August 16, 2023

What are rewarded video ads and how do they work?

Blog banner with an illustration of a hand holding a phone and a giant cursive Z swirling around the composition.
Jump to a section...

What are rewarded video ads?

The benefits of rewarded video ads

How do rewarded video ads work?

Rewarded video ad best practices

        Publisher best practices

        Advertiser best practices

Lorem ipsum dolor sit amet

  • Lorem ipsum
  • Lorem ipsum
  • Lorem ipsum
Get a monthly loot box of insights straight to your email!
Subscribe

Digital media has a complicated relationship with advertising.

On the one hand, ad revenue sustains the world’s most beloved properties and platforms. Insider Intelligence reports that digital ad spending will reach nearly $700 billion by 2024, representing an 11% year-over-year increase1.

On the other hand, people don’t like ads. Research from HubSpot found that “91% of respondents agree ads are more intrusive today compared to two to three years ago, and 87% agree there are more ads in general.”2

For the last decade or so, rewarded video ads have been a popular compromise. Users are given greater autonomy over their advertising experience and the chance to benefit from their participation. It’s an approach that, while perhaps overdue for an evolution, has afforded developers a sustainable living while keeping users happy.

Whether you’re a publisher, advertiser, or a curious app user, getting the most out of this well-balanced format starts with a fundamental understanding of its mechanics.

What are rewarded video ads?

A stylized graphic shows graphics representing web video playing in a window, which leads to rewards and gifts.

The term “rewarded video ads” refers to a subset of rewarded advertisement types characterized by their opt-in premise and compensatory nature. Unlike interstitial and/or display ads, which appear unsolicited by the end user, rewarded video ad impressions are only delivered on request by the user. This is typically preceded by a contextual offer, made clear either via the app’s UI or an integrated offerwall. 

Using text, images, and/or iconography, the host app communicates the fact that users have the option to view an ad and what they will receive in return for doing so. Users are then free to opt-in to view the ad and receive their reward, or decline and continue engaging with the app. 

For example, a user might see a “play button” icon in an idle-clicker style game’s main menu screen. Tapping the icon could produce a modal window offering the user 5 units of premium in-game currency in exchange for watching the ad. If the user accepts, the ad plays and, if viewed to completion, the user receives the currency which can then be spent on gameplay upgrades, timer accelerations, or cosmetic items. 

The Interactive Advertising Bureau (IAB) has aptly used the term “opt-in value exchange advertising” to describe rewarded ads in the past, especially in the context of non-gaming apps. In a 2018 blog article titled “Everything You Need to Know About the Attention-Grabbing Ad Format That’s Winning Consumers Over (even on OTT)”, the IAB’s Head of Social and Content Marketing Solutions, Susan Borst describes them as “premium ads that offer consumers something of value in exchange for their time and attention that consumers actually prefer… the value exchange for the consumer is directly related to accessing the media experience that the user intended to access at the destination, e.g., engage with a brand message on a music app and immediately get xx hours of ad-free listening on that music app.”3

The benefits of rewarded video ads

Rewarded video ads evolved out of interstitial ad placements, which were never known for their benefits to user experience. A 2021 survey conducted by CivicScience found that roughly 30% of mobile smartphone users use some form of ad blocker4. Rewarded video ads set out to improve on the interruptive nature of interstitial ads and provide a better overall experience. When it comes to players, there’s mounting evidence to suggest they’ve succeeded. A 2019 survey by IAB found that “Nearly 80% of digital video viewers accept free content as a value exchange for watching advertising.”5

1. Receptive audience: Without the frustration of an interruptive ad experience, users are more likely to take action. Mobile advertising platform Aarki confirmed this to be the case in a recent comparative study, which found that “After analyzing the two ad formats, we discovered that the click-through rate (CTR) of the rewarded video was 45% better than the non-rewarded video, and the conversion rate (CR) was 33% greater. The install rate (IR) was greater by 93% with the rewarded video ad format which explains the cost per install (CPI) value, which was lower by 26%.”6

2. Better user acquisition: There’s also a growing body of evidence to suggest that rewarded ads can bring in new audiences, with tangible rewards being particularly powerful tools that marketers can leverage. In the 2023 Mobile Gaming Loyalty Report, we found that an overwhelming majority (84%) of players will engage with games that offer tangible rewards, and that 1 in 4 players would go so far as to stop playing their current favorite game in order to focus on the new game7. Ads, both rewarded and not, also remain the top method of discovery for new players, with nearly half of users surveyed in the report saying they rely on advertisements as a primary method for learning about new games8.

Of course, it’s not enough to simply bring a new user into a game. Mobile measurement partners like Tenjin are reporting a consistent rise in CPIs among some of the most popular mobile game genres9, meaning that more than ever, mobile marketers need to make the most of every install. That means prioritizing growth strategies anchored around loyalty and long-term profitability.

The 2023 Mobile Gaming Loyalty Report offers an extensive and in-depth look at the relationship between acquisition, engagement, and monetization – setting marketers up for long-term success. Download your copy.

3. Improved monetization: Rewarded ads have also been linked with better non-advertising monetization behaviors. A 2017 report from Tapjoy, as reported by VentureBeat, concluded that app users who engaged with rewarded ads were 4.5x more likely to complete in-app purchases9. The assumption being that, if properly integrated, rewarded ads can afford players a taste of what’s possible with premium in-game currency. The premise is similar to how cost-per-engagement (CPE) ads are intended to expose players to more game mechanics, thereby increasing the likelihood that players will find value in the title and be well-retained. Rewarded ad placements, in addition to generating incremental revenue for publishers, direct players towards features and mechanics that foster greater long-term LTV. 

