Current state of play in the UK
The UK is the second most advanced Advertising-Based Video on Demand (AVOD) market globally, side by side with Australia1. The US is #1 by far. But the UK is catching up.
The US has never had free public service broadcasting to compete with, and differing privacy laws means suppliers can offer more audience data and targeting opportunities. In Q4 2022, Netflix adfunded launched while Disney+ and Paramount + will launch in H1 2023 further fragmenting the Audio Visual (AV), Connected TV (CTV) and AVOD marketplaces.
Consumer habits are changing
Catapulted by a cost-of-living crisis, UK consumers are reviewing their financial outgoings and moving over to ad-funded TV options in order to keep enjoying all of the content they want at lower rates.
With AVOD, TV viewers can flick between different video platforms relevant to their choice of content without having to pay multiple subscription fees – an appealing offer in today’s climate.
AVOD consumption is similar to the way in which linear TV is consumed, with each different content platform representing a different TV channel and identity.
And the Subscription Video on Demand (SVOD) and AVOD market isn’t small:
25% of UK consumers stream 100% of their TV content and this audience is expected to grow in the UK. When you look at younger audiences (aged 4-15), 33% of their time is on linear TV with 24% on SVOD and AVOD combined. 2
The younger generation will only know a world where they combine all CTV platforms to access whatever content they choose – like TikTok or YouTube, but more likely merging SVOD, AVOD and Broadcaster Video on Demand (BVOD) – it doesn’t matter the platform – the content they want will be the driver.
AVOD is ripe for advertiser experimentation
Building in an element of experimentation to every plan is important to help advertisers move into new spaces more effectively to compare performance and bring in continuous optimisation to this ever-evolving channel - and AVOD is the perfect place to do this.
There are lots of ways to experiment: For example:
- Testing different creative formats often on large immersive flat screen TVs
- Making TV ads shoppable in various ways including QR codes
- Using AI to place ads directly in the middle of contextual content
- Targeting geographies or audiences not covered by linear
And much more. For global clients, Netflix, Disney+ and Paramount+ will eventually provide international investment opportunities with the ability to plan and buy a global CTV campaign from one central place and amplify dynamic copy depending on location.
Consumption levels of ad-funded content on Netflix have not been at expected levels (11% of users have downgraded since launch).3 It will be interesting to see if families trade down to the ad-funded version when Disney+ launches or if it brings in new consumers who see the cheaper price point more financially manageable (£4.99 a month over £10.99 a month).
Either way, AVOD is just one portion of the AV pie that advertisers should be experimenting with to learn and maximise the growing opportunity ahead of competitors, while linear and BVOD take the majority of spend and drive the biggest reach.
Live now: Total TV
The future of AV is exciting, with further fragmentation coming down the line, at dentsu we’ve created Total TV, our sophisticated market-leading addressable TV offering to combine all AVOD, CTV, Linear Addressable and TV like content streaming across all our media plans.
The industry used to say every year was the year of mobile back in the 2010s, but 2023 genuinely feels like the big bang for AVOD for both consumers and advertisers, with lots of learning to come.
To dive deeper into the AVOD world, get specialist advice and tactics to experiment in this growing channel, contact: vanessa.eagle@dentsu.com.
By: Vanessa Eagle, Head of Investment.
1Source: Videoweek
2Source: BARB
3Source: Digiday
