An Uptick in Consumer Adoption and Services Boosts AVOD Opportunity

avod

By Sam Wilson, VP Platform, EMEA – Magnite

Subscription streaming services such as Netflix and Amazon once cornered the CTV market, but the scale is now tipping. As more audiences suffer from subscription fatigue, they’re turning to reduced-cost or free services and seeing the value exchange in ad-supported content. In Europe, CTV viewers now watch an almost equal amount of ad-supported content than ad-free content, with 85% of viewers opting to watch ads.

With an oversaturated SVOD market and linear losing viewers to cord-cutters, AVOD is a bright spot for advertisers looking to reach engaged, actionable audiences at scale. Here’s a look at the factors contributing to AVOD’s rise in Europe and what this means for advertisers.

Ad-Supported Content Wins Coveted Audiences from Paid SVOD

With a lower barrier to entry, consumer adoption is driving AVOD investment. Four out of five households now have a connected TV, a 30% increase from 2020.

Notably, the audience has expanded beyond young, digital-first viewers to include all ages, income levels, and household compositions, with families comprising a significant portion of CTV users. The COVID-19 pandemic only accelerated these consumer trends. Across the EU5 markets, between January 2020 and May 2021, CTV consumption increased by 55%.

In Magnite’s recent CTV: The Future Forward study, 83% of EU5 respondents said they prefer to watch advertising in exchange for free or reduced-cost subscriptions, and 74% of SVOD users said they would switch to an ad-based tier of a paid service if it was available.

To boost incremental reach, traditional TV advertisers are now optimising campaign spend by adding AVOD to their media planning. CTV can unlock audiences unreachable on linear television as more Europeans cut the cord. EMEA marketers are realising they’re missing out on reaching key consumers by ignoring CTV audiences.

Meanwhile, with CTV’s continued technical advancements, tools such as competitive separation, ad-podding, and flexible levers facilitate a seamless, dynamic ad-supported viewing experience on AVOD services. This gives marketers more control and agility in optimising budgets, making it a high-performance channel.

AVOD Curates Content for Local Markets

Rising investment in AVOD is driving greater geographic expansion. Recently, FuboTV took a decisive step in this direction, acquiring one of France’s popular live TV companies and AVOD streamer Molotov SAS for 164.3 million.

This comes in the wake of the Audiovisual Media Services Directive (AVMS), a decree that streamers must invest between 20%-25% of their French revenues in French content. Initiatives such as these are hyper-charging the growth of local markets internationally, with consumers engaging with content more intimately. Language-specific programming and adverts are becoming more widely available on AVOD services, attracting audiences that wish to see content in their native language, be it French, Italian, German, or beyond.

As AVOD platforms go international, this opens up new opportunities for buyers. Whereas brands could only buy inventory through siloed agencies in different markets, they can now reach Nordic, UK, Spanish, French audiences, and more in one programmatic buy. This significantly streamlines the deal process and creates one holistic and dynamic touchpoint through which brands can optimise budgets.

Ultimately, as AVOD’s value and affordability inspire European households to switch to ad-supported content, brands are presented with a golden opportunity to reach addressable audiences at scale.

In a greater sense, AVOD free-for-consumer services harken back to Europe’s longstanding tradition of offering television programming for free. Culturally, Europe comes from an entrenched view that storytelling should be accessible to all audiences. In more ways than one, AVOD is delivering on that promise.

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