In today’s mobile-first streaming era, your content consumption and monetization strategies are evolving rapidly. One model that’s quickly becoming hard to ignore for you is AVOD (Advertising-Based Video on Demand), which gives your users free access to video content while generating revenue through ads.
If you are a mobile marketer, an app developer, a growth marketer or have any stake in mobile, understanding how this ad-supported format works and how it compares to other monetization models like SVOD, TVOD, and PVOD is essential to creating sustained and scaled strategies.
We’ve put together this glossary to break down what Advertising-Based Video on Demand is, why it is meaningful, and how it relates to app monetization and measurement.
What is AVOD?
The acronym AVOD stands for Advertising-Based Video on Demand, a business model that allows users to stream video content without paying while they see ads before, during, or after playback for their viewing experience. The user is creating a paywall by paying with their attention and not money.
This monetization format is immediately recognizable in free video streaming services, news portals, and OTT apps in various markets where subscription hesitancy may be present. The platform creates revenue based on ad impressions, clicks, or video completion and the user can enjoy their content without a fee.
This format is simply the digital adaptation of linear TV that is ultimately reconfigured for mobile and on demand audiences.
How AVOD Works
Here is the general framework for the Advertising-Based Video on Demand model: a user launches an app, selects a video to watch, and then the user does not get to watch until after one or more advertisements. These ads are served based on user behavior, location, type of content viewed, or even time of day.
Advertisers pay platforms to serve these ads, the platforms use that ad revenue to fund their content and operations. It opens up monetization for app marketers and publishers reaching mass-market audiences in cost-sensitive markets.
Combined with data-driven targeting and privacy-compliant attribution tools, this approach becomes an incredibly effective model for both acquisition as well as revenue generation.
AVOD vs SVOD, TVOD, and PVOD
To appreciate the value of Advertising-Based Video on Demand, it’s useful to know how it stacks up against other video-on-demand models you are likely already familiar with:
This model takes away the paywall entirely and is therefore the most accessible of all formats. SVOD is based on paid membership, while TVOD and PVOD are based on rental or purchase. What this means is that users ultimately make decisions based on flexibility, price sensitivity, and content requirements.
Why AVOD is on the Rise
The ascendance of ad-funded streaming means more than just convenience for audiences, it is part of a wider shift in consumer behavior and digital advertising.
While people increasingly tire of juggling multiple paid subscriptions, ad-based access provides a swifter and more effective alternative: access with no commitments. Meanwhile, brands or agencies are shifting ad budgets to streaming, targeting content inventories where audiences are most engaged.
The latest metrics back this growth. Global AVOD revenue is expected to top $70 billion USD by 2027, almost 50% more than just two years prior. In 2023 alone, Advertising-Based video-on-demand platforms drove 45.3% of all OTT revenue in India, helped by local and indigenous content and mobile-first consumption options.
With mobile penetration increasing and data costs decreasing, mobile audiences want video whenever they want, for free. For app developers, this kind of monetization can lead to more installs, longer session times, and regular engagement without limited advertising inventory, in-app purchases, or subscriptions.
AVOD in the Mobile App Ecosystem
For app marketers and content owners, AVOD is so much more than just a monetization opportunity, which can also propel user acquisition, provide experienced-level opportunities for multiple audience segments, and establish new attribution paths.
Free video programs, generally, lead to higher download rates, particularly when mobile marketers woo users from well-crafted, strategically placed targeted ad campaigns. Even if users consume your Advertising-Based Video on Demand platform but never pay for the premium version of the app, they still provide value to advertisers, including monetary benefits, through each view of the advertiser’s ad. Additionally, if users are required to view ads before they can use free video content on the app, then the marketers have another opportunity to push out branded content, promotion, or calls to action.
Nevertheless, to really create a success story with AVOD, it will be crucial for apps to adopt robust measuring tools (that measure impressions, view-through conversions and retention, across channels and devices), and this is increasingly including privacy-safe solutions, such as SKAN and contextual targeting.
Challenges of AVOD and How to Address Them
While ad-supported video-on-demand has enormous scale and accessibility, it also poses its own unique challenges.
One of the most common issues is ad overload. When users see too many ads or irrelevant creatives, it is likely that they churn quickly. Companies can mitigate ad loads and irrelevancy by adhering to ideal ad frequency and personalized delivery, e.g., ads must be aligned with user interest and/or type of content.
Attribution complexity is another headache that Advertising-Based Video on Demand presents when journeys occur across both devices or platforms. In comparison to a direct-purchase model, AVOD ad interactions can be very hard to trace back to specific ad campaigns. View-through attribution (VTA) and impression-level insights can help understand how and where ads inspire user behaviors.
Revenue predictability in AVOD can fluctuate due to ad demand, fill/empty rates, and pricing variations with seasonality considered. It is therefore prudent to track ad performance continuously while experimenting with hybrid monetization modeled on user control (i.e., optional SVOD tiers for ad-free content).
Building an Effective AVOD Strategy
A successful AVOD strategy is achievable through more than sheer volume – it requires smart design, engaging content, and accurate measurement.
Having a solid Advertising-Based Video on Demand model starts with understanding your audience: Who are they? What type of content do they typically engage with, and how do they respond to various ad formats? Content should be created for mobile first, short, engaging, and high-quality.
It’s also crucial to have solid attribution tools that will allow you to track impressions, participate in deep linking, and then run post-install analysis. Tools like Apptrove can provide this level of measurement, so marketers are able to optimize their campaigns without funding invasive tracking.
As privacy regulations continue to change, so should your AVOD strategy. Transitioning towards SKAN-native analytics, using contextual targeting and cookieless detection methods will help your monetization strategy be both efficient and compliant.
The Future of AVOD: Contextual, Privacy-Aware, and Intelligent
Free-with-ads video platforms are trading cookie-based targeting for contextual signals, without compromising user privacy.
The next phase of Advertising-Based Video on Demand will include new interactive formats, AI-powered playlists, brand integrations with video, and others, creating a richer advertising experience not just during an ad break but also next to content.
For app marketers, it’s time to rethink how to define and measure performance. Success in AVOD will depend on much more than total ad views; it will depend on how well it leads to actual user engagement, user retention, and conversion.
Conclusion
Ad-supported video is not to be viewed merely as an alternative to paid content; rather, it is a key strategy to broaden your reach, enhance monetization, and respond to the behaviors of users today.
It offers value to non-paying users and monetization potential for publishers when done right. But success requires planning, consistent measurement, and a focus on user experience.
Whether you’re running a streaming app, a content-rich mobile platform, or experimenting with hybrid models, this approach gives you the scale, flexibility, and insights needed to grow sustainably. And with platforms like Apptrove supporting privacy-safe measurement and deep attribution, you’re set up for long-term success.
