Advertising-based Video On Demand Market Size, Share & Trends Analysis Report By Advertisement Position (Pre-roll, Mid-roll, Post-roll), By Device, By Enterprise Size, By Industry Vertical, By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global advertising-based video on demand market size was estimated at USD 29.79 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 29.0% from 2023 to 2030. Advertising-based video on demand (AVOD) services are gaining popularity, particularly as more subscription-based on-demand services proliferate and grab a substantial share of the consumer budget. AVOD platforms leverage analytics of user activity as well as device specifications and capabilities to target advertisements to viewers. Because publishers can utilize user activity data to customize ad targeting, marketers are becoming more interested in AVOD services. AVOD platforms can use user activity analytics to provide tailored advertising that boosts conversion rates and ROI for advertisers.

Customers who are willing to watch advertisements in exchange for free content are the target audience for advertising-based video on demand providers. The absence of advertisements in the model is understandably appealing to consumers who have become accustomed to fast service and are willing to pay for convenience. YouTube is a prime example of an AVOD media service where content producers can upload original content to YouTube's servers and monetize their work with adverts. One significant challenge AVOD services face is balancing the number of adverts and the user experience. Too many advertisements or advertisements that are not relevant to the user may turn them off. Some AVOD systems allow consumers to comment on the advertisements they watch, click a button to skip an intrusive ad, or respond to a survey question in its place.

Advertising-based video on demand platforms analyze user engagement and behavior analytics, revenue, and conversion rates to determine the efficacy of tailored advertising. In addition to audience reach, preferences, demographics, user activity and engagement metrics, and income, AVOD service providers can collect data from everything on their platforms. Service providers can enhance user suggestions and ad targeting, promote engagement, and optimize revenue production by analyzing AVOD data with the appropriate software solutions. To gauge the success of tailored commercials, AVOD systems can also track ad impressions, clicks, and conversions. These analytics allow AVOD platforms to identify the most successful advertising and modify their targeting tactics accordingly.

COVID-19 Impact

The COVID-19 epidemic has greatly affected advertising-based video on demand platforms and the advertising sector. Due to lockdowns and social dissociation brought on by the pandemic, many customers are now spending more time online, which has caused a change in digital channels. The pandemic also substantially increased the e-commerce and internet services industries. Businesses in these areas have raised advertising spending to attract potential clients as more individuals have shifted to online shopping and other digital services. Digital advertising has become more popular as a result, especially on social media sites and search engines.

Digital advertising was at a disadvantage in the early stages of the pandemic, but as marketing spending began to pick up again, it became obvious that money was pouring in digitally. Budgets from advertisers have been redirected to digital advertising, especially AVOD platforms. The pandemic has increased media usage, particularly video streaming on televisions with internet connections. As a result, ad-supported streaming video has become more widely used, giving advertising-based video on demand services a chance to develop. By giving them clear data to work with and allowing them to be extremely selective with their ad budgets, AVOD platforms are creating new opportunities for advertisers. Advertisers can increase their return on investment (ROI) by using AVOD platforms, which can assist with proper reporting and performance attribution.

The pandemic has accelerated the move toward advertising-based video on demand platforms, with a notable increase in ad revenue beginning in Q2 2020. AVOD platforms are enabling advertisers to reach consumers who spend more time at home and consume more media than before, although this pandemic has had a severe impact on the advertising sector.

Advertisement Position Insights

In terms of advertisement position, the market is classified into pre-roll, mid-roll, and post-roll. The mid-roll advertisement position segment dominated the overall market, gaining a revenue share of 49.7% in 2022 and registering a CAGR of 28.2% during the forecast period. Mid-roll advertising is placed in the middle of a video or audio clip, frequently interrupting the viewer's or listener's experience. Additionally, a mid-roll advertisement's position might vary based on the platform and content format. Moreover, mid-roll adverts on online video platforms such as YouTube are often put at regular intervals, such as every five minutes or at specified timestamps defined by the content provider. This maintains a balance between keeping viewer interest and allowing advertising to reach their intended group.

