AVOD (advertising-based video on demand)
AVOD is free-to-viewer streaming paid for by advertisers. The viewer gives time and attention instead of money, and the service’s revenue depends on how much is watched and what each ad impression sells for.
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AVOD is one of the three main video-on-demand models. SVOD charges a recurring subscription, TVOD charges per title, and AVOD charges nothing to the viewer. Ads run before, during or after the video, and advertisers pay the service for those impressions.
How AVOD makes money
AVOD revenue is a function of viewing time, how many ads are shown in that time, and the price advertisers pay. Ad prices are commonly quoted as CPM, the cost per thousand impressions.
- Viewing time. More hours watched means more opportunities to show ads.
- Ad load. The number and length of ad breaks per hour of content.
- Fill rate. The share of available ad slots that are actually sold.
- CPM. What advertisers pay, which depends on audience, country, content type and targeting.
Ad load and the viewer experience
Ad load is the central trade-off in AVOD. More ads per hour raise revenue per viewing session, but too many make viewers leave, watch less, or never come back. A service that overloads viewers can end up with fewer total impressions than one that shows fewer ads to a more loyal audience.
Common ways to manage it include shorter breaks placed at natural pauses, frequency caps so the same ad does not repeat too often, and lighter ad loads for new viewers while they are forming a habit.
FAST and hybrid ad-supported tiers
FAST, free ad-supported streaming TV, is a close relative of AVOD. Instead of letting viewers pick any title, it offers scheduled linear channels that play continuously, like traditional television, with ad breaks built in. Many services offer both an AVOD library and FAST channels.
Hybrid models are now common. Subscription services add a cheaper tier with ads, and ad-supported services offer a paid tier to remove them. For the viewer, the ads become part of the price: pay less and watch ads, or pay more and skip them.
| Model | Viewer pays | Revenue driver |
|---|---|---|
| AVOD | Nothing | Viewing time and ad prices |
| SVOD | A recurring fee | Subscribers and renewals |
| TVOD | Per title | Rentals and purchases |
| Hybrid ad tier | A reduced fee | Subscription plus ad revenue |
Acquiring users for AVOD and hybrid apps
For a pure AVOD app, the value of a new user is the ad revenue they generate over time, which depends on how long they keep watching. For a hybrid app, it is ad revenue plus any subscription revenue from users who upgrade to an ad-free plan.
- Measure engagement, not just installs. A user who installs and never watches earns nothing.
- Track upgrades separately. In a hybrid model, the users who move to a paid plan are often worth far more than viewers who stay on the free tier.
- Use cohort revenue. Ad revenue accumulates slowly, so short windows understate what a campaign earns.
Related terms
AVOD is one of the monetization models that run on OTT delivery, alongside SVOD and TVOD. CPM describes what advertisers pay for its inventory, and ROAS shows whether acquiring its viewers pays back.