The Impact of Rewarded Ads on App Retention

Increasing app retention is one of the top goals for app developers all across the industry today. This ultra-competitive environment has driven user acquisition costs higher than ever, making it imperative to keep existing users engaged. Today, the challenge is understanding what truly drives retention. An app must deliver value — in the form of exciting gameplay, engaging content, or functional utility — but how else can developers keep their users coming back? Developers must foster continuous engagement, days, weeks or even months after the initial install.

Tapjoy conducted a study to understand the relationship between rewarded advertisements and user retention. Rewarded ads gift app users with virtual currency or premium content in exchange for their engagement and attention. We sampled the behavior of over 500 million app users worldwide across nearly 10,000 apps. We then studied data from the first week post-install and examined how user interactions with rewarded ads affected their 30-day retention rates.

As the research in this report shows, rewarded ads have a profound positive impact on app retention. The findings are presented here to help developers understand how they can leverage rewarded ads to drive retention and maximize user LTV.

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Retention benchmarks

App users are finicky: Two-thirds of players never use an app again after the first day they download it. Retention rates drop to just 22% after one week and less than 13% after one month. Two months after they’ve installed it, just 6% of users will still be using the app. That’s why it’s critical to hook users’ interest right from the start.

With so many apps from which to choose, it appears that most players download an app with the intent to simply “try it out.” If they are not immediately impressed, they have no qualms either uninstalling the app or allowing it to languish on their device. With retention rates so low throughout the mobile industry, how can developers engage players during the critical first few days? This question is the key to increasing both short and long-term engagement.

 

App Retention 1

 

Advertising engagement frequency

Many developers believe that presenting ads too early may scare off new users, and that may be true for traditional, non-rewarded ads. However, our data shows that rewarded ads do just the opposite: They deepen engagement and drive long-term retention. Many players value the option of rewarded ads as an alternative to in-app purchases because they make premium features, content, and power-ups accessible to all.

Users who engage with just one ad in the first week — whether a video ad, playable or offerwall placement — are four times more likely to stick around after 30 days. Players who complete any advertising engagement in the first week have a retention rate of at least 50%, depending on the ad type, compared to the retention benchmark of just 12.72%. The more ads with which they engage in that first week, the greater the likelihood they’ll be around at the 30-day mark.

 

App Retention 2

 

Video ad performance

Rewarded video ads have the most profound effect on app retention of any ad type. Players who watched just one rewarded video during their first week had a 30-day retention rate of 53.2% — an increase of more than 300% over the average 30-day retention rate. For players that watch seven videos in their first week, the 30-day retention rate was 71% — more than 450% greater than the benchmark.

It’s easy to see why video ads are so effective at increasing retention: They are a great introduction to both opt-in, rewarded advertising and to an app’s overall virtual economy. They are easy to complete — requiring just 15 seconds of a user’s attention — and the reward they earn can be redeemed immediately and used to enhance their in-app experience.

Developers should use all of the tools at their disposal to direct users to rewarded video placements, including in-app messages to video, direct play videos, and push notifications to video. These tactics ensure that players have the opportunity to complete at least one rewarded video ad at some point during their first week.

 

App Retention 3

 

Full-screen interstitial performance

Full-screen Interstitials (FSI) also have a dramatic impact on players’ retention rates. As with videos, a user who completes just one FSI in first week post-install has a 300% higher 30-day retention rate compared to the average. From there, their retention rate goes up with each subsequent FSI with which they engage. However, subsequent FSI engagements do not have as strong an impact as subsequent video views.

FSI ads appear during natural break points in the app experience. They take up the device’s entire screen. With Tapjoy, developers have full control over the placement of FSI ads and can insert them wherever they feel is appropriate.

Developers should be judicious with their use of full-screen interstitials because they can be distracting if deployed too frequently. However, as the data below shows, when players engage with these types of ads, their 30-day app retention shows a dramatic increase over the benchmarks.

 

App Retention 4

 

Offerwall performance

A similar pattern emerges when looking at the impact on retention of players who complete an ad through the Tapjoy offerwall. The offerwall is a custom-skinned marketplace of rewarded ads that developers make accessible through their storefront or merchandising screen. A prompt to visit the offerwall can also be triggered through a message-to-earn (M2E) placement at specific moments in gameplay.

Players love the offerwall because it provides them with a long list of relevant offers from their favorite brands, enabling them to pick and choose which advertisements with which they’d like to engage. Some offerwall ads require minimal engagement, such as videos, while others encourage users to engage with brands on a deeper level for a larger reward.

Offerwalls provide a simple, unobtrusive way to let players engage with rewarded ads. By adding an “Earn Free Coins” or similar button to the store screen or main screen of their app, developers can let their players seek out rewarded ads all on their own — without disrupting gameplay.

 

The power of rewarded advertising

Many app developers subscribe to the outdated belief that their users will be turned off by advertising. But that perception is based on traditional advertising — the type that typically interrupts, annoys and does not reward its viewers. Rewarded advertising actually enhances the user experience and leads to higher retention rates.

The key lesson that developers should take from this data is that it’s important to present users with rewarded ads during the first week after they have installed an app. If they complete at least one rewarded ad offer, their chances of long-term retention will increase significantly. The more ads with which they engage, the more valuable they will become for your app.

Rewarded videos ads are the easiest and most effective way of maximizing 30-day retention, but other ad types — such as full-screen interstitials and offerwall ads — will boost retention as well. For more information, take a look at Tapjoy’s mobile monetization strategies.

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