Demand for on-demand is outstripping supply: so what’s the answer?

With ad-supported-video-on-demand [AVOD] booming, supply chains are struggling to keep up with creating the personalised ads required.

Dan Goman, CEO at Ateliere, on the consolidation of the streaming market and what it means for advertisers during a cost of living crisis…

The streaming industry continues to grow at an unprecedented rate and the demand for content is booming. The transition from linear to OTT [over-the-top media] has been the fastest new consumer technology adoption we’ve seen – so much so that the supply chain for delivering the content can’t keep up. The solution is to move supply to the cloud, which can scale to constantly growing demand. 

With growth of subscription video on demand [SVOD] streaming models continuing at a significant pace, we’re now seeing the emergence of popular ad-supported-video-on-demand [AVOD] services, with over half of UK consumers (60%) saying they are happy to watch adverts in order to access video content for free. AVOD is rivalling traditional television platforms because of its ability to individually target consumers, monetise content and, in turn, create a highly profitable business model for content owners, streamers and advertisers. 

For instance, we’re currently witnessing platforms such as Freevee (formerly IMDb TV,) an AVOD service from Amazon Prime testing a free-to-use model as another way to maintain and grow audience viewers – which has already proven to be popular with consumers. Additionally, ViacomCBS CEO Bob Bakish shared in December its acquisition of ad-supported streamer Pluto TV became profitable far ahead of schedule. The model clearly works.

What this means for advertisers

All of this demand for AVOD content means there is a simultaneous demand for advertising content to complement it. However, the current content supply chain can’t keep up. The traditional infrastructure used to manage and deliver content to platforms is not designed for the demands of today’s streaming world. This reliance is forcing a real challenge for advertisers to scale to these global streaming platforms and ensure at the same time the process is economically viable. 

Content that is created for SVOD is expensive – it is a premium service and audiences demand premium content, and advertisers still can’t touch it which is why subscriptions continue to rise in price. However, AVOD’s model moves away from original programming and typically licences content that has previously run, making it less expensive and able to be accessed without a monthly subscription. A balance needs to be found to create a formula for profitability for AVOD platforms that includes an efficient supply chain alongside advertising revenue to ensure the streamer, consumer and advertiser are benefiting. 

AVOD services are becoming more thematic as they create specific streams within platforms that target small but engaged audience demographics, such as Pluto’s BBC Food stream. This opens up huge targeting opportunities for advertisers. It creates a highly concentrated demographic of people, which means reaching people on an individual level is made possible and is highly effective for ROI. However, this approach requires advertising content that is personalised and fits the audiences’ interests, which requires a robust infrastructure to succeed.

An AVOD future

The supply chain in the cloud offers great value to advertising. With the proliferation of digital channels, including web and streaming, advertisers need to produce many versions of the same advert. A cloud-based supply chain platform allows advertisers to use AI and machine learning to orchestrate the creation of the many versions, automating production and even creating virtual versions that are rendered and delivered on demand based on media buys. The supply chain platform can even generate content on demand allowing advertisers to dynamically respond to market dynamics in a near real-time way. When this ability is combined with the ability to deliver individualised adverts, advertisers and marketers have a very powerful toolset for reaching consumers.

While the industry and customer expectations continue to evolve, one thing will always remain the same – viewers will continue to want to watch compelling, high-quality content. Adverts must level up to this expectation to reach them with the same convincing targeting and therefore need the technology to be able to do so.