What ad insertion is better for AVOD model?

What ad insertion is better for AVOD model?

Introduction

By the end of 2020, the number of OTT platforms has increased twice and users are ready to pay not only for the content but, first of all, for the quality of the content itself and the quality of related technologies. The list of related technologies includes: multiscreen, interactive, 4K, VR, HDR etc. This increases the interest in the segment of free services with advertising or the AVOD format.

AVOD. What is that thing?

Advertising based Video on Demand (AVoD) is a type of VoD in which a viewer can watch a movie, TV series or TV show for free and with ads. It means that the service provider does not charge the user money for watching the video, but places video ads before, during or at the end of watching the video content.

So unlike SVoD, where video access is provided by purchasing a subscription, AVoD video access format is provided along with ads that "slip" in the video from time to time.

Outstanding representatives of SVOD and AVOD formats are Netflix and Hulu respectively. There is also a mixed model. We can observe this on YouTube for example.

However, today we will focus on AVOD.

While Netflix, HBO and others streaming services have to grow their audience and form the habit of paying for content among their subscribers, the AVOD strategy is based on an advertising monetization model.

Monetization of AVOD

Simon Murray, head of analyst at Digital TV Research, predicts that the United States will become the leader in revenue from AVOD: by 2024 the revenue of this segment will reach $19.23 billion which will be 34% of global revenues.

The Covid-19 crisis has highlighted significant growth in video consumption. In the US, for example, Comcast recorded a 50 % increase in VOD views in March and April 2020. However, while subscription VOD (SVOD) and linear OTT environments have become more congested, AVOD has gained popularity as an opportunity for low-budget content consumption. However, according to Dataxis, this move towards AVOD is not entirely new to the US video market.

The study also found that ad revenues, which were previously captured by YouTube largely, are becoming more diversified among a growing number of players able to monetize their audience in a country where the digitalization of ad spending is accelerating. It was noted that some of the characters began to go international.

DigitalTVEurope, citing a study by Digital TV Research, reports that China and the United States are currently ahead of all other countries in spending on the AVOD model (i.e. with advertising), while China's spending has decreased by 8.9% and is predicted to decrease. another 11.4% in 2020, which gives the United States the opportunity to come out on top in the ranking.

If you decide to use this business model on your service then you need to understand how it can be implemented. There are 2 types of ad insertion on your streaming platform: CSAI and SSAI.

Client Side Ad Insertion. How it works? 

CSAI usually works like this:

The browser sends a request to the ad server ⇒ The ad server responds with a document containing a link to the ad ⇒ The player shows the ad to the client at a certain time, interrupting the video at a certain place.

CSAI fits well for live events, such as breaking news and sports, where there may not be predefined “commercial breaks” and where a broadcast trigger can instruct the client’s player to deliver ads that are already pre-populated on consumer’s devices.

But CSAI also has technological difficulties which are hard to overcome - especially during live broadcasts, typical for newscasts, as well as broadcasting events and sporting events.

CSAI and ad blockers

CSAI was designed to personalize and target video ads. However, the display of such ads can lead to problems with buffering and latency in the video display, since the video itself and the ads that are broadcasted almost simultaneously are separate files.

Thus, the ad file is very easy to block with the most common ad-blocker.

Ad blockers are the simplest browser extensions that can be installed in a couple of clicks and easily block almost all requests to ad servers. E.g. ad-blockers based on Windows cope with the task by 95%, and on the MAC basis - by 75%.

What is Server Side Ad Insertion?

SSAI also is called “stitching”. It is the process of stitching video content and ads together on the server side level rather than on the browser level (Client Side Ad Insertion). Videos and video ads are coming from different places. Videos typically come from a content delivery network (CDN) and ads from an ad server (video ads can also be served from CDNs, although content CDNs and ad CDNs often differ). These are then combined on the fly when people start watching videos. With server-side ad stitching, that combination of video and advertising happens on the backend.

Server-side ad insertion allows for smoother ad user experiences as users do not have to wait for players to fetch ads and render them in real time. The stitching is all done prior to the user getting the ad break/pod. In the ad stitching process, ad specs are matched with content specs resulting in more consistent viewer experience as the ad quality will match the content quality.

SSAI also allows publishers to mitigate ad blocking, as video content and ads are stitched together as a cohesive stream on the server side which allows them to bypass browser or device-level detection/blocking. When a browser or device-level script makes a call to the ad-decisioning system, the ad blocker can identify that signal, as opposed to a server-side script where the ads are already stitched into the player’s content, making it impossible to distinguish an ad from content.

This is a great solution for a publisher, however advertisers may have concerns with measurement being made server side and request such delivery to be distinguished in reporting.

Image source: https://www.oxagile.com/ 

SSAI VS CSAI - pros and cons

Pros of SSAI:

1. A single, uninterrupted video stream with alternating main video and ads.

2. Reduce latency and negate video buffering

3. There is a high probability that the advertisement will reach the viewer and will not be blocked by ad-blockers.

Cons of SSAI:

1. Not profitable for companies with small volumes of video production.

2. SSAI does not support clickable ads as well as interactives and VPAIDs.

SSAI architecture:

The similarity of SSAI with conventional TV advertising is very high, but in fact the difference is that this type of advertising is more dynamic and is “embedded” into the video player just before the video is delivered. In this architecture, the manifest remains with the service provider and when a consumer requests a specific video, the program receives a request from the server. Thus, the video content is delivered with ready-made markers for inserting ads. Typically, these are standard SCTE35 for compressed video or SCTE104 for SDI video.

Image source: https://www.intertrust.com/

Conclusions

While CSAI was the most popular approach in the past, SSAI is making progress on the technical side.

However, everyone chooses the most proper monetization model to their business.