AVOD vs. SVOD: Which Model Works Best for Advertisers?

In the rapidly evolving world of streaming media, advertisers must choose between two dominant models: Advertising-Based Video on Demand (AVOD) and Subscription Video on Demand (SVOD). Each offers a unique framework for reaching audiences, shaped by different revenue structures and viewer experiences. As brands seek to maximize their advertising impact on connected TV platforms, understanding the strengths and limitations of these models is essential. This article explores AVOD vs SVOD, and how each approach serves advertisers, helping them determine the best fit for their objectives.

Defining the Streaming Paradigms

AVOD platforms like Tubi and Pluto TV provide free content supported by ads, mirroring traditional television with a digital twist. Viewers can access a vast library of shows and movies without paying but must watch commercial breaks.

SVOD services, such as Netflix and Disney+, operate on a subscription model, offering an ad-free experience—though some, like Hulu and Disney+’s lower-tier plans, incorporate advertising. For advertisers, AVOD presents a natural space for placements, while SVOD’s historically ad-free approach limits opportunities. However, as more SVOD platforms experiment with hybrid models, new opportunities are emerging.

Audience Reach and Accessibility

AVOD attracts a broad and diverse audience, including cord-cutters and budget-conscious consumers who prefer free content. This expansive reach benefits advertisers looking for mass exposure—such as a snack brand aiming to reach millions on The Roku Channel with a single campaign.

SVOD, in contrast, appeals to a smaller but more engaged audience that is willing to pay for content. These subscribers often belong to more affluent or niche demographics, making SVOD attractive for advertisers targeting premium buyers, such as high-end car manufacturers advertising on Hulu’s ad-supported tier.

Advertisers must decide between AVOD’s high volume and broad accessibility versus SVOD’s smaller but more engaged and potentially high-value audience.

Ad Integration and Viewer Experience

The way ads fit into each model directly impacts their effectiveness.

• AVOD naturally integrates ads, with pre-roll, mid-roll, and post-roll placements that resemble traditional TV commercials. Since ads are expected, they tend to receive high visibility. A car brand’s 30-second spot on Crackle, for example, is likely to get full playtime.
• SVOD prioritizes uninterrupted viewing, meaning ad-free subscribers are not exposed to commercials. However, hybrid SVOD models, like Hulu and Disney+’s ad-supported tiers, offer a limited number of ad breaks, providing a less cluttered, more premium ad experience.

Advertisers seeking frequent placements and high visibility may prefer AVOD, while those targeting a more engaged audience with fewer ad interruptions might opt for SVOD.

Cost Structures and Budget Considerations

AVOD’s ad-driven model shifts the cost burden to advertisers, resulting in lower CPMs (cost per thousand impressions)—typically $10-$20. This makes it cost-effective for broad-reaching campaigns; for example, a beverage company could run widespread ads on Pluto TV without a massive budget.

SVOD’s reliance on subscriptions means fewer ad slots, leading to higher CPMs—often $30-$50 on platforms like Hulu. These higher rates reflect a more premium audience and limited ad inventory, making it a better fit for brands prioritizing quality over quantity.

Budget-conscious advertisers might lean toward AVOD, while premium brands seeking exclusive placements may justify SVOD’s higher costs.

Engagement and Attention Levels

Viewer engagement differs significantly between the two models.

• AVOD attracts casual viewers, some of whom may multitask or tune out during ads. However, non-skippable formats ensure ad completion rates remain high, even if attention varies.
• SVOD subscribers are more invested in content, leading to higher engagement when ads are present. For instance, a 15-second ad on Disney+’s ad-supported tier may benefit from a more attentive audience, as fewer commercials mean less ad fatigue.

Advertisers prioritizing high completion rates and mass reach may favor AVOD, while those valuing deeper engagement and stronger brand recall might opt for SVOD.

Targeting Capabilities and Data Insights

Both models leverage connected TV’s digital infrastructure for audience targeting, but with different levels of access.

• AVOD platforms, like Roku Channel and Tubi, offer robust targeting, using viewing habits, device data, and contextual targeting. This allows brands to reach specific demographics—for example, a beer brand targeting sports fans during live sports streams.
• SVOD platforms have more restricted access to user data, as many operate within walled gardens that limit advertiser insights. However, when available (as with Hulu’s ad-supported tier), SVOD data is often higher quality, based on subscriber profiles and engagement patterns.

For brands seeking broad, data-rich targeting, AVOD offers more flexibility, while SVOD provides more curated, premium targeting where available.

Flexibility in Ad Formats

AVOD supports a wide range of ad formats, from 6-second bumper ads to 60-second narratives. This allows for experimentation and optimization—for example, a fashion brand could test short teasers and long-form storytelling ads on Philo.

SVOD, by contrast, offers limited ad formats, usually 15-30 second spots with fewer placement options. However, emerging interactive formats, such as QR code-enabled shoppable ads on Amazon’s AVOD tier, provide new engagement opportunities.

For brands prioritizing creative flexibility and experimentation, AVOD is the better choice, while SVOD requires concise, high-impact messaging.

Brand Safety and Content Alignment

Ad placement risks vary between models.

• AVOD’s vast content libraries (which may include user-generated or third-party content) increase brand safety concerns. For example, a luxury brand might avoid placing ads alongside unpredictable content on YouTube TV.
• SVOD platforms offer more controlled environments, with curated content ensuring higher brand alignment. A skincare ad on Hulu is more likely to appear next to premium, high-quality content.

Brands concerned with ad placement safety and contextual relevance may prefer SVOD, while AVOD is suitable for those prioritizing scale over control.

Scalability and Market Trends

AVOD’s rapid growth makes it highly scalable and accessible. Platforms like Tubi and Pluto TV are expanding quickly, attracting advertisers with affordable reach and large audiences. A startup could launch a broad AVOD campaign cost-effectively and see immediate results.

SVOD remains a dominant force, with Netflix, Disney+, and other platforms exploring ad-supported models. While SVOD’s ad space is currently limited, its future expansion could create premium opportunities for brands willing to invest early.

For advertisers seeking immediate scalability, AVOD is the clear winner. However, SVOD’s long-term potential makes it an attractive option for brands planning for the future.

Choosing the Right Model for Advertising Goals

The best model depends on the advertiser’s objectives, budget, and audience priorities:

• AVOD is ideal for mass awareness campaigns, offering low-cost, high-reach exposure—perfect for brands like detergents or fast food chains.
• SVOD, particularly hybrid ad-supported tiers, is better suited for premium branding, targeting affluent or niche audiences—making it a good fit for luxury cars or high-end fashion brands.
• A hybrid strategy can be effective, combining AVOD for broad awareness and SVOD for high-impact, premium targeting—for example, a tech company using Pluto TV for reach and Hulu’s ad tier for deeper engagement.

The Future of AVOD and SVOD Advertising

As streaming evolves, both AVOD and SVOD will continue to adapt. AVOD is expected to expand interactive and shoppable ad formats, while SVOD giants like Netflix will refine their ad-supported models, blending premium content with selective advertising opportunities.

Advertisers must remain flexible, testing both AVOD for immediate reach and SVOD for evolving high-value opportunities. The best choice depends on today’s marketing priorities—but keeping an eye on streaming’s future ensures long-term success.