What is a rewarded ad? An overview of rewarded video and other formats
Rewarded ads provide an opportunity for users to watch a video or engage with a playable ad in exchange for a reward within the app.
For example, mobile game players will eventually “die” upon reaching a critical point. The users are disappointed they did not complete the level, and wish they could continue playing instead of starting over from the beginning. In each rewarded ad “funnel,” there are four main events that can occur:
Ad prompt, where the user is presented with the option to view an ad in exchange for a reward.
Opt-in, when the user opts-in to watch the ad.
Ad reward, whereby the user completes viewing the ad, and receives a reward such as an extra “life” or power-up.
Item used, once the user consumes the reward and is able to continue playing the game from where he or she left off.
Because users want to keep playing, they’ll often convert throughout the whole funnel.
Why use rewarded video ads?
With increasing competition in the mobile gaming market, developers need to be more focused on engagement and retention. As such, finding the right balance between monetization and user experience is critical to the success of the game. Rewarded ads are becoming one of the most popular ways to achieve that balance: over the last year, the number of apps using AdMob rewarded ads has quadrupled.1
A win for users: rewarded ads upgrade the app experience for free
Users love rewarded ads because instead of paying with money, they can pay with their time to get access to items that help them keep playing, progress faster, or get paid items. Additionally, rewarded ads put users in the driver’s seat of the ad experience by giving them the option to engage with ads. This opt-in structure makes rewarded ads safe to integrate without the risk of disrupting the user experience. In fact, in Google internal studies, 50% of users have reported that they would be less satisfied with their app experience if rewarded ads were removed.2
A win for developers: rewarded ads boost revenue and user engagement
Developers love rewarded ads because they boost revenue and keep users engaged. These formats are designed to effectively monetize non-spending users, while protecting the core app experience. They tend to have a very high cost per thousand impressions (CPM) because of the unprecedented video completion and engagement rates. Additionally, rewarded ads generally increase user retention because users are enticed to spend more time on the app, thanks to the rewards. Finally, rewarded ads provide a great opportunity to implement a hybrid monetization model with in-app purchases (IAP). An increasing number of games that monetize with in-app purchases now implement rewarded ads as a complement to IAP. Rewards can serve as an introduction to premium features, so not only do users play longer, more of them may eventually become spenders.
A win for advertisers: rewarded ads create valuable impressions
Advertisers love rewarded ads because they receive higher user engagement than other ad formats, resulting in a higher return on ad spend (ROAS). The ads are opt-in, and users often watch them until the end because of the rewards. As a result, performance advertisers see higher conversion rates and brand advertisers have increased brand awareness and recall.
How do rewarded ads drive results?
Developers using rewarded ads have seen a positive impact on both revenue and user engagement. Read on to learn how rewarded ads have increased value for developers like you.
Increased advertising revenue
NoSixFive, a gaming company based in Sofia, Bulgaria, built its game Jump Drive around the rewarded ad experience. The company was monetizing its existing apps with banner and interstitial ads, but wanted to try out rewarded ads. NoSixFive had originally chosen to work with AdMob because of the high fill rates and good user experience.
Semi-endless survival game Jump Drive was the perfect opportunity to implement rewarded ads from the ground up. Players collect energy cells, which they get to keep throughout the game. The cells unlock ships and new levels. NoSixFive decided to give players the option to double or triple the amount of cells collected during the run by watching a rewarded ad, granting players the opportunity to achieve even higher results. This implementation of rewarded ads led to high eCPMs, fantastic user engagement, and positive comments in the Google Play and Apple App store.
Higher IAP revenue
Using rewarded ads can be a great way to entice users to make in-app purchases. Chinese developer Avid.ly wanted to unlock another revenue stream to supplement the revenue it received from the typically small percentage of players who were buying digital goods. The developer decided to work with AdMob to try rewarded ads, but was worried about cannibalization of IAP revenue.
After implementing rewarded ads in one of its casual games, Avid.ly saw the exact opposite effect. Users bought in-app items 18% more often and spent 20% more time in the game. This app also saw total revenue grow by 40%. These results prompted Avid.ly to implement rewarded ads in all 50+ of its gaming apps. An increasing number of developers are finding success with this hybrid model of rewarded ads and IAP.
Positive impact to user engagement and retention
Apps using rewarded ads have seen an increase in session length and user retention. CookApps, a global gaming company founded in South Korea had acquired 80 million players in North America and Europe by 2016.
CookApps originally relied on IAP as its main revenue stream, but an increase in user costs combined with less organic traffic from social networks left the company looking to grow revenue. In May 2017, after adding rewarded video ads that enabled users to gain an additional life, CookApps saw a 16% increase in session length in one of its apps. Later that year, the company A/B tested ad placements to boost opt-in rates. The tests revealed it was possible to increase visibility of rewarded ads by placing them as soon as users exhausted their last life. Session length shot up by 211%.
Through optimizing its rewarded analytics funnel, CookApps was able to increase user engagement. The team decided to show rewarded ads to both paying and non-paying users based on the belief that increasing users’ screen time could increase the chance of users making an in-app purchase. When users have engaging and stimulating experiences with rewarded ads, their affinity for the app increases and they return again and again.
Ready to get started with rewarded ads? If your app has more than 100,000 downloads, we can help you with a free consultation. Request a free consultation.