OTT to boom this year and AVOD to near double by 2023 | Media Analysis | Business
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Data released by advertising research firm WARC has revealed that consumer and advertiser investment in over-the- top (OTT) is rising rapidly worldwide with expenditure on advertiser-funded on-demand platforms (AVOD) growing ahead of other paid media.
Warc 26Oct2018
In an OTT market set to almost double over the next five years, WARC says some $46.6 billion, 36.0%, will likely be funded by advertiser video-on-demand (AVOD) platforms at that time. Prime examples of the leading AVOD services cited include Hulu, HBO Now and Sony’s Crackle, as well as YouTube, though only in relation to ads during professionally-made TV shows and movies).

WARC also calculates that just over a third of 2018’s OTT total, amounting to some $23.8 billion, is expected to be invested by advertisers across AVOD platforms. This compares with 51.0% ($35.0 billion) in subscription fee revenue (SVOD), which is growing faster than AVOD. The remaining 14.3% ($9.8 billion) is from transactional fees (TVOD).

The data shows that China is expected to overtake the US to become the world’s largest AVOD market for the first time this year, drawing $8.0 billion of advertiser spend – a third of the global total. US AVOD is expected to attract just under this, on $7.9 billion.

Among the other key findings in the report, WARC revealed that consumers have a voracious appetite for content, and most are platform agnostic. It noted that rising internet penetration and connection speed has driven the consumption of video anywhere. As many as 45% of streamers agreed that was important to them to be able to watch TV shows on the go, while 81% say it’s important to watch TV programmes whenever they want.

In addition, WARC stated that successful high-budget campaigns typically overspend on TV and that the leading Facebook advertisers allocate less to TV. It also warned that marketing technology gains may be leading to a reduced overall media spend.