Rewarded ads have become a significant source of revenue for many of the top grossing app developers today. But most developers don’t know that the ads, also known as “value exchange” ads, also help increase their in-app spend, app engagement and user retention metrics as well.
If players can get virtual currency or premium in-app items simply for watching videos or engaging with ads, they are likely to have a better, richer app experience, which leads to more usage. And once they get the taste for an app’s virtual economy, they are likely to want more, which means rewarded ads often serve as gateway to in-app payments.
All of this was quantified in our latest Maximum Impact Report: “Exploring the Effect of Rewarded Ads on User Value.” We wanted to know whether users become more (or less) valuable to app publishers as they complete more ads, and by how much. To find the answers, we looked at millions of users across ten high-volume apps and measured their average performance for in-app spend, user sessions and 30-day retention depending on how many rewarded ads they completed.
We found that the more rewarded ads a user engages in during their first two weeks with an app, the higher their other KPI’s soar. As detailed in parts 1 and 2 of this blog series, users who complete 20 or more rewarded ads demonstrated 89 percent higher engagement and an incredible 705 percent higher in-app spend than users who complete just five or fewer ads.
Now let’s take a look at how rewarded ads impact user retention.
Our data shows that users who watched up to five videos in their first week had a 30-day retention rate of 35%. That’s nearly 3 times better than the industry average of 13%. The average retention rate spikes for users who complete 6–10 rewarded ads during their first two weeks — up to 49%! And it continues to climb even higher with each additional ad a user completes, at a rate of 16% between each new cohort group.
The most voracious consumers of rewarded ads — those who watched 20 or more videos in their first two weeks — wound up with a remarkable 30-day retention rate of 62%, or nearly 5 times higher than industry benchmarks.
Such high correlation is proof that rewarded ads improve the user experience for mobile apps. Players who watch rewarded videos use the virtual currency or premium items that they earn to have a richer, more, well, rewarding time, and as a result they end up using the app for longer periods.
Best practices to maximize ad engagement
The main thing app developers should take from our report is that rewarded ads drive a lot more than just ad-based revenue: they also drive IAP revenue, engagement and retention. It is therefore important to expose users to ads early and often. Our new Maximum Impact Report provides more details on eight suggested best practices to maximize rewarded ad engagement, so be sure download the full report for more!
Part 3 of 3: Rewarded Ads Can Increase User Retention by 76% or More was originally published in Tapjoy on Medium, where people are continuing the conversation by highlighting and responding to this story.