Understanding rewarded video ads: Everything you need to know

Rewarded video ads effectively increase user engagement and retention while providing a positive user experience. Monetization platform Unity Ads found that 62% of mobile gamers regularly view rewarded video ads in exchange for a quality gaming experience and 71% find this advertising preferable to other methods. Moreover, rewarded video ads can be two times more effective than interstitial videos. This guide covers everything you need to know about rewarded video ads and shares best practices to integrate this advertising format effectively.

What are rewarded video ads?

Rewarded video advertising is a format that gives users a reward in exchange for time spent viewing a full-screen ad. For example, if you have a mobile game with in-app coin currency, you can reward users with more coins by watching a full-screen ad for 30 seconds. Rewarded videos are typically between 15-30 seconds in length and cannot be skipped, but users typically have the option to opt in or out of this type of advertising. Mobile games can offer any in-game reward that can provide a superior gaming experience, such as extra lives, more time to complete a level and special items.

This advertising format creates a positive outcome for publishers, advertisers and users. Rewarded video ads enable publishers to generate revenue while advertisers gain significant exposure to their target audience. The user ends up with a superior gaming experience and an increased chance of progressing through your mobile game.

Rewarded video ads have taken the industry by storm with a reputation for increasing user engagement and boosting retention rates. 90% of gaming apps support rewarded video ad formatting and video ad network Unity Ads described the format as the “hottest revenue generator” on the market. OpenX also found 77% of users are willing to view a 30-second ad in exchange for a discount from a retailer. Due to the high engagement rates that can be achieved with rewarded video ads, this advertising format has a high cost-per-thousand-impressions (CPM).

Are rewarded video ads exclusive to mobile gaming?

Although this advertising format is commonly associated with mobile games, any kind of app can implement rewarded video ads as long as there is a way to reward users. For example, music streaming app Spotify uses rewarded ads as part of the company’s monetization model. Users can download and stream music on Spotify for free with ads. After free and unlimited access to this service, users can decide whether they prefer to be exposed to ads intermittently throughout their sessions or upgrade to Spotify Premium.

Mobile apps that have incorporated gamification, such as language education app Duolingo, have also included rewarded video ads. Users can gain additional “hearts” by watching an ad. Hearts are used in Duolingo “as a way of pacing Duolingo lessons to balance practice and new material.” These in-app items can be lost as a result of answering questions incorrectly. Therefore users can use rewarded video ads to progress through the app’s courses more quickly.

Rewarded video ads: Case studies

PickCrafter increased revenue by 165%

PickCrafter is a mobile game by indie developer Fiveamp. The game used rewarded video ads to create more in-app monetization opportunities, optimize engagement and significantly increase ad revenue. According to the game’s Ironsource case study, Fiveamp implemented rewarded video ads with seasonal creatives just before the Easter holidays. Players were offered a choice between a single reward for free or three rewards in exchange for watching an ad. As a result, Fiveamp increased revenue by 165% and user engagement by 94%.

Farm Away! achieves an 80% daily ad conversion rate

Futureplay’s Farm Away! used rewarded video ads to significantly increase player engagement and extend lifetime value (LTV). A Unity Ads case study shows how Futureplay used the ad format to achieve an 80% daily ad conversion and an average of 22 ads viewed per install. The study suggests Farm Away! achieved these results due to the effective integration of rewarded video ads into gameplay. Mika Rahko, Co-Founder and Head of Development at Futureplay states that the engagement is “sending revenue through the roof, driving $0.15 average revenue per player per day in the U.S. market.”

Earn To Die 2 increases engagement by more than 25%

Earn to Die 2 is a casual game by Sydney-based developer Not Doppler, who wanted to integrate rewarded video in a way that compliments the game’s unique in-app economy. Not Doppler partnered with IronSource, using their ad mediation platform to maximize revenue and eCPM. The implemented rewarded video system adapts to the player’s progress throughout the game, exposing the user to intermittent “double rewards”. As a result, Earn to Die 2’s engagement rate increased by as much as 38%.

