AVOD's Striking Impact on CTV Advertisers and Streamers

Unless noted otherwise, all data in this infographic is from the "Publicis Media & Verizon Media: Capitalizing on the CTV Opportunity" study, April 2021.

First things first: Steaming growth has gone exponential

Streaming adoption climbed 48% in just the three months between Q3 and Q4 last year, and the industry is responding with a new AVOD or SVOD service announced seemingly every month (Verizon Media internal data, March 2021).

However, new services mean more costs, and these streamers are reaching a tipping point around subscription price fatigue. Half of users share logins to keep costs down both for themselves and others.

AVOD grows to fill a need

While the vast majority of viewers regularly turn to premium, ad-free streaming like Netflix or Amazon Prime Video, TV ads are still hitting most viewers. Seventy-seven percent of viewers see ads across cable, live, or AVOD services, and 66% see ads via AVOD services of any kind.

Affordability is the primary reason why viewers try paid or free AVOD services. And AVOD, particularly Paid AVOD, is delivering value, with 70% saying there is no difference in "price for value" when comparing SVOD to Paid AVOD.

What's holding back AVOD at this point? Bad ad experiences.

Thirty-nine percent of AVOD subscribers are so irritated by advertising experiences that they've considered upgrading to an ad-free version. Another 23% actually have upgraded (typically to the ad-free version of Hulu) because they were bothered by the ad experience. The risk here is AVOD services without an ad-free upgrade option risk losing their viewers to other services that irritate viewers less.

What could be so irksome about CTV ads? Here are some of the most common complaints:

• 60% say commercial breaks are too long
• 60% feel there are too many commercial breaks
• 58% see the exact same ad play over and over in the same or consecutive shows
• 53% dislike commercials that occur in the middle of the action, where there isn't a natural break
• 52% blame AVOD commercials that occur right at cliff-hanger moments

How can publishers improve the viewing experience?

Improving the ad experience will make your advertising customers more successful. AVOD providers can look to cable TV as a guide, as 54% mentioned the cable TV ad experience as the benchmark for AVOD ad experiences.

Ad experiences that qualify as "Better Experiences" include approaches that give viewers more control, countdown clocks and ads that are entertaining or personally relevant.

Fortunately, there are multiple pathways publishers can explore to improve the ad experience.

1. Optimize your waterfall setup. Unified auction solutions and multi-bidding support can increase the pool of demand for your ad slots, helping reduce the frequency of no ads or repetitive ads.
2. Increase relevance. Content Object is an OpenRTB attribute that helps buyers better understand where their ads will run and increases the likelihood that you'll be able to deliver more relevant ad experiences to your viewers. Publishers should make sure to work with an SSP that supports Content Object and has experience selling it through to buyers.
3. Experiment with ad pod placement and structure. Too often the industry has defaulted to ad breaks consisting of 3-5 ads, placed every 15 minutes. This is an area where CTV could even improve upon the Cable TV experience. "Better ad experience" suggestions included skippable ads, fewer ad breaks and ad breaks placed in different parts of the content stream, all of which are aspects that publishers can control and modify to find the right balance between revenue and the optimal user experience.

Straight talk to advertisers

Advertisers may need your help adjusting to a more complicated ecosystem. Here are a few thought-starters for that conversation:

• Expand your audience. If you're still solely focused on reaching viewers via traditional, linear TV, you're missing out on opportunities to reach your audience.
• Keep ad quality high. The ad experience matters, but so does the substance of the ad itself. Two-thirds of the CTV audience prefers ads that are funny or entertaining. The creative process is just as important as it is on TV.
• Diversify your ad creative. While publishers have work to do to stop the same ad from running repeatedly, advertisers may want to account for this by ensuring they're submitting more creative variations of their ads in the event they're appearing in front of viewers several times an hour.
• Demand relevancy. If you're not using Content Object to influence your targeting, you're missing out. Content Object provides information about the content in which your ad runs and can help you deliver more relevant ads to more relevant viewers. Ensure the SSP you're buying from supports this feature and can help you find the right opportunities.

The future of CTV and AVOD is exciting, even with its current imperfections and growing pains. We are in a phase where advertisers and publishers have opportunities to not only fix the pain points, but to also reimagine what a "great" viewing experience can be -- even going beyond the gold standard set by cable TV. Working with strong technology partners who can embrace and support a spirit of experimentation can help you figure out the best possible solutions.

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