Understanding The Impact of Rewarded Ads on IAP, Retention and Engagement

Tapjoy studies have shown that mobile gamers prefer rewarded ads to interstitials 4-to-1. It’s a valuable insight for advertisers and developers alike when it comes maximizing ad revenue, but rewarded ads also have the potential to impact other parts of the user experience and your game’s performance overall.

To ensure a healthy portfolio, it’s critical that developers understand the additional impact rewarded ads have beyond ad revenue. This includes their effect on metrics like in-app purchase conversion rate, average user spend, 30-day retention, and daily session count. To find out more, we conducted an in-depth analysis of eight different high-DAU apps across iOS and Android for several varying timeframes to find out how users behave when exposed to rewarded ads compared to those who aren’t.

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Here’s what we discovered:

 

1. Higher IAP Conversion Rates

We studied new app users during a one month period and segmented them into two different groups: Those who engaged with at least one rewarded ad and those who never engaged with an ad. We then compared the IAP conversion rates (or percentage of users that made a first time purchase) for each group.

  • On average, users who engage with rewarded ads are 4.5 times more likely to make in-app purchase versus those who do not.
  • 7 out of the 8 of apps studied demonstrated higher conversion rates among those who engaged with ads versus those who did not.
  • In the case of two of the apps studies, we found that users who engaged with an ad were over 9 times more likely to make a purchase.

Impact of Rewarded Ads 1

 

2. Higher Average Spend Per User

We measured the average spend per user in each app for seven days before and seven days after a user’s first rewarded ad engagement.

  • In all 8 apps studied, user spend increased significantly after they engaged with an ad.
  • The average weighted increase in user spend was 326%.
  • Among the apps studied, the boost in average spend per user ranged from just shy of 200% to over 500%.

Impact of Rewarded Ads 2

 

3. Increased 30-Day Retention

We measured the 30-day retention rates of users who engaged with 1-6 rewarded ads during their first week of using an app. Three types of rewarded ad formats were studied (rewarded video, full-screen interstitial, and offerwall placements) and measured against the average 30-day retention benchmark for all apps.

  • Players who complete just one rewarded ad in the first week — whether a video, full-screen interstitial or an offerwall engagement — have a retention rate of at least 50%, compared to the benchmark of 13%.
  • Rewarded video has the most profound effect on retention of any ad type. 30-day retention steadily increases with each video view, ranging from 53% to 68%, which is 3.5-5 times greater than the benchmark.

Impact of Rewarded Ads 3

 

4. Higher Average Daily Session Count

We measured the average number of user sessions per day — both seven days before and seven days after a user’s first rewarded ad engagement — for each high-DAU app.

  • In all cases, users engaged with apps more frequently after completing a rewarded ad.
  • All 8 apps studied demonstrated a lift in the average number of user sessions among those who completed an ad.
  • The average weighted increase in user sessions across all apps was 34%.

Impact of Rewarded Ads 4

 

What does this mean for developers?

4 key monetization strategies became abundantly clear following our research:

  • Make rewarded ads easy to find – To increase visibility, consider adding a button to your app’s home screen or storefront, or utilize in-app messaging or push notifications to promote rewarded offers. Tapjoy’s Native-to-Earn, Message-to-Earn, and Push-to-Earn features make it easy for developers to add and manage these additions right from the dashboard.
  • Explore currency sale promotions – Try running limited-time offers in which your players earn more currency than usual for every rewarded ad they complete. These currency sales can drive serious spikes in revenue. With Tapjoy, it’s easy to personalize your currency sale with custom branding and to control the payout ratio.
  • Introduce ads early – Getting users to interact with ads early in their gameplay increases the chance that they will continue to engage with or make a purchase in your app. Rewarded ads introduce players to the mechanics and benefits of your in-app currency, so it’s important to make ads visible and easy to access during the player’s first few sessions.
  • Integrate multiple rewarded formats – Integrating multiple formats — such as rewarded video and offerwall combined — provides developers with the best opportunity to monetize their users and maximize revenue. Diversifying formats not only unlocks higher eCPMs, but it provides players with the freedom to pick and choose the rewarded offer that appeals most to them.

Implementing rewarded ads are just one step to monetizing your app — you’ll also need to optimize deployments and leverage industry-standard mediation tools. For more information, take a look at Tapjoy’s mobile monetization strategies.

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