10 best practices for rewarded video ads

1. Ad placement is critical to success

How you choose to implement rewarded video ads in-game will determine whether they positively or negatively impact the user experience. To define your ads’ best placement, consider what is most important to your users while using your mobile app. For example, it may ruin the user experience to include rewarded video ads just before a pivotal moment in your mobile game. Placing videos in between levels can give the user an opportunity to leverage your ads to progress further in your game. If a user has run out of lives or in-game currency and is unable to progress, a user may find rewarded ads particularly useful at this moment.

Developers can also place rewarded video ads in an app’s in-game store and on the home screen to maximize visibility. In addition to these options, you can prompt users any time a user has acquired in-game items and offer a boost. For example, if a user unlocks 50 coins during gameplay, you can allow them to double their money by watching a rewarded video ad.

2. Give priority to the user experience

Rewarded video ads offer an opportunity to satisfy advertisers and users simultaneously. There is no need for this advertising format to sacrifice the quality of your user experience. Instead, your user experience should take top priority and rewarded video ads should contribute to your users’ enjoyment of your app. The success of rewarded video ads relies on daily active users (DAU), retention and user engagement. With this in mind, implementing ads that contribute positively to the user experience will produce the desired results from rewarded video ads further down the line.

3. Let users opt-in for rewarded video ads

Users with no interest in exchanging their time for in-game rewards should still be able to enjoy your game. It is smart to make rewarded video ads opt-in, allowing users to use your app according to their preferences. Allowing users to opt in is also positive for advertisers as it increases the quality of ad impressions and conversion rates.

4. Test incentives for optimal results

Another critical factor that will impact the success of your rewarded video ads is the reward on offer. It is crucial to test different incentives and learn the optimal offering that will produce results and monetize your app. This testing should include the type of reward and quantity per ad. You should also consider which reward matches the ad placement: if a user is out of lives, they are more likely to want an extra life than power-ups or coins.

5. Boost in-app purchases with rewarded video ads

Marketers can use rewarded video ads to promote in-app purchases. This ad format gives many users who would not have made an in-app purchase access to a superior experience, encouraging them to make future purchases. According to IronSource, users who have received a reward for watching a video ad are six times more likely to make in-app purchases. Marketing Dive found that users spend more than four times as much on in-app purchases after watching a rewarded ad. For this reason, you should use rewarded video ads as an opportunity to give users a taste of your most effective in-app purchases.

6. Give unexpected rewards to users

Marketers should also consider offering mystery rewards for watching rewarded video ads. For example, once a user has watched a video you can display multiple treasure chests and prompt them to select which one to unlock. This can offer a more satisfying user experience by building suspense and increasing satisfaction when a high-value reward is unlocked. If a user wants a specific prize, they might be willing to watch several ads to achieve their aim.

7. Segment users

It is essential to segment users into different audience groups depending on user behavior. For rewarded video ads, this includes segmenting users based on how often they are using your app. You can offer users that are frequently using your app less valuable rewards because they are more likely to remain engaged. Boosts to enhance what they have already purchased may be an effective way to encourage more in-app purchases. For users who infrequently use your app, a high-value reward may encourage them to play more often and start making in-app purchases.

8. Use advertising filters

Improve the user experience by only showing ads based on your users’ interests. For example, suppose you have a language learning app. In that case, travel and tourism ads may be particularly well-suited for your audience. Filtering the types of ads you want to show users is also a great way to ensure their time is respected.

9. Mediate ads from third-party ad networks

Marketers can maximize revenue by mediating third-party ad networks with tools such as AdMob Mediate. This feature also has Ad Network Optimization which automatically mediates according to the most recent eCPM. This means the ad with the highest bid will be served first, whether it is part of the AdMob network or a third party.

10. Offer in-game hints

If you have a mobile game, another reward that may be useful to your users is in-game assistance. For example, if your user has spent a certain amount of time on a level without progressing, you may want to trigger a prompt that offers a tip or clue as a reward. Depending on the nature of your app, you can also include this as a permanent option throughout the user experience.

If you found this guide useful, you may also be interested in learning more about different ad formats and best practices for a mixed monetization strategy. We also have a resource for mobile game marketing key insights and best practices.