5 reasons to use rewarded video ads in user acquisition

Written by Raquel Ríos Dafonte - Marketing Specialist at Techsoulogy

Created Aug 25, 2023 | 4 min read

What are rewarded video ads?

Rewarded ads are an advertising format that allows users to view a video or interact with a playable ad in exchange for a reward to use within the app. This is a kind of transaction in which users, instead of paying money to enjoy the app’s premium functions, pay with their time. In other words, the rewarded video ad is a kind of value exchange: viewing the entire ad as a requirement to receive a reward.

Rewards that also arrive at highly opportune times within the game or app dynamics in the form of in-app currency, content or premium features. For example, within a gaming app, it is common to use them when the user has not managed to move on to the next level. At that time, they are offered the possibility to continue playing in exchange for viewing ads and, as a reward, will receive an additional lifeline or similar to stay in the game.

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How does the rewarded videos dynamic work?

It’s simple:

Step 1: At a key moment in the content, without interrupting the user experience, an ad appears that offers the user a reward (an additional lifeline, virtual money, premium content, etc.) in exchange for viewing the entire ad.
Step 2: The user is in control of whether they agree to view the ad. If they do, by completing a 15-20 second viewing of an advert, they receive a reward.
Step 3: The user returns to the game or app with their reward and continues to play and invest their time in the app, increasing the chances of continuous impact.

Now that we know what rewarded videos are, let’s see why you should use them to attract and retain users in your app.

5 Benefits of Rewarded Ads in User Engagement

Given the high competition in the gaming sector, application developers should not only focus on creating the best possible game but also look for ways to encourage user participation and retention within them. One of those avenues that not only works is monetization, but it also improves the user experience, and rewarded videos are fundamental to the game’s success.

The main reasons why you should use rewarded video ads in user acquisition are:

Increase user engagement and retention by offering incentives to view ads. As the user decides whether they want to see the ad, they are more engaged with the content of that ad and more motivated to keep playing and spending more time using the app.
They improve the user experience and audience satisfaction by being less intrusive, ads that do not interrupt the consumer experience create a positive experience. They also greatly encourage interaction and add value to the user.
They drive conversions and eCPMs by generating high video play completion rates and positive feedback. In addition, they offer the possibility to combine with monetization models through, for example, in-app purchases so that the user, in addition to time, invests money in the app. As players invest more time and energy into your game, their levels of excitement increase and, consequently, the odds that they will be willing to make in-game purchases to enhance their experience.
They promote brand recognition and recall by creating immersive and interactive experiences with advertising. They are not banners that go unnoticed, but videos that capture the user’s attention and require their active participation to be played. In addition, when shown during key moments where the user is more predisposed to view them, they are a way to obtain rewards in which they are interested.
They attract highly skilled users who are more willing to invest money or time in the app or game. A user who actively participates in playing an advertisement and waits until the end to receive their reward implies a much greater level of involvement.

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Bonus track of reasons to use rewarded video according to Tappx data

As if these aren’t enough reasons, we would like to remind you of the extent to which rewarded videos can improve conversion rates and return on advertising investment (ROAS), which we already discussed in this other article on user acquisition in igaming apps:

Advertisers who used rewarded video ads with Tappx saw a 15% increase in average revenue per daily active user (ARPDAU) and a 40% increase in retention compared to those who did not use rewarded video ads.
Rewarded video ads had an average conversion rate of 8%, compared to an average of 0.98% for all other types of mobile video ads.
Rewarded video ads had a 38% lower cost per install (CPI) than other types of mobile video ads, indicating that they can provide a higher return on ad spend.

Takeaways

The great thing about rewarded ads is that this format offers benefits for every part of the app ecosystem:

The developer enhances user participation, retention and, consequently, income by enabling the user to progress faster through the levels of the game or enjoy the app’s premium content for free. This increases the retention rate, engagement and LTV, enhancing revenue through in-app purchases and other monetization models.
The advertiser generates greater brand visibility, better CTRs, high brand recognition and recall, highly valuable impressions and, consequently, an overall improvement in ROAS. In fact, the advertiser only pays for the ads that the user views in their entirety.
The end user receives highly valuable rewards for their consumer experience just by viewing the advertising, without having to invest money or suffer constant interruptions beyond their control.

In short, rewarded video ads can end the eternal war between publishers and advertisers over providing a respectful user experience without losing exposure or advertising impact while offering excellent receptivity on the part of the audience.

If it’s time to start practicing, at Tappx, we can help you implement a rewarded video strategy tailored to your needs to acquire new users.