The U.S. AVOD market grew to new heights in 2020, with it forecast to be worth $19 billion this year and rising to $53 billion by 2025 as newer services become entrenched among U.S. consumers.
AVOD itself is an all-encompassing term for different types of video service. There are two variables when it comes to AVOD: whether the source is free or requires a subscription and whether the format is on-demand or a linear streaming channel.
The growth in AVOD means an increase in both ads served to viewers and revenues made from advertising. Data provided to VIP by Wurl Network’s Wurl Datapool, a leading connected-device advertising delivery service, shows how stunning the increase has been, with 2020 closing out with over 800% more ad impressions served to viewers via connected devices than a year prior.
Advertiser Perceptions found that over two in five U.S. advertisers planned to increase their spending via AVOD services in 2021, with a further one in five looking to increase their programmatic AVOD spend.
The volume of advertising time available on AVOD platforms is shrouded in mystery, with scant public information. To get a sense of the variance of ad breaks across AVOD services, VIP conducted its own analysis by tracking how much commercial time appeared in a single TV series, “Unsolved Mysteries,” that is available for viewing across the majority of free platforms.
What we found was that ad length varied immensely across services. Pluto TV is one of the most popular free AVOD services in the U.S., but the 15 minutes of commercials during one episode of “Unsolved Mysteries” on its dedicated linear streaming channel for the show is three times what Peacock’s “Unsolved Mysteries” channel has. As a note, Peacock is dedicated to having only five minutes of commercials an hour to enhance the consumer viewing experience.
Although Pluto is the leader among linear streaming ad lengths, it had a wide range of advertisers and rarely repeated an ad, unlike some of its competitors with smaller ad breaks. Another element VIP noted for linear streaming advertising was that not all services were filling their ad inventory, despite the boom in AVOD advertising.
Based on the length of the commercial breaks, VIP reached out to Nielsen to ask what the average commercial length per hour was for broadcast and cable TV. Nielsen confirmed that in Q4 2020, traditional TV averaged 15 minutes of commercials an hour, meaning Pluto’s linear ad load is no different now than that of regular TV. This may become an issue down the road, as viewers begin to notice other AVOD services that offer speedier viewing of content distributed across services.
VIP also analyzed the ad breaks in on-demand episodes of “Unsolved Mysteries.” Pluto once again led the pack with 9 minutes and 10 seconds of ads, much greater than the average 3 minutes and 35 seconds across the nine services with episodes available and commercials. Not all on-demand airings were filling their ad breaks, with several skipping over completely denoted breaks in the episode timer.
It was surprising to see that episodes on YouTube and Facebook Watch had no ads at all. VIP reached out to a representative for FilmRise, the U.S. distributor for “Unsolved Mysteries,” who clarified that platforms such as YouTube have strict monetization policies that forbid ads on content featuring violence (“Forensic Files” is another casualty of this policy). Holding “Unsolved Mysteries” in the same category as drug cartel torture videos seems a little strange, especially given other AVOD services have no qualms about the content.
Even with the growth in AVOD advertising, it is not yet one of the top ranked advertising sources for advertisers. This may change if President Biden’s broadband access pledge, which is part of his infrastructure bill, gets congressional approval, with free streaming in particular an area VIP predicts to grow should poorer American households gain Internet access.
Another external force that should boost the importance of AVOD to advertisers are the increasing numbers of Americans exiting pay-TV. While some do get an antenna and watch broadcast channels, and thus can still be reached via linear TV, OTA channels are just one part of their viewing habits. To reach these viewers, advertisers must travel to where they are, hence the increases in AVOD ad spend forecast over the next few years.