301 / 2024-04-24 11:00:18

Optimal Ad Placement: Strategies for Pre-roll and Creative Mid-roll Ads on Video Platforms

video platform,pre-roll ads,creative mid-roll ads,subscription service

In recent years, China's online video industry has witnessed the emergence of an innovative form of advertising known as creative mid-roll advertisements. Unlike traditional pre-roll advertisements, creative mid-roll advertisements are positioned in the middle of videos, and subscribers are unable to skip these ads. This novel form of advertisement, integrated creatively with the storyline, is more readily accepted by audiences. This study aims to identify the applicable scenarios for pure pre-roll advertisements, pure creative mid-roll advertisements, and a combination of both strategies. By constructing a consumer utility model, we endeavor to describe consumer responses to different types of advertisements and further explore how ad-supported video platforms can maximize revenue by selecting the optimal advertising placement strategy. Given the significant impact of blockbuster series on subscriber conversion and advertising revenue, this research will focus on the influence of individual videos on platform revenue. The findings indicate that pre-roll advertisements effectively stimulate new subscriber conversion but may concurrently lead to a decrease in advertising revenue. In contrast, creative mid-roll advertisements help reconcile the conflict between subscriber conversion revenue and advertising revenue, thereby enhancing the platform's profitability. Moreover, the optimal advertising placement strategy depends on the platform's existing subscriber proportion and subscription fees. When the proportion of existing subscribers is low, all three strategies may yield optimal profits, with the choice of the optimal strategy determined by subscription fees. Conversely, when the proportion of existing subscribers is high, creative mid-roll advertisements are favored by the platform due to their unskippable nature by subscribers.