, more than half of all digital video traffic.

Furthermore, AVOD is a great way to give this audience what they want: content that is instant and free. In fact, around 62% of viewers say they don’t mind watching ads as long as their content stays free.

On the other hand, there is a possibility that ads could lower viewer retention rates because they interrupt a viewer’s experience, which could cause people to stop watching your content. Even more harmful is the fact that most YouTube creators won’t make anything above $12,000 a year on their content, which is wholly disproportionate to the amount of money their hosting platforms make running ads over the videos they worked hard to make. This is essentially big companies poaching the audience content creators worked hard to build, and then making more money on momentum that isn’t theirs to an nth degree comparative to creators.

Furthermore, advertisements often change their guidelines and can pull their ad funding whenever, which drastically affects a creator’s revenue.

What is the Difference Between AVOD and SVOD?

Whereas AVOD is advertising video on demand, SVOD is subscription video on demand.  Compensation from AVOD comes from showing ads to viewers, and compensation in SVOD models comes from charging users a subscription fee to access content. Netflix is a perfect example of a subscription video on demand model.

The issue with SVOD is that many marketers and advertisers can’t make money within this model. Since streaming services and creators charge a user directly for watching their content, they trade off having to watch ads that drive revenue for companies unrelated to video. AVOD instead gives free content to users and allows advertisers and marketers to profit.

So What Do I Do Now?

We are glad you asked! We recommend using a content host that lets you choose the way you make your money (since it’s your content, after all). Look for a platform that doesn’t force ads into your content for the sake of their own monetary gain. Platforms like Facebook and YouTube force AVOD on its content creators, splicing beautifully-curated and laborious videos in half by inserting a PetCo commercial to make a profit on your viewership. 

Endavo is a website builder specifically for video content creators that allows them to post their creations on their own website with their own URL and their own brand. The best part is that Endavo lets you choose whether you want to use advertising video on demand to turn a profit, and we never run our own ads over your content. This offers content creators considerably more freedom and chance to turn a profit with AVOD. 

If you do choose to run ads, then you can partner with companies you and your fan base like, and curate your videos so that the ad breaks aren’t abrupt, which could improve audience retention and make you more money.

Click here to sign up for a free 30-day trial of Endavo’s customizable video content platform and start creating and sharing independently. Have outstanding questions? We’d love to talk. Let’s start a conversation.