How do rewarded video ads work?

A stylized graphic shows a play button surrounded by code and gears.

From a technical perspective, rewarded video ads are slightly more sophisticated than interstitial placements. Unlike non-rewarded ads which typically just require setup, integration, and an update, rewarded ads can give publishers the option of conditional fulfillment. Confirming that users have completed the impression and received the reward can be handled by server-to-server callbacks. 

Specifics vary between platforms, but for publishers implementing a new rewarded video placement in a mobile game or app, the steps involved typically include:

  • Create a new ad unit: Publishers will need to first create a new rewarded video ad placement on the web dashboard of their preferred platform. Creating the placement typically populates a series of unique values and identifiers for engagement tracking.
  • Configure callbacks: While often optional, configuring callbacks affords visibility into engagement levels with rewarded video ad placements. Developers will need to create an endpoint on their own server to receive the information, but once configured, functionality can typically be tested on the platform provider’s web portal.
  • Ad rewarded placement code: With the new ad placement set up, developers will need to add the code necessary to load and eventually call the rewarded ad itself. Leading platforms will have designated guides for how to integrate the necessary SDK and call the relevant methods for all major development environments including iOS, Android, Adobe Air, Unity, and more.
  • Push update live: Finally, developers will need to push live the code base update that includes the newly integrated ad placement before they can start serving impressions. From there, placement performance and resulting revenue can typically be tracked via your rewarded video ad platforms web portal.

For a comprehensive list of the best rewarded advertising platforms available for mobile game and app developers, be sure to check out our article on The 5 best rewarded Ad networks for acquiring loyal mobile users.

Rewarded video ad best practices

Whether you’re an app publisher or advertiser, getting the most out of rewarded advertising comes down to delivering a positive user experience. 

Publisher best practices

Placing and configuring rewarded video ads requires an interdisciplinary understanding of mobile app design, behavioral economics, monetization, and more. Mobile game publishers were among the first to embrace rewarded ad placements and many of the best practices they’ve developed are equally applicable to non-gaming apps, including:

  • Prioritize user experience: Rewarded ad views should never come at the cost of a user’s enjoyment. Avoid placements that interrupt engagement loops or distract from the game or app’s core functionality. Placement should only ever enhance or augment the experience.
  • Test for engagement: Actively test which rewarded ad placements are the most likely to drive engagement within your game or app. In its 2023 Mobile Growth and Monetization Report, game development platform Unity found that mobile game players are “most likely to engage with rewarded ad placements that are found between game levels, followed by in the IAP store and in the lobby/pre-level.”11
  • Scale reward values: By scaling the rewards earned from watching rewarded videos, publishers can provide one more reason for their users to stay loyal. Ideally users should be able to affect some level of achievement as a result of viewing a single ad. This could be something as simple as accelerating a timer by a few minutes. 

Advertiser best practices

Game and app marketers allocating budget to rewarded ad networks can maximize their campaign results with their own set of best practices. Like publishers, advertisers need to ensure user experience is at the forefront of their decision making process.

  • Align creative with post-install experience: Ensure your ad creative accurately depicts what users can expect after install. Misleading or incomplete creative might help boost click through rates, but down-funnel performance will suffer.
  • Work with reputable networks: Limit your campaigns to rewarded ad networks that prioritize transparency and have a good track record of success with other apps in your category. Again, marketers can check out The 5 Best Rewarded Ad Networks for Building Loyal Mobile Audiences for suggestions on where to start.
  • Optimize for loyalty: Wherever possible, work with your rewarded advertising partners to leverage targeting options most likely to produce users that will stick around. From a contextual perspective, this typically means running ads in games and apps that offer similar experiences to yours.

As the user acquisition landscape gets more challenging, it’s increasingly critical that mobile marketers prioritize loyalty above all else. The Mistplay loyalty platform expands the best parts of rewarded video ads to deliver a loyalty-centric experience that benefits players, publishers, and marketers alike. To learn more about how Mistplay can help you cultivate a more loyal and profitable user base, visit our advertising page and get in touch.

Sources:

  1.  InsiderIntelligence.com, Worldwide digital ad spend will top $600 billion this year, Sara Lebow, 2023
  2.  HubSpot.com, Why People Block Ads (And What It Means for Marketers and Advertisers), Mimi An, Updated 2020
  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.  Statista.com, Smartphone ad block usage rate in the United States from 2017 to 2021, 2021
  5.  IAB.com,IAB Identifies Audience Motivations and Mindsets as Signals Required to Better Inform Targeting Strategies for Digital Video, 2019
  6.  Aarki.com, Rewarded vs. Non-Rewarded Video Ads: Which Will Come Out On Top? 
  7. The 2023 Mobile Gaming Loyalty Report, Mistplay, October 2023
  8. The 2023 Mobile Gaming Loyalty Report, Mistplay, October 2023
  9.  PocketGamer.biz, Cost Per Install for hypercasual games hit an all-time high, Lewis Rees, 2023
  10. VentureBeat.com, Tapjoy: App users who engage with rewarded ads are 4.5X more likely to spend, 2017
  11.  Unity, The 2023 Mobile Growth and Monetization Report is here, Alex DiRenzo, 2023

WritTEN BY

No items found.

Share this article

You may also like

Spiele und verdiene mit Mistplay

Google Apple Store icon

Steiger deine mobile Kundengewinnung

Werde ein Partner
Terms of UseDatenschutzrichtliniePrivacy Center