What is OTT Monetisation?
OTT monetisation refers to the various methods content creators and distributors use to generate revenue from their Over-the-Top (OTT) platforms. These platforms deliver video content over the internet, bypassing traditional TV and cable services. OTT monetisation allows content providers to profit from video streaming services by leveraging a combination of advertising, subscriptions, and transactional models.
The monetisation approach depends on the platform's audience, content type, and goals. For example, some platforms use a subscription-based model (SVOD), where users pay for access to content, while others rely on advertising-based models (AVOD), where ads are shown to viewers in exchange for free access.
👉Read More: The Power of CTV Advertising
Key OTT Monetisation Models for 2024
There are several monetisation models that OTT platforms can adopt, and the right choice depends on the content, audience, and business objectives. Here are the most popular models:
Subscription Video on Demand (SVOD)
In the SVOD model, viewers pay a recurring fee to access content. This is the most common monetisation method for platforms offering premium, exclusive, or high-quality content. Examples include services like Netflix, Disney+, and HBO Max. This model provides stable and predictable revenue, especially if you have a loyal subscriber base.
Advertising Video on Demand (AVOD)
AVOD allows platforms to offer free content in exchange for ad impressions. Ads are typically displayed at various points during the content, such as pre-roll, mid-roll, or post-roll. This model is often used by platforms with large audiences but no paywall, such as YouTube and Peacock. AVOD can be very lucrative if you have high viewer engagement and can target specific demographic groups effectively.
Transactional Video on Demand (TVOD)
With TVOD, users pay for each piece of content they view, such as purchasing or renting movies or episodes. This model works well for exclusive or newly-released content that users are willing to pay a one-time fee to access. TVOD is often used by platforms like Amazon Prime Video for rentals and purchases.
Hybrid Models
Many OTT platforms combine SVOD and AVOD (SVOD+AVOD), offering users the option of a subscription that is ad-free or a free tier that includes ads. This flexibility allows platforms to cater to different viewer preferences and maximise monetisation opportunities. Hybrid models can boost user acquisition and retention by offering multiple options based on individual preferences.
Choosing the Right OTT Monetisation Strategy
Selecting the most suitable OTT monetisation strategy depends on several factors, including the type of content, audience engagement, and business objectives. Here are some key considerations:
Audience Type
If your audience consists of highly engaged users who prefer ad-free experiences, SVOD may be the best approach. However, if your platform has a large, diverse audience that prefers free access to content, AVOD can help you maximise revenue through ads. A hybrid model can cater to both paid subscribers and free viewers.
Content Type
The type of content you offer will also influence the monetisation model. High-value, exclusive content like original shows and films may work best with SVOD. On the other hand, general or ad-supported content works well for the AVOD model, as you can generate significant revenue from large numbers of viewers.
Long-Term Goals
Consider your platform's long-term goals when selecting a monetisation strategy. If your goal is to generate immediate revenue, AVOD may be ideal. If you are looking to build a sustainable, long-term subscriber base, SVOD will help generate steady income. Hybrid models allow you to balance short-term ad revenue with long-term subscription growth.
How to Optimise Your OTT Ad Inventory
Efficient ad inventory management is essential to maximising OTT monetisation through advertising. By optimising ad placements, you can increase ad revenue without compromising the viewer experience. Here’s how to do it:
Dynamic Ad Insertion (DAI)
DAI allows ads to be inserted dynamically based on user behavior, location, or device type. This improves ad relevancy, reduces wasted impressions, and maximises ad revenue by targeting viewers more accurately.
Programmatic Advertising
With programmatic advertising, ads are sold and placed automatically using data and algorithms. This allows for better ad targeting and more effective use of your ad inventory. By leveraging programmatic platforms, you can optimise your OTT ads for maximum reach and revenue.
Frequency Capping
Frequency capping limits how often a viewer sees the same ad, reducing ad fatigue and preventing users from feeling overwhelmed. Effective frequency management can improve the viewer experience and increase ad effectiveness.
👉Read More: Creating a Winning CTV Strategy: Monetizing Your Content
To get the most out of your OTT monetisation strategy, follow these best practices:
Leverage Data for Targeting
Use viewer data to tailor ads to specific audience segments. The more relevant the ads, the higher the chances of engagement and conversions. Leverage demographic, behavioral, and geographic data to ensure you are serving the most relevant ads to each viewer.
Offer Multiple Subscription Tiers
Offering different subscription plans allows users to choose the level of access that best suits their preferences and budget. Consider offering both SVOD and AVOD tiers, giving users the option of paying for an ad-free experience or watching free content with ads.
Focus on Content Quality
Premium, high-quality content is essential for both attracting new viewers and retaining existing ones. Focus on creating engaging, unique content that aligns with your audience’s interests to drive long-term subscriber growth.
Measuring Success in OTT Monetisation
To effectively measure the success of your OTT monetisation efforts, focus on key performance indicators (KPIs) such as:
Revenue Per User (ARPU)
ARPU measures the average revenue generated per user, allowing you to assess the profitability of your SVOD, AVOD, or hybrid models.
View-Through Rate (VTR)
The VTR measures how many viewers watch the entire ad. This metric is critical in assessing the engagement and effectiveness of AVOD ads.
Subscriber Growth
Tracking the number of new and retained subscribers helps determine the effectiveness of your SVOD strategy. Sustained growth is a strong indicator that your content is resonating with your audience.
Ad Engagement Rates
Monitor how viewers interact with your ads, including click-through rates (CTR), engagement with interactive ads, and conversion rates. These metrics provide valuable insights into the success of your advertising campaigns.
👉Read More: What is SVOD (Subscription Video on Demand)? A Comprehensive Guide
Conclusion
As OTT platforms continue to evolve in 2024, OTT monetisation remains a key focus for content providers and advertisers. By adopting the right monetisation models, optimising ad inventory, and following best practices, you can effectively maximise revenue from your OTT platform. Whether through SVOD, AVOD, or hybrid approaches, the key to success lies in understanding your audience, offering engaging content, and using data-driven strategies to optimise your monetisation efforts.
By staying ahead of trends and leveraging advanced ad solutions, you can turn your OTT platform into a highly profitable venture that drives both short-term gains and long-term growth.
FAQs
What are the main OTT monetisation models?
The main OTT monetisation models include SVOD (subscription-based), AVOD (ad-supported), and TVOD (pay-per-view). Many platforms also use hybrid models to combine these methods.
How do I optimise my OTT ad inventory?
Optimise your OTT ad inventory by using dynamic ad insertion (DAI), programmatic advertising, and frequency capping. These strategies help ensure your ads reach the right audience without overwhelming viewers.
What’s the difference between SVOD and AVOD?
SVOD (Subscription Video on Demand) generates revenue through subscriptions, offering ad-free content. AVOD (Advertising Video on Demand) generates revenue by showing ads to viewers who access content for free.
How can I measure success in OTT monetisation?
Measure success in OTT monetisation by tracking metrics like revenue per user (ARPU), view-through rate (VTR), subscriber growth, and ad engagement rates. These KPIs help gauge the effectiveness of your monetisation strategy.
