What is VOD advertising?

Video on demand (VOD) is a TV service, with origins in linear TV, that allows users to watch a selected TV or movie at their convenience or “on demand”, instead of waiting for the specific day and time when the show airs on a network. In this way, VOD allows users to pick and choose content at the program level, rather than paying for content at the network level, and to watch that content at their own discretion, usually within a limited time window, much like a rental period.

Often, VOD requires an additional cost on the part of the viewer, in addition to the fees they paid for linear TV (such as their cable subscription or other video channel package). This content requires the users to opt-in and pay for the content, which isn’t included in a regular video channel package.

A TV service provider selects which shows are made available for on-demand viewing, and determines the rental period length in which the content can be viewed. TV VOD systems can stream their content offerings via an internet connection either through a set-top box or through devices such as computers, as is the case with over-the-top TV (OTT).

Today, the definition and usage of the term VOD has evolved and encompasses streaming platforms, or connected TV (CTV) platforms that offer video on demand. For example, Amazon Prime TV offers both rentals and purchases of video content that are exclusive and otherwise not offered by the platform under the regular Prime subscription.

Three Models of VOD

There are three different current models of VOD, which are distinguished by how they generate revenue, with more or less emphasis on placing advertisements:

AVOD: Advertising-Supported Video on Demand. These are video services that stream free of charge, and whose profits are entirely fueled by advertising placements. As each view on an AVOD typically generates a small amount of revenue, AVODs are useful for content creators that can attract a large number of viewers and who have a steady, heavy flow of content. They need to make a wide and continuous impact in order to be very profitable on an AVOD. Examples of AVOD companies include Tubi and Pluto TV.

SVOD: Subscription Video on Demand. These platforms charge a monthly or annual subscription fee that bundle offerings or provide access in tiers. An example is Netflix, who offers three different subscription options with a different mix of offerings, such as with or without multiple user accounts, access to lower or higher definition, etc. While some SVOD services are ad-free, like Netflix and Disney+, others also offer lower-priced ad-supported tiers, such as HBO Max and Peacock.

TVOD: Transactional Video on Demand: Video servers that offer individual pieces of content for a one-off fee, which the user then has the license to download and own (though this is not a license to distribute or alter). An example of TVOD would be a movie rental off of Apple or Amazon.

Unique Opportunity of VOD

Video on demand – specifically AVOD – offers a unique opportunity for advertisers to create advanced TV targeting strategies that reach audiences who are highly engaged with the video content they consume. VOD viewers watch more television than most viewers on average, and live event shows keep overall averages low for viewership. VOD viewers are a golden opportunity for advertisers to reach selective, engaged and intentional viewers who are most likely to engage in relevant advertising content when it hits them because of the self-selecting bias.

Through our TV+® platform, Simulmedia has direct integrations with over 250 networks and publishers in the linear and connected TV landscape, including every major streaming service, so advertisers can plan, buy and measure across AVOD programming. Our proprietary technology takes into consideration the hundreds of combinations of target audiences, programs, and platforms on which a given ad can run, and churns out the most predictably successful campaign strategy based on your baseline metrics and campaign goals.

Alongside targeting VOD advertising, TV+ allows advertisers to place ads across networks, platforms and programs with different audiences and goals, to create a holistic, 360-degree approach to achieving a successful campaign. And your ad strategy can pivot as the results roll in, adopting a test-and-learn approach to optimization. Most importantly, our unique access to both linear and CTV inventory allows advertisers to understand where their audiences intersect and how best to reach them with guaranteed scale and speed that no one else can deliver.