The pre-roll advertisement position segment is anticipated to grow at the fastest CAGR of 30.4% throughout the forecast period. Pre-roll advertising appears before the main video or audio content begins. Additionally, this advertising is widespread in online video platforms, streaming services, and podcasts. Pre-roll advertising appears at the start of the content and is usually played automatically before the viewer or listener can access the desired content. Furthermore, pre-roll commercials can run for various lengths, but they are often kept brief to minimize disturbance to the user experience. Pre-roll ad lengths can range from a few seconds to a minute, with 15 to 30 seconds being the most popular. The main aim of this sort of advertisement position is to create a favorable balance between generating ad revenue and maintaining a positive user experience.

Device Insights

Based on device, the market is classified into laptops and tablet PCs, mobile, console, and TV. The mobile segment dominated the overall market, gaining a revenue share of 46.6% in 2022, and is expected to grow at a CAGR of 27.9% during the forecast period. The segment's growth is attributed to the increasing mobile device adoption due to its unparalleled convenience and accessibility. These devices are also portable and lightweight, allowing users to stay connected and access information on the go. The widespread availability of affordable smartphones has made them accessible to many people, especially, in countries such as India, China, and Japan.

According to a report by GSMA, a global non-profit industry organization that advocates for the interests of mobile network operators worldwide, the total number of mobile users surpassed 5.4 billion globally, in 2023.

The laptops and tablet PCs segment is anticipated to grow at the fastest CAGR of 30.3% throughout the forecast period. Laptops and tablets are popular video consumption devices owing to their bigger screens and a more immersive viewing experience than smartphones or mobile phones. Many people choose these devices for long-term viewing, such as watching films, TV series, or web videos. Moreover, laptop and tablet devices capitalize on technological advancements and enhanced connectivity. With improved screen resolutions, more robust processing capabilities, and faster internet speeds, users can enjoy a smooth and immersive experience on these devices. These technological enhancements contribute to a seamless and pleasurable viewing experience for AVOD content on laptops and tablets.

Enterprise Size Insights

In terms of enterprise size, the market is bifurcated into small and medium enterprises (SMEs) and large enterprises. The large enterprises segment dominated with a revenue share of 63.5% in 2022. It is expected to grow at a CAGR of 28.4% during the forecast period. Large enterprises usually have significant resources to develop high-quality video material. They create professional videos such as advertisements, product demonstrations, brand promotions, and corporate documentaries for distribution on advertisement channels. Furthermore, large enterprises use sophisticated advertising strategies in the industry. Additionally, they employ AVOD platforms' user data and analytics to target certain demographics, interests and watching behaviors. This allows companies to display personalized adverts to their target demographic, increasing the efficacy of their marketing initiatives.

The small and medium enterprises (SMEs) segment is expected to grow at the fastest CAGR of 29.9% throughout the projected period. AVOD platforms provide SMEs with a low-cost advertising channel to market their products and services. Additionally, SMEs can access a broad audience while avoiding the substantial costs linked with conventional advertising methods by using the advertising-based video on demand platform. They may boost brand recognition by creating tailored commercials that resonate with their unique target market. Furthermore, SMEs cater to specific regional or specialty markets. They may target local or niche audiences via AVOD platforms. SMEs may maximize the relevance and efficacy of their advertising campaigns by placing their commercials on AVOD channels that are relevant to their target audience.

Industry Vertical Insights

Based on industry vertical, the market is classified into BFSI, education, media & entertainment, IT & telecom, retail & consumer goods, healthcare, and others. The retail & consumer goods segment dominated the overall market, gaining a share of 28.8% in 2022. It is expected to grow at a CAGR of 28.1% over the forecast period. Retailers and consumer goods corporations use AVOD platforms to market their brands and products through tailored adverts. Additionally, the retail segment often focuses on advertisements that showcase their products, highlight promotional offers, or tell brand stories to capture viewers' attention and drive consumer engagement. Furthermore, AVOD platforms often offer opportunities for retailers to integrate e-commerce capabilities directly into their video content. This allows viewers to buy or learn more about the items featured in the videos without leaving the AVOD site, streamlining the purchasing process.

The media & entertainment segment is expected to grow at the fastest CAGR of 30.9% throughout the forecast period. AVOD platforms offer media and entertainment enterprises a large distribution network via which they may reach a large audience. They may use advertising-based video on demand channels to disseminate their movies, TV shows, web series, documentaries, and other video material to audiences worldwide. Furthermore, AVOD systems allow media and entertainment firms to monetize their content by generating advertising income. They can display adverts to viewers during their content consumption by collaborating with advertisers or through programmatic advertising, collecting money depending on ad impressions or interactions.

