August 22, 2023

Understanding incentivized traffic: Benefits and drawbacks for mobile marketers

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What is incentivized traffic?

How does incentivized traffic work on mobile?

The evolution of mobile incentivized traffic

The benefits and drawbacks of incentivized traffic

        Rewarding engagement

        Incentivizing retention

        Necessary transparency

The Mistplay solution: incentivized traffic from owned inventory

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Marketers have always known the power of a good offer. 

Whether it’s a free sample, complimentary consultation, or a first round on the house, offers let marketers flip the script to get a prospect in the door. Nowhere is this more valuable than the modern world of mobile app marketing. According to Business of Apps1, the average app sees 77% of its users churn just 3 days after install

At rates like that, marketers can’t afford to overspend on channels that don’t give them a fighting chance at winning a user’s loyalty. That’s where incentivized traffic comes in. By effectively rewarding users for resisting the temptation to churn too quickly, it gives mobile games and apps a chance to make an impression and, hopefully, earn the user’s long-term trust. 

Read on to learn what makes incentivized traffic unique and how you can put it to good use in your mobile marketing campaigns.  

What is incentivized traffic?

The term “incentivized traffic” refers to the engagement earned through advertisements that promise users a reward. The actions necessary to earn the reward are set by the marketer running the campaign. In the example of a cost-per-engagement (CPE) campaign promoting a mobile Match 3 game, the ad could require that players download the game and reach level 6. Doing so could then reward the player with virtual currency for the game in which the ad initially appeared.

They can also include things like downloading a mobile app, signing up for a newsletter, or submitting contact information via a form. The advertising mechanics and formats that produce incentivized traffic are often referred to as “opt-in value exchange advertising” by professional bodies like the IAB, or simply “rewarded ads” by mobile marketing practitioners. Incentivized traffic is often used as part of a comprehensive mobile user acquisition strategy, which typically includes other inorganic efforts like paid social advertising, as well as organic efforts like app store optimization and community engagement.

How does incentivized traffic work on mobile?

Unlike traditional paid advertising, which appears unsolicited by the end user, incentivized traffic comes from rewarded advertisements that are delivered on an “opt-in” basis and offer a better overall user experience. A 2019 study by the Interactive Advertising Bureau (IAB)2, found that over 80% of users prefer rewarded ads to the alternative of interruptive interstitials. As Susan Borst, Head of Social and Content Marketing Solutions at IAB explains3, “Opt-in Value Exchange ads are premium ads that offer consumers something of value in exchange for their time and attention that consumers actually prefer.” 

It then becomes the responsibility of the marketer to design and deliver rewarded advertising offers that deliver the incentivized traffic results they’re after. This unlocks a world of intersectional design decisions for marketers with a deep understanding of their target audience. It becomes beneficial, for example, for marketers to understand how users view progression in their game. In Mistplay’s 2023 Mobile Gaming Loyalty Report, more than 55% of mobile game players said their primary motivation for continued play was to progress and reach new milestones4.

Similarly, more than 60% said the reason they would spend money in a game would be to make progress5. Access to this kind of data can help marketers make better-informed rewarded ad budgeting and forecasting decisions. Download your copy of the 2023 Mobile Gaming Loyalty Report to get access to even more helpful insights:

Mobile marketers operating in programmatic real-time bidding environments are able to target and transact specifically on rewarded traffic using the “rwdd” attribute of the “imp” (impression) object. As explained in the Open Real-Time Bidding (ORTB) standard, the attribute defaults to a value of 0, but switching that to a 1 lets auction participants know that users are being given some type of reward in exchange for the ad view. While this style of bidding doesn’t afford marketers the level of control that’s possible by working directly with rewarded ad networks or incentivized traffic providers, it is an option for those looking to experiment with budget optimizations in the larger programmatic environment.

The evolution of mobile incentivized traffic

Rewarded advertising practices and incentivized traffic at large have undergone substantial evolution, ultimately landing in a place that most users enjoy and are grateful for. That said, incentivized traffic has had a colorful history, especially in the mobile/social gaming world, with a few high-profile incidents serving to (arguably undeservedly) tarnish its reputation. 

In a 2009 article titled Scamville: The Social Gaming Ecosystem Of Hell, TechCrunch Founder and Editor Michael Arrington said of then-contemporary rewarded advertising practices in games that “Users are tricked into these lead gen scams. The games get paid, and they plow that money back into Facebook and MySpace in advertising, getting more users. Who are then monetized via lead gen scams. That money is then plowed back into Facebook and MySpace in advertising to get more users…”4

In a subsequent interview with VentureBeat, Anu Shukla, then-CEO of Offerpal Media (a rewarded advertising provider named in the article) refuted the claim, stating that “I don’t see a sustainable economy unless a free business model produces something for the publishers who are creating these games. As you know, virtual worlds and social networks are free … I have less than 1 percent of the people complaining about offers.”5 As VentureBeat reports6, Offerpal later rebranded as Tapjoy following the acquisition of the mobile monetization platform of the same name.

In 2019, Apple started cracking down on developers and ad networks that were delivering rewarded ads operating on a cost-per-engagement (CPE) basis. Games and apps that included offerwall ad placements from traditional rewarded networks like Tapjoy, ironSource, and Fyber started receiving rejection notices from the Apple editorial board upon submission. For some developers, this represented a substantial hit to revenue, with PocketGamer.biz reporting7 that “One industry source claimed … that some developers make six-figure sums daily through offerwalls and could reasonably expect a revenue drop of 50 to 70 percent on iOS, making a “material” impact.”

