What Is AVOD? Advertising Video on Demand, Explained

by The MNTN Team

7 Min Read

Advertising video on demand (AVOD) has quickly become one of the most popular streaming content models for both consumers and service providers. AVOD currently offers 71.7% user penetration in the United States — an amount that is projected to climb to three out of every four customers by 2029.

Below is everything you need to know about advertising video on demand, so you can tap into this invaluable medium for reaching prospective customers.

What Is AVOD?

Advertising video on demand is a content-streaming model that allows users to watch video content at no cost to them. In exchange, ads are displayed before, during, or after the content.

In a sense, AVOD models resemble traditional television broadcasting in that they fund programming with commercials. However, they go a step beyond by providing the added benefit of on-demand access.

AVOD vs. SVOD

Subscription video-on-demand (SVOD) models require users to pay a monthly fee to access a library of content, often in exchange for an ad-free viewing experience. Services like Netflix and Hulu primarily operate under these practices.

In recent years, many streaming service providers have adopted hybrid models that include several different subscription tiers. The lowest tiers are either free or very cheap and require users to watch ads throughout their programming, thus are more closely aligned with AVOD models. Mid-tier subscriptions may have fewer ads while offering some cost savings, and the highest tiers most closely adhere to the original SVOD model, being ad-free.

AVOD vs. TVOD

Transactional video on demand (TVOD) allows users to buy individual pieces of content. Amazon Prime Video and iTunes, for instance, both allow users to purchase specific movies or episodes they want to watch and then access them on demand.

TVOD can be appealing when users want to access early-release content that’s not readily available on their preferred SVOD streaming service. However, the individual content tends to be more costly.

AVOD services position themselves as cost-free alternatives. Additionally, they rotate their offerings frequently, which helps ensure users have access to a wide range of content to enjoy.

Learn more about AVOD vs SVOD vs TVOD

How AVOD Works

Advertising video on demand is more sophisticated than traditional broadcast television, as it allows brands to precisely target specific markets or demographics. Viewers benefit by saving money and avoiding monthly subscription fees, while content providers benefit by placing streaming ads throughout the content that earn revenue based on metrics such as impressions and viewership.

Advantages of AVOD

Advertising video-on-demand models offer the following benefits:

Wider Audience Reach

Monthly subscriptions can be a barrier to reaching audiences. With an AVOD-based approach, you can target and connect with more consumers, including more diverse audiences and new markets that would otherwise be out of reach, by providing them with access to free streaming content.

Cost-Free Access for Viewers

If a streaming service offers ad-free and ad-supported viewing options, you might assume that most consumers would just pay for the ad-free membership. But as it turns out, the opposite is true.

A 2023 survey found that 64% of American viewers would prefer to watch ads if it saved them money. It’s a statistic that reveals just how appealing the cost-free nature of AVOD content is to budget-conscious consumers.

Targeted Advertising Opportunities

AVOD platforms leverage data analytics to deliver target advertisements. You can set up precise campaign criteria to target users in specific ZIP codes, or filter audiences based on their demographic data and personal preferences.

Advanced targeting helps minimize campaign waste and save you money, and you can connect with viewers who have a higher purchasing intent.

Disadvantages of AVOD

Advertising video on demand is not without its shortcomings, some of which include the following:

Ad Fatigue and Viewer Drop-Off

Frequent interruptions by advertisements can frustrate users, and high ad frequency can cause ad fatigue, which can make viewers abandon streaming platforms altogether. According to 38.5% of marketers, excessive repetition is what turns them off to an ad the most.

Thankfully, you can avoid ad fatigue by keeping your content fresh and relevant. Use advanced targeting to present your OTT ads to the right audiences and frequently retool your content so that users don’t get burnt out.

Lower Revenue Per User Compared to SVOD

While AVOD can attract a large user base, the revenue that providers can generate per user is generally lower compared to subscription-based models. That’s likely why many streaming services have adopted hybrid models that require users to pay small subscription fees in exchange for fewer ads.

Limited Content Library and Exclusivity

AVOD platforms have limitations when it comes to offering exclusive or premium content. High-production-value programs often reside on subscription-based services, which means AVOD platforms may be less appealing to viewers who want to watch the latest releases or exclusive shows.

Popular AVOD Platforms

The top advertising video-on-demand platforms include the following:

YouTube

YouTube is a global video-sharing platform that includes everything from mainstream TV content to vlogs and other user-generated content. The short and medium-length videos that YouTube is known for are a perfect match for AVOD models.

While YouTube offers a premium subscription for ad-free viewing, most people tap into the site’s extensive library and watch ads in exchange for free access.

Tubi

Tubi is a free, ad-supported streaming service that offers a large selection of movies and TV shows, allowing users to avoid a subscription fee while viewing content in a variety of genres.

The Roku Channel

The Roku Channel provides Roku device users with free access to movies, TV episodes, live TV channels, and even some original programming — all in exchange for watching ads.

Pluto TV

Pluto TV emulates the traditional cable experience by offering a large selection of live channels, as well as a robust on-demand library. Its channel guide is a throwback to the days of cable TV and provides users with a familiar navigation experience.

Crackle

Crackle is a free streaming service that features a mix of movies and TV shows, and a small selection of original content. The platform is entirely supported by ads and frequently rotates its content to keep users engaged.

Why Advertisers Need Performance TV

There are plenty of opportunities to reach consumers and earn new business on AVOD platforms, but you’re going to need precise targeting tools and access to premium ad inventory to achieve your campaign goals. Enter MNTN Performance TV — the hardest working software in television.

MNTN Performance TV gives you all the tools and resources you need to drive and measure impressive results with CTV advertising. Our built-in automation tools and precise targeting capabilities enable you to reach the ideal audiences at the perfect times in their decision-making journeys, and our robust reporting suite provides actionable insights about what works, what doesn’t, and how to make your content better.

MNTN Performance TV stands out from other TV advertising platforms thanks to its proprietary attribution solution, Verified Visits™, and advanced AI-driven audience targeting feature, MNTN Matched.

Explore the power of streaming advertising with MNTN.

Advertising Video on Demand: Final Thoughts

The future of TV advertising undeniably lies in AVOD. The model offers users access to free or low-cost content in exchange for watching ads, and it caters to a broad audience base, thereby providing you with a lucrative opportunity to reach potential customers in virtually any market. Tap into the power of advertising video on demand with MNTN and level up your marketing strategy in 2025.