Regional Insights

North America led the overall market in 2022, with a revenue share of 37.8%. The regional growth can be attributed to several major AVOD platforms that have a strong presence in the North American region. Platforms like YouTube, Hulu, Tubi, Facebook, and Roku Channel have established themselves as leading players, offering viewers a wide range of free, ad-supported content. For instance, in February 2023, according to a report by Digital TV Research, the U.S. is expected to contribute USD 30 billion. Such trends are anticipated to propel regional growth over the forecast period.

Asia Pacific is expected to witness the fastest CAGR of 30.2% over the projected period. The advertising-based video on demand industry in Asia Pacific is one of the second-largest and fastest-growing markets in the world. It has experienced significant growth in recent years, driven by increased internet penetration, rising demand for online video content, and the shift toward digital advertising. Additionally, the affordability of smartphones has significantly increased their accessibility, particularly in countries like India, China, and Japan. Notably, iQiyi, MXPlayer, JioCinema, Viu, and Line TV have established themselves as key players in the Asia Pacific region. Their diverse range of AVOD content offerings has played a significant role in driving the growth of the AVOD industry in the region.

Key Companies & Market Share Insights

The market is fragmented and remains competitive due to the presence of several players. The players in the market compete based on the type of advertisements and the quality of creativity of these advertising services. Furthermore, the AVOD model is growing quickly due to its dynamic ad delivery, higher personalization, and customization of the ad-delivery experience. The surge in demand for advertising videos for product and service promotions is also driving the growth of advertising-based video on demand services.

For instance, in March 2023, Brightcove introduced Brightcove Ad Monetization, a dedicated service designed to help media companies monetize their content by leveraging advertising opportunities. The solution offers support for monetizing both live and video-on-demand content, incorporating yield optimization to fill any unsold ad inventory. It provides client-side and server-side advertising insertion capabilities across various platforms, including web players, android, iOS, and connected TV platforms.

Furthermore, in December 2021, Kaltura, the video experience cloud provider, revealed its collaboration with Astro, Malaysia's leading entertainment and content firm. Astro has selected the Kaltura TV Platform to power its new streaming service, sooka, specifically targeting millennials. By harnessing the advantages offered by Kaltura Cloud TV, Sooka launched successfully nationwide in June, with hosting support provided by Amazon Web Services. Moreover, in May 2023, Wedotv launched its core AVoD (Advertising Video on Demand) service on the LG app store. Additionally, Wedotv's FAST (Free Ad-Supported TV) channels, namely Wedo big stories & movies, are expanding their reach across Europe on LG’s smart TV platform. Some prominent players in the global advertising-based video on demand market include:

• YouTube

• Facebook

• IBM

• Vimeo

• Brightcove

• Vidyard

• Kaltura

• Dailymotion

• Vdocipher

• SymphonyAI Media

• Muvi

• Dacast

Advertising-based Video On Demand Market Report Scope

Global Advertising-based Video On Demand Market Report Segmentation

This report forecasts revenue growth and provides an analysis of the industry trends in each of the sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the global advertising-based video on demand market report based on advertisement position, device, enterprise size, industry vertical, and region:

• Advertisement Position Outlook (Revenue, USD Million, 2017 - 2030)

  • Pre-roll

  • Mid-roll

  • Post-roll

• Device Outlook (Revenue, USD Million, 2017 - 2030)

  • Laptops & Tablet PCs

  • Mobile

  • Console

  • TV

• Enterprise Size Outlook (Revenue, USD Million, 2017 - 2030)

  • Small & Medium Enterprise (SME)

  • Large Enterprise

• Industry Vertical Outlook (Revenue, USD Million, 2017 - 2030)

  • Media & Entertainment

  • BFSI

  • Education

  • Retail & Consumer Goods

  • IT & Telecom

  • Healthcare

  • Others

• Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

    • Spain

    • Italy

  • Asia Pacific

    • China

    • Japan

    • India

    • South Korea

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa

    • UAE

    • South Africa