Advertisers have since adapted. Between incentivized traffic restrictions and growing privacy limitations, many marketers are reallocating material percentages of their UA budgets to Android. Data from Appsflyer8 found that “A quarter of total budgets shifted from iOS to Android as a result of Apple's app tracking transparency.”  Today, the most effective rewarded advertising solutions prioritize user experience and long-term value for advertisers. It’s arguably the only option as challenges continue to mount for mobile marketers. Between rising CPIs and increasing privacy restrictions, loyalty has become the key to profitable mobile growth for a new age of mobile rewarded advertising solutions. 

The benefits and drawbacks of incentivized traffic

Any conversation about the merits and/or flaws of incentivized traffic should start by acknowledging that it’s a term covering the full spectrum of quality. The best incentivized traffic providers are those that prioritize long-term user loyalty. They identify and capitalize on organic interest, employing intelligent targeting and fostering continuous reward cycles that keep users engaged. 

These are the pillars on which we built Mistplay, our mobile game loyalty app. After users download the app, we gather demographic information and use artificial intelligence to recommend games they’re most likely to enjoy. Installing and playing the recommended games earns players real-world rewards like Amazon gift cards on an ongoing basis. The result is a well-retained, highly profitable user base that delivers where other incentivized traffic providers fall short. It’s a win for publishers, advertisers, and users who are all able to benefit from the best aspects of incentivized traffic campaigns, such as the following:

Rewarding engagement

Incentivized traffic allows marketers to mitigate the “window shopper” dynamic inherent in the modern world of freemium app experiences. By rewarding users for progressing to specific milestones set by the marketer, they can expose users to more of the app, giving them more chances to discover something they value. This is especially important considering that with no upfront investment to foster a feeling of sunk cost, there’s little tying modern freemium mobile users to the apps they download. Nowhere is this more true than the arguably commoditized world of mobile games, with Udonis reporting no less than a combined 700k available titles across Google Play and the App Store9 for users to choose from. 

Incentivizing retention

Thanks to its ability to produce more engaged users early in their lifecycle, incentivized traffic can also produce better-retained users, which are only getting more valuable. The rate at which mobile game and app users are churning is accelerating, and there’s little sign of things slowing down. Daily retention rate data from Appsflyer’s latest app retention benchmark report10 shows a steady year-over-year decline. Average day 1 retention has fallen from 24.8% in 2020 to 22.6% in 2022. The report notes similar drops across all major retention milestones, and explains that “There is little doubt that the Android app landscape is more competitive than ever, leaving users more distracted and less loyal to one particular app.” Incentivized traffic combats that directly by exposing more users to deeper-funnel features that they’re more likely to value.

Necessary transparency

The perceived ills of incentivized traffic you’re most likely to hear about are almost always in reference to individual short-sighted media sources that use some form of arbitrage to meet their obligations. These networks sell performance-based ad buys and then shop fulfillment out to third-parties that, while technically meeting their goals, do so by offering outsized rewards to poorly-matched audiences who are unlikely ever to convert. 

It’s important to note that this isn’t a categorical issue. It’s a vendor-specific one, and there are market forces at work counteracting it. The growing insistence from publishers that advertisers prioritize transparency is helping to make “black box” solutions a thing of the past. As LifeStreet product manager Lily Stoelting explains in an article with PocketGamer.biz, “Advertisers can drive better performance when they have a transparent understanding of their bidding strategies. This degree of understanding fosters greater dialogue and feedback between DSPs and advertisers. Together, they can implement new ideas to remain effective, efficient and competitive in an ever-changing market.”11

The Mistplay solution: incentivized traffic from owned inventory

Having been around for the entire evolution of mobile incentivized traffic, we know how challenging it can be to find trustworthy media sources. We’re app marketers ourselves, and one thing we’ve learned is that the inherent challenges of opaque advertising practices disappear when dealing with a rewarded advertising solution that leverages its own inventory, which is just one benefit of the Mistplay loyalty program. Advertisers know with absolute confidence where their users are coming from and, in our case, what their interests are. Visit our advertiser page to learn more, or submit the form below to sign up for more helpful mobile marketing insights.

Sources:

  1.  Business of Apps, Mobile App Retention, Nayden Tafradzhiyski, 2023
  2. Marketing Dive, Study: Video ads see 7.5X higher CTR than display, Robert Williams, 2019
  3.  IAB.com, Everything You Need to Know About the Attention-Grabbing Ad Format That’s Winning Consumers Over (even on OTT), Susan Borst, 2018
  4. The 2023 Mobile Gaming Loyalty Report, Mistplay, October 2023
  5. The 2023 Mobile Gaming Loyalty Report, Mistplay, October 2023
  6. Scamville: The Social Gaming Ecosystem Of Hell, Michael Arrington, TechCrunch, 2009
  7.  Interview with Offerpal Media CEO Anu Shukla on the offer “scandal”, Dean Takahashi, VentureBeat, 2009
  8. Following scandal, Offerpal changes name to Tapjoy, Dean Takahashi, VentureBeat, 2010
  9.  PocketGamer.biz, Devs lose out on thousands of dollars as Apple cracks down on offerwall ads, Craig Chapple, 2019
  10. Marketing-Interactive.com, Why ad spend is drastically shifting from iOS to Android, Janice Tan, 2022
  11.  Business of Apps, App Store Data (2023), Updated 2023
  12.  Appsflyer.com, Attention Retention! 2022 app retention benchmarks report, 2022
  13.  PocketGamer.biz, What transparency means in today’s mobile marketplace, Lily Stoelting, 2023

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