Advertising in VOD

Video on demand is a huge amount of content available at any time. On VOD websites, we can find premiere films and classics from years ago, series, sports events, guides, entertainment programs, political commentaries and hundreds of other types of video content. Petabytes of data, which viewers spend millions of hours of attention each year is a great option for advertisers. Marketers can display engaging video ads before or during the video, or graphic overlays on the content. It is also enormous possibilities of more and more precise targeting of advertisements. We can target our message to a specific group based on location, demographics, devices used or – as part of remarketing – to people who have previously had contact with our brand.

The evolution and boom of VOD services took place relatively slowly over the years, mainly due to limitations in broadband access to the Web. High-quality movie transmission requires high speed and stability of the Internet connection, which has only become relatively widespread for a while.

The second reason for the moderately fast gaining of popularity was also the dominance of traditional television as a medium, especially in the general consciousness. Of course, after many years, television companies have “made friends” with this form of distribution, launching their own internet platforms and unifying them with solutions offered by digital television in various forms.

VOD and OTT technology

It is worth making a distinction between VOD and OTT. These services are very similar, but may have different content delivery mechanics. In short, VOD is simply a service that allows you to play content at the moment you choose – most often via the Internet, but satellite broadcast also fits this definition. Meanwhile, OTT requires internet transmission, but it does not have to allow “play” to be pressed at any time. An online streaming of a live match that only takes place at a certain time will therefore meet the OTT definition, but cannot be classified as VOD. The difference between the terms is nevertheless minimal and usually the abbreviations VOD and OTT are used as synonyms.

VOD – monetization models

First of all, VOD brings together many distribution models that use different monetization schemes. They can be divided into several main categories.

SVOD – Subscription VOD

An option that is used by, among others, Netflix, HBO GO or Amazon Prime is SVOD, i.e. VOD based on the subscription model. In this case, as part of the monthly amount paid, we have access to the entire library of the platform. Another option within the same model is to set different subscription levels – this way, on the cheapest plan, ads will be shown before the movies, and only more expensive subscriptions will be devoid of spots. The US service Hulu uses this option.

Due to the specificity of this type of solutions, the advertising possibilities are very limited – in the classic subscription model, in the absence of advertising before or during the video, the only available option seems to be product placement in a given work.

TVOD – transaction VOD

Another model is TVOD, i.e. transactional VOD. As part of it, the consumer buys access to a specific product – film, live broadcast or any other digital work. The TVOD model is, for example, the purchase of a PPV (pay-per-view) broadcast from a boxing gala or the purchase of one episode of the series.

They can be classified into two subgroups:
– DTR (download-to-rent) – temporary access to the file, for example for 24 or 72 hours from the date of the transaction.
– EST (electronic sell-through) – theoretically unlimited access to the file, sometimes with the ability to download the product to disk.

AVOD – a model based on displaying advertisements

The third option is to give users free access to the platform’s library. This is called AVOD, or advertising-based video on demand. In this case, starting playback is usually associated with a set of advertisements before and during viewing. We can see it, for example, on the largest streaming service in the world – YouTube. This solution is also used by a large number of horizontal portals that combine content in the form of text with video in the presentation of one issue.

VOD ads in this form are usually not to be missed by the viewer, although it is not a rule. In the most “aggressive” solutions, when playing advertisements, the user cannot even switch the tab in the browser and do something else – the advertisement cannot be played in the background, it must be displayed in the active tab. Inevitably, this guarantees high viewership of the broadcasts.

Ads can also appear in the video itself in the form of text and graphic overlays placed directly on the video. They do not cover the entire screen and can be easily closed, although they are certainly noticeable. This option occurs, for example, on YouTube as overlay ads.

VOD: mixed model

In many websites we will meet a mixed model, in which some content is available for free, but only purchasing a premium account limits or completely blocks the display of ads, adding other options, such as the ability to download the movie to disk and later watch it offline. This connection is used by YouTube – as users, we have access to the entire library, but only buying YouTube Red disables advertising. We can also find a model that works in such a way that the account gives you access to some movies without VOD ads, but the ability to watch others requires an additional fee. There are many options – the AVOD, SVOD and TVOD models can be combined with each other in various configurations.

VOD with advertising – disadvantages

It cannot be denied that the ads before and during the movie are very burdensome for the user. They are often repetitive and play louder than the base video, making content consumption difficult. According to research by Paraphrase-Online.com, the level of annoyance with advertising is 61% for YouTube and 63% for other VOD services, while traditional television “reached” 62% and advertising in cinemas 46%. The duration of displaying advertisements in VOD, although still lower on average than in traditional television, is inexorably approaching the level of television standards. The bittersweet marketing truth is, however, that it does not have a particularly negative impact on the effectiveness of advertising activities.

Other disadvantages arise from possible technical issues on some platforms – for example, when the mandatory ad won’t play, preventing you from seeing the main video, requiring you to refresh your card and watch the entire ad bundle again. Fortunately, such situations happen less and less due to the constant adaptation of platforms to new standards.

From the marketer’s perspective, issues related to ad blocking seem troublesome. Internet users are very eager to use browser plug-ins that help to get rid of ads – also on VOD platforms. Even at the end of 2017, almost every second Internet user over the age of 15 used at least one ad blocker. Most websites, however, deal well with such situations, forcing you to temporarily disable a given plug-in to allow the movie to play. As usual in the world of technology, each day is a constant race between advertisers and users.

VOD advertising as an effective marketing tool

However, this does not change the undeniable fact that a well-executed VOD campaign is very effective, offering low conversion costs and enormous brand exposure.

Considering the reach, the largest platform that allows you to display ads on various VOD services is Google Display 360 & Video. It allows you to place advertisements while omitting the commission that we would have to pay to intermediaries, i.e. media houses.