AVOD spend forecast to double by 2025

The report said that brand investment in AVOD services such as Youtube, Hulu and Peacock grew by $2.4bn in 2020 to a total $26.7bn, as advertisers continue their shift away from broadcast television.

Broadcast television ad revenue continued its downward trajectory, according to the report, losing $47bn over the last five years, of which 71% ($33.5bn) occurred in 2020 alone.  

Warc attributed the accelerated decline in broadcast television ad spending to a halt in TV production caused by Covid-19 lockdowns, with AVOD the recipient of the broadcast industry’s ad-spend shortfall. 

The report predicted that by 2025 AVOD will double in value to $54bn, and treble in the US to $24.2bn.

The decline in advertising revenue in traditional TV and subsequent growth in AVOD investment is attributed in the report to broader societal shifts in consumer behaviour away from linear TV and towards digital viewing.  

In the US one in three Americans now only streams video content, according to Warc, and in the US and UK, a quarter of viewers are spending more time watching streamed video content at the expense of linear TV.

Warc held that the shift to digital tallies with the global growth of next generation televisions – TVs that connect to streaming services either directly or via an intermediary device such as internet-ready plug-ins Roku or Amazon Firestick.

James McDonald, head of data content at Warc and author of the research, said: “Consumers have never before had such a varied choice when it comes to how and where they watch video content, and the distinction between channels continues to blur – one in three Americans now regards YouTube and TV as analogous.  

“Like linear before it, next gen TV is demonstrating the core traits of offering mass reach for resonant creative in brand safe environments.”