How Will COVID-19 Impact Advertising & Subscription Video on Demand in 2020?

AVOD (advertising video on demand) has always been considered SVOD’s (subscription video on demand) poor cousin. But with the dawn of 2020, AVOD was supposed to take the limelight pushing aside SVOD. However, with the onset of COVID-19, things changed dramatically. In this article, Daniel Elad, CHIEF STRATEGY OFFICER , TheViewPoint, talks about how COVID-19 will affect both AVOD and SVOD in the coming year.

The COVID-19 pandemic has moved the needle in the lives of people all around the world. It has affected every level of society, as well as every business industry. Today, people use online services to minimize live contact. Thus, online shopping is booming now and so are various video conferencing programs. Another snowballing factor is the growing popularity of streaming services. It’s a nail-biting situation we are witnessing today, and the CTV (Connected TV) environment is also witnessing the reinvention of its trends, such as binge-watching and subscription fatigue.

Within the new coronavirus reality that is accompanied by manufacturing shutdowns and economic stagnation, people are looking for options to tighten belts and avoid unnecessary expenditures. Such an approach is spurring them to prioritize paywall-free content consumption services. Current circumstances suggest that people will be observing this model. In such realities, people are looking for a way to economize where possible, and that’s where AVOD comes into the game.

SVOD, AVOD: Who Is Who?

There are two CTV consumption models that are the most commonly used:
● SVOD (Subscription Video on Demand) – it represents an ad-free gateway to streaming services, like Netflix, Hulu, HBO max, Apple TV+, Peacock, etc. So users pay a subscription fee (usually, monthly) and get access to all available content.
● AVOD (Ad-Based Video on Demand) – it’s a freemium VoD model where users have to watch ads instead of paying for a subscription. Hence, people can consume desirable content with no added pressure to their budget.

Who Benefits? Who Loses?

The coronavirus pandemic crisis brings economic issues. A lot of people are passing through a period of abrupt unemployment. Dozens of organizations and companies have wound up their business activity. And online streaming services face challenges as well. While the quarantine is taking place, cinema production has been shut down. There are no early indicators that the situation is going to return to ‘normal’ in the near future, so AVOD is likely to become a big beneficiary. In contrast, SVOD is expected to suffer losses.

For instance, Netflix, which used to provide 35 content units per week, today, has plateaued. In addition, such a production cessation affects all other SVOD vendors too. Things are becoming incrementally precarious here by the obscurity of the future – no one knows when the pandemic curtains will fall. At this point, SVOD providers should revise their content release strategy. Facing the situation, subs retention is the key goal and challenge for this type of TV for the time being.

Sports Out – Segment Out

The virus has led live sports events to be put on hold. Games have been canceled, stadiums are empty, broadcasting is frozen. Most SVOD users are paying for a subscription to get access to live sport transmissions, like NHL or NBA and now they have lost access to these forms of entertainment. Also, the Summer Tokyo Olympics 2020 has been provisionally rescheduled to 2021. It’s estimated that NBCUniversal has signed a contract for over $ 1 billion in national advertising for this event. Since the Olympics is canceled, advertisers are looking for alternatives.

AVOD – The Budget ‘Re-Allocator’

Meanwhile, AVOD is about to benefit due to its ability to deliver entertainment content for free. On top of that, it gives advertisers an option to output their brand message for a new growing audience of cord-cutters and cord-nevers.

Back to the sports story, blue-chip brands, often associated with the aforementioned NHL or NBA, like PepsiCo, Bridgestone, General Electric, Nike, Harley Davidson, and so on are now exploring new channels to deliver their corporate messages to audiences.

AVOD channel works best here. Via programmatic targeted advertising, demand-side clients are capable of getting the utmost efficient impression delivery. They can capture all the same and even more prospects. Now, when the majority of people are at home under quarantine, CTV is one of the best ways to build a brand-consumer link. Unlike SVOD, AVOD provides such an option and can reach a fairly sizable audience. There are a variety of ad formats available on this channel, like in-stream (pre-, mid-, post-roll), pause, QR code ads and 15-,30-seconds ads.

New Environment, New Responsibilities, New Opportunities

Since online traffic is on the crest of a wave due to the lockdown situation, ad tech providers should focus on the quality of their services like never before. The projector has to be focused on supply chain transparency maintenance which sequentially brings brand safety output and prevents fraudulent deals. As online activity has grown, bad actors have become enlivened too. Where there is big money, there are fraudsters. So the issue of fraudulent traffic, which is commonly released via spoofing, is on the radar now.

COVID-19 has had an impact on consumers’ purchasing decisions. According to a CNBC study, millennials are going to cut their spending, and they are also reconsidering where and how to shop. At this point, brands need to pay attention to their creatives’ scripts and to deal with reliable DSP vendors to ensure they are reaching out to the target audience precisely. Each advertising ‘bullseye’ is another dollar for their business.

Takeaways

It is now crunch time for the TV and video industry, but as they say: “every cloud has a silver lining.” The AVOD freemium model is at its best right now. It allows advertisers to gain commercial benefits, to reach out to the audience they’re aimed at, and to replace paid TV services. The CTV market trends are indicating that more and more ad dollars will be shifting to AVOD providers as it’s the best alternative to SVOD, where live sports advertising is out of the game for now.

This content was originally published on Toolbox for Marketing