Understanding rewarded video ads: Best practices and insights

Marketers fighting for an audience’s attention is nothing new, and with more than 880,000 games available in the App Store and Google Play Store combined, convincing users to part with their hard-earned income can prove difficult.

Thanks to rewarded video ads, mobile gamers have the chance to secure items that would usually require a fee, in exchange for a little bit of their time. These opt-in videos can be twice as effective as interstitials, and are often cited as the least disruptive ad format, with 53% of gamers saying they play for longer because of the rewards.

So, to help you boost retention and revenue, this guide covers everything you need to know about rewarded video ads.

Rewarded video advertising is an ad format that lets viewers access prizes, benefits, and bonuses in exchange for viewing a short advert. For example, if you have a mobile game with in-app coin currency, you can reward users with more coins for watching a full-screen, unskippable ad for 15-30 seconds. App users typically have the choice to opt in or out of these ads, and can decide to close them mid-stream, which will return them to their previous point in the app—though the completion rate for rewarded video ads is 75.8%. The more enticing the reward—and more engaging and relevant the ad—the more likely a gamer is to complete their rewarded video ad viewing.

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.

With a reputation for increasing user engagement and boosting retention rates, rewarded video ads have a high cost-per-thousand-impressions (CPM).

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 Spotify to stream music for free, with ads played between tracks. 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, but users still have the ability to progress through their course by watching rewarded video ads.

Integrating rewarded video ads is an effective way to increase revenue, satisfy gamers, and reduce churn. To help you get a better understanding of the impact this advertising format could have on your app and its users, we’ve sourced the key rewarded video ad stats from the latest case studies and research.

• The average revenue increase from rewarded video ads is 41%
• 50% of gamers would be less satisfied with their app experience if rewarded video ads were removed
• 71% of gamers prefer in-game video ads to making in-app purchases
• Rewarded video ads can be 100% more effective than interstitial ads
• 84% of gamers would adopt a new game advertised to them with tangible rewards
• 53% of gamers play for longer because they get rewards
• Rewarded video ads are seen as less disruptive by 50% of mobile gamers

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 audience 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, they may find a rewarded ad particularly useful.

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 they have 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 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 enjoy your app according to their preferences. Giving users the choice 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 spend money in the future. 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

While the relevancy of the reward on offer is important, 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 engaging 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. This is another element to test and learn from, eventually giving you the data you need to maximize the impact and engagement rates of your rewarded video ads.

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 frequent app users 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, and engagements are of the highest quality

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.

Whether it’s a few quick taps on a hyper casual game, or a slow-burning strategic play, no gamer wants to see the dreaded “Game over” screen. Whatever the genre of your mobile gaming app, there’ll be something you can offer users to encourage their engagement with a rewarded video ad, collect their benefit, and continue gaming.

Here are 15 ideas to get you started:

1. Extra lives or power ups: Grant a small number of extra lives, or a health boost, so gamers can continue playing without having to restart the level.
2. In-game currency: Topping up in-game bank balances gives power back to the user, and can encourage them to make a purchase using their reward—or use it to help them buy something they wouldn’t have spent their own money on.
3. Double ups on next actions: Keep players in your game by giving them the ability to double up on their next action, whether that’s points won, bad guys defeated or coins collected.
4. Resource refills: Gamers can lose interest and motivation if they can see the end is near. Replenishing their ammo, health, or other in-game resources can keep them hooked for longer.
5. Item upgrades: Sometimes the entry-level items just don’t cut it, and gamers who’ve reached a plateau and can’t progress will eventually churn. Give them a hand by upgrading an item in their inventory.
6. Access new levels: Whether a player is stuck or progressing quickly, knowing they’ve unlocked a new or exclusive level can give them the break or challenge they need, retaining their attention rather than letting it go stale.
7. Unlock new characters: Perhaps a particular character is better at a certain level than others, or isn’t selling as well due to its price tag. Consider rewarding gamers with new characters—even for a limited time, like to complete one level.
8. Time jump: Enable players to fast-forward waiting periods, like in construction games or when waiting for resources to regenerate, effectively giving them back the time they spent watching the rewarded video ad.
9. Extra time: Like extra lives, a little extra game time can see a player through to level completion, giving them the satisfaction and positive user experience they should be receiving.
10. Character customization: Personalizing characters gives gamers a sense of ownership and, as this doesn’t provide a tactical advantage, it’s not likely to be something they spend their own money on.
11. Hints and tips: Offering walkthrough–style instructions, hints or clues can tackle the problem of user frustration and reduce attrition. This is a good reward to keep as always accessible in a menu or shortcut, rather than waiting for players to get to a certain checkpoint or stage in a game.
12. X-fold in-app purchases: Like doubling up on next actions, you can also boost a gamers' next purchase up to a certain value, encouraging them to watch the rewarded video ad and then make a qualifying purchase.
13. Ad-free game time: Popular with streaming services, but not uncommon in the mobile gaming world, securing ad-free game time can help satisfy users by removing a popular annoyance—more ads!
14. Discount codes: These can be applied to in-app purchases or used for cross-app/third-party promotions to aid additional spending or boost exposure of other apps.
15. Mystery box: The good old-fashioned element of surprise is a great way to retain engagement and interest. Consider packaging up rewards as common and rare to give users a real sense of success when they see what they’ve unlocked.