According to a Deloitte survey, nearly three quarters of Americans (73%) have binge-watched a TV program, either on a TV or another device. Given this, it’s no surprise that ad-supported video on demand (AVOD) has come on the scene as a way for brands to capture people’s attention at the right moment, regardless of how they’re watching their favorite show.
But what exactly is AVOD and how can brands experiment with it? To answer these questions and more, we spoke with TV industry analyst Alan Wolk at TV of Tomorrow in San Francisco. Below, he shares his insights on the AVOD opportunity, partners to consider, and the importance of defining your audience and an ad’s purpose.
RampUp: How would you define ad-supported video on demand? Are we talking about commercials, product placement, or something else?
Alan: I think it’s all of that. I think the traditional definition is straight-up commercials, but there’s also product placement and what’s called “native advertising,” where the characters in a show advertise something. A lot of subscription-based companies, like Netflix, may do some sort of product placement which creates another revenue stream for them, but if I’m looking at it from the consumer POV, they are ad-free.
RampUp: Yes, totally. That makes sense. So, it’s not just VOD, it’s also streaming VOD.
Alan: Exactly. Right. And generally all of that stuff is streaming since streaming services are the bulk of VOD. Most of the traditional MVPDs completely messed up their VOD offerings and made them inaccessible, and while many actually have much larger libraries than Netflix, they are impossible to find or use, so no one does.
RampUp: Yes. So, if marketers want to get into the space, are there any apps, platforms, or tech partners you think they should get in touch with first?
Alan: There’s a bunch. Roku has a really interesting approach, where they have almost a programmatic, automated way to reach specific audiences across a range of apps. The caveat there is making sure you’re on the right shows because they have so many different channels and different reviews.
And the other partner is Hulu, which sells their own advertising separately. They have dedicated sales teams and don’t work through Roku. Even though Hulu has an ad-free version, about 60% of their audience is still watching their ad load. They have a much smaller ad load than other traditional networks, and they also have Hulu Live TV, which brings people in, and that’s growing incredibly quickly. I think it’s up to 800,000 viewers.
In terms of tech partners, FreeWheel does a lot, including placement and insertion. They are owned by Comcast, so some companies (CBS, for instance) don’t like working with them and choose Google’s DoubleClick instead.
RampUp: If someone wants to dip their toe in the water with this type of marketing, what should their first steps should be?
Alan: I think the first thing they need to think about, and this is something that often gets lost in a lot of this stuff, is what is the purpose of the ad. So, there’s the big branding ads, like Nike’s Just Do It campaign. It’s not designed to make me want to buy a specific product, but just to feel good about Nike. Then there’s specific product ads where Nike has a new women’s triathlon shoe, and if you’re a female triathlete you might want to buy it. So, that’s your audience. And then there’s very specific ads, where the Nike 4.0 running shoe is on sale this week, buy it. That’s a much more direct marketing, direct action.
So, think about what the purpose of your ad is, and then how do you want to reach the audience. I think there’s a big advantage right now for a lot of the AVODs in that there’s a much smaller ad load, so it is logical that if there are only three ads in a pod—a grouping of TV commercials that run at the same time—you’re going to remember them more than if there were eight ads. There are also opportunities to sponsor a program or take over most of the advertising, and in that case, I advise clients to be aware of frequency caps, so they’re not seeing the same commercial over and over again, which happens a lot.
RampUp: You can see a lot of the same ads, especially on Hulu. I’d be much less annoyed if I was served a two-minute ad for one company. How do you see AVOD being used with other forms of advanced TV advertising?
Alan: I think that because it’s delivered digitally, for the most part, it can support a lot of really cool ad units and tactics. For instance, you can do overlays that take over the bottom third of the screen. If you’re Subaru, for instance, you can use geolocation to figure out where the viewer is, where their local dealerships are, and run an overlay that contains the names and addresses of the local dealers. I’ve seen ad overlays where you can actually change the color of the car and other specs using your remote. There are a lot of cool interactive units available to advertisers.
RampUp: Do you see AVOD as a good place for brands to get into advanced TV, or should they start somewhere else first?
Alan: I think AVOD is the place to get involved. It’s still new and you can still get very good deals. The companies are all very willing to work with advertisers now, and it’s always good to learn these things under an experimental budget so when it gets bigger, you know what you’re doing. You can be very quick about taking advantage of it, rather than, oh my God, we never did this before.
RampUp: Between a digital team or a traditional TV planning team, do you see one of them as having more ownership in general over an AVOD strategy?
Alan: It varies a lot in terms of which team got there first. I think they’re all coming together, and what I’ve seen is they’ve often been putting the digital team on AVOD because it has some digital. But then the younger TV planners understand digital as well, they haven’t really specialized, so I think it’s coming together that way. It’s really who raised their hand first and who started doing it when everyone else said, “Oh, that’s just a fad. No one is going to do that.”
RampUp: This is an area where the digital teams and the TV teams can start working together.
Alan: Exactly. Yes.
RampUp: What do brands stand to gain from experimenting in this area?
Alan: They’ll learn what works and what doesn’t work, so it will be easier for them to make the right decisions when they decide to invest more money into AVOD. And they will—AVOD is only going to get bigger with more opportunities, including different ad formats—voice search, for example. The earlier you’re in, the better off you are.
RampUp: Right. Yes, you can be a first mover. Do you think there’s anything in terms of having a more innovative audience in the AVOD space, or earlier adopters who are actually watching that content, and how that should relate to the brand?
Alan: Yes. If you’re advertising to a downscale senior audience, it may not be the best thing for you, but especially something like a Hulu or even a Roku gets a wide range of viewership. They do skew a little bit younger, but the audience doesn’t have to be super techy to get the ad.
RampUp: That’s true. Thank you so much.
Alan: You’re welcome.