Digital media has a complicated relationship with advertising.
On the one hand, ad revenue sustains the world’s most beloved properties and platforms. Insider Intelligence reports that digital ad spending will reach nearly $700 billion by 2024, representing an 11% year-over-year increase1.
On the other hand, people don’t like ads. Research from HubSpot found that “91% of respondents agree ads are more intrusive today compared to two to three years ago, and 87% agree there are more ads in general.”2
For the last decade or so, rewarded video ads have been a popular compromise. Users are given greater autonomy over their advertising experience and the chance to benefit from their participation. It’s an approach that, while perhaps overdue for an evolution, has afforded developers a sustainable living while keeping users happy.
Whether you’re a publisher, advertiser, or a curious app user, getting the most out of this well-balanced format starts with a fundamental understanding of its mechanics.
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The term “rewarded video ads” refers to a subset of rewarded advertisement types characterized by their opt-in premise and compensatory nature. Unlike interstitial and/or display ads, which appear unsolicited by the end user, rewarded video ad impressions are only delivered on request by the user. This is typically preceded by a contextual offer, made clear either via the app’s UI or an integrated offerwall.
Using text, images, and/or iconography, the host app communicates the fact that users have the option to view an ad and what they will receive in return for doing so. Users are then free to opt-in to view the ad and receive their reward, or decline and continue engaging with the app.
For example, a user might see a “play button” icon in an idle-clicker style game’s main menu screen. Tapping the icon could produce a modal window offering the user 5 units of premium in-game currency in exchange for watching the ad. If the user accepts, the ad plays and, if viewed to completion, the user receives the currency which can then be spent on gameplay upgrades, timer accelerations, or cosmetic items.
The Interactive Advertising Bureau (IAB) has aptly used the term “opt-in value exchange advertising” to describe rewarded ads in the past, especially in the context of non-gaming apps. In a 2018 blog article titled “Everything You Need to Know About the Attention-Grabbing Ad Format That’s Winning Consumers Over (even on OTT)”, the IAB’s Head of Social and Content Marketing Solutions, Susan Borst describes them as “premium ads that offer consumers something of value in exchange for their time and attention that consumers actually prefer… the value exchange for the consumer is directly related to accessing the media experience that the user intended to access at the destination, e.g., engage with a brand message on a music app and immediately get xx hours of ad-free listening on that music app.”3
Rewarded video ads evolved out of interstitial ad placements, which were never known for their benefits to user experience. A 2021 survey conducted by CivicScience found that roughly 30% of mobile smartphone users use some form of ad blocker4. Rewarded video ads set out to improve on the interruptive nature of interstitial ads and provide a better overall experience. When it comes to players, there’s mounting evidence to suggest they’ve succeeded. A 2019 survey by IAB found that “Nearly 80% of digital video viewers accept free content as a value exchange for watching advertising.”5
1. Receptive audience: Without the frustration of an interruptive ad experience, users are more likely to take action. Mobile advertising platform Aarki confirmed this to be the case in a recent comparative study, which found that “After analyzing the two ad formats, we discovered that the click-through rate (CTR) of the rewarded video was 45% better than the non-rewarded video, and the conversion rate (CR) was 33% greater. The install rate (IR) was greater by 93% with the rewarded video ad format which explains the cost per install (CPI) value, which was lower by 26%.”6
2. Better retention: There’s also a growing body of evidence to suggest that rewarded ads help keep users engaged longer. A 2021 study by ironSource found that “Rewarded video has the most profound effect on retention of any ad type. 30-day retention steadily increases with each video view, ranging from 53% to 68%, which is 3.5-5 times greater than the benchmark.” Other findings from the study point to the value of introducing ads early and often, keeping their opt-in prompts prominently displayed even during the first-time user experience.
This is especially noteworthy in today’s mobile marketing climate. Mobile measurement partners like Tenjin are reporting a consistent rise in CPIs among some of the most popular mobile game genres7. 87% of experts surveyed as part of Deconstructor of Fun’s 2023 in Mobile Games feature article asserted that 2023 would be the year app store discovery would be declared dead8. Now more than ever, mobile marketers need to make the most of every install. That means prioritizing growth strategies anchored around loyalty and long-term profitability.
3. Improved monetization: Rewarded ads have also been linked with better non-advertising monetization behaviors. A 2017 report from Tapjoy, as reported by VentureBeat, concluded that app users who engaged with rewarded ads were 4.5x more likely to complete in-app purchases9. The assumption being that, if properly integrated, rewarded ads can afford players a taste of what’s possible with premium in-game currency. The premise is similar to how cost-per-engagement (CPE) ads are intended to expose players to more game mechanics, thereby increasing the likelihood that players will find value in the title and be well-retained. Rewarded ad placements, in addition to generating incremental revenue for publishers, direct players towards features and mechanics that foster greater long-term LTV.
From a technical perspective, rewarded video ads are slightly more sophisticated than interstitial placements. Unlike non-rewarded ads which typically just require setup, integration, and an update, rewarded ads can give publishers the option of conditional fulfillment. Confirming that users have completed the impression and received the reward can be handled by server-to-server callbacks.
Specifics vary between platforms, but for publishers implementing a new rewarded video placement in a mobile game or app, the steps involved typically include:
Whether you’re an app publisher or advertiser, getting the most out of rewarded advertising comes down to delivering a positive user experience.
Placing and configuring rewarded video ads requires an interdisciplinary understanding of mobile app design, behavioral economics, monetization, and more. Mobile game publishers were among the first to embrace rewarded ad placements and many of the best practices they’ve developed are equally applicable to non-gaming apps, including:
Game and app marketers allocating budget to rewarded ad networks can maximize their campaign results with their own set of best practices. Like publishers, advertisers need to ensure user experience is at the forefront of their decision making process.
As the user acquisition landscape gets more challenging, it’s increasingly critical that mobile marketers prioritize loyalty above all else. The Mistplay loyalty platform expands the best parts of rewarded video ads to deliver a loyalty-centric experience that benefits players, publishers, and marketers alike. To learn more about how Mistplay can help you cultivate a more loyal and profitable user base, visit our advertising page and get in touch.