There’s a great misconception that app developers and app advertisers can’t both get their way — publishers are worried ad campaigns will damage user experience and advertisers are looking for maximum exposure and impact. But app advertising doesn’t have to be a zero sum game. It’s why more and more app developers are turning to rewarded video ads. Let’s learn why.

What are rewarded video ads?

Rewarded video ads offer users a clear value exchange — users watch a video ad and get in-app rewards (like in-app currency, premium content, etc) in return. 

RV is quickly becoming one of the fastest growing ad units, and for good reason. They’re completely opt-in so they don’t damage user experience; they increase user engagement (no addicted gamer will turn down free coins, I know first hand); they bring app developers more revenue; and give advertisers higher viewability rates and engaging, enjoyable ad campaigns. They’re a win-win-win.

For app developers: increased revenue and customer lifetime value

App developers care about two main things: successful app monetization and great user experience. But the balance is difficult to achieve, as app monetization methods have the potential to undermine UX. Banner ads, for example, are often accompanied by lower eCPM and lower engagement – but most damaging of all – they irritate users.

Rewarded video ads, on the other hand, are a great answer for app developers looking to get the best of both worlds.

How do rewarded video ads increase revenue for app developers?

Soomla reports that rewarded video ads can increase app revenue by 20% to 40%. And a study on the gaming developer Dirtybit claims that rewarded videos helped increase their revenue by 70%.

How can that be? It all goes back to user engagement. Our data shows that click-through rates for rewarded video ads are about 20% to 35% (which is nearly 4 to 5 times higher than typical display ads). The rate is high because users have incentive to engage. Not only is the ad unit more enjoyable to interact with, but users also know they’re about to get something concrete in return. In addition, because once clicked, rewarded video ads are non-skippable, video completion is guaranteed. This means that app developers get paid for every opt-in.

Recommended Reading
What Should App Developers Know About Playable Ads?
Best Practices: Where to Place an Interstitial in Your App
How to Monetize Your Non-Paying Users

In addition, rewarded video ads tend to nudge non-paying users towards in-app purchases by giving them a taste of the premium features they’re missing out on. A study found that users who watch rewarded videos are more likely to make IAPs. Specifically, 4.7% of users who watched an RV made an IAP, which is 6 times more than those who didn’t.

Big Fish Games, for example, saw a double digit increase in gross revenue after using our rewarded video solution, because the rewarded ad unit also drove an increase in users choosing to spend via IAPs.

How do rewarded video ads increase lifetime value?

Users respond extremely well to rewarded video ads. They let users continue engaging with an app even when they don’t have real money to spend. Over time, because RV viewers usually turn into IAP spenders, rewarded videos also create an uptick in gross revenue, as I mentioned earlier, which drives up lifetime value.

In fact, in an interview, the former VP of Marketing and Revenue at Dots told us that when they removed RVs from their app, users actually complained and wrote negative reviews on the Play Store.

By rewarding users with something they value, you’re giving them a great reason to come back for more. This sets the foundation for a loyal user base who will continue interacting with your app.

Clearly, rewarded videos offer great opportunities for app developers. We expect this lucrative ad unit to continue gaining popularity in the coming years. Are you next?

Developers, check out this helpful tutorial on rewarded video integration. Select a platform and get going.

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