The Pros and Cons of Rewarded Ads
People love getting things for free – even when it’s not really free. In fact, “free” is so irresistible that psychologists have been studying how the offer of a freebie makes us willing to give up our time and information. In the advertising industry, we take advantage of this phenomenon through rewarded ads.
In this article, we’re going to:
- Briefly explain rewarded ads and how they work.
- Cover the pros and cons of incentivized ads.
- Describe the typical ad specifications.
Are rewarded ads a good option for your platform? Let’s find out!
What are Rewarded Ads?
Rewarded ads are also known as incentivized ads. As the name implies, these ads prompt users to take voluntary action in exchange for a reward – and incentive. These can range from an extra life to a puzzle hint or even in-app currency.
The primary goal is to get the user to interact with a video ad, install an application, or subscribe to a site or service. Some may refer to the use of rewarded ads as a “Freemium” model. In short, users can get access to certain premium features by watching ads rather than buying the app or making in-app purchases.
These incentivized ads are typically used in-game or entertainment applications. However, they’re sometimes used on websites as interstitial ads and aren’t exclusive to mobile devices.
The most crucial feature of rewarded ads is that they’re entirely optional. Users must choose whether they want to interact with the ad or not and reap the consequences of their choice.
Example of a reward ad via Google
- The app must prompt the user to interact with the advertisement in exchange for a specified reward.
- The user must opt-in to watch the video ad or to complete the action required.
- The user completes the required action and receives their compensation.
- The reward is consumed as the user continues to use the app.
In short, incentivized ads are optional advertisements that offer users a reward for watching or participating.
The Benefits of Rewarded Ads
Over time, rewarded ads have become a popular and widely used form of monetization, particularly on mobile applications. There are several benefits to using these incentivized advertisements.
Improved User Experience
Giving users the option to opt-in and -out of an ad makes them feel like they’re in more control of their experience. They’re also rewarded for opting in by being given something for which they’d typically have to pay.
Additionally, users prefer to view rewarded ads rather than buying in-app content:
- 71% of users prefer incentivized ads over in-app purchases or paid applications.
- 54% claim that rewarded video ads are their preferred ad format.
- 62% voluntarily interact with rewarded ads regularly.
These ads also lead to higher interaction rates since users are more likely to opt-in if rewarded for their efforts.
In our experience, rewarded ads can also lead to higher user retention rates. By earning hints, rewards, or “premium” content through incentivized adverts, users are less likely to get frustrated and uninstall an app.
Higher Completion Rates of Ad Views
Users don’t receive their reward unless they view the entire ad or stay on the advertisement for a specific amount of time. That leads to fewer skips and higher completion rates. An added benefit is that viewers tend to look more favorably on the app and the advertiser. If done right, the ads remain entirely voluntary and, as such, are non-intrusive.
While some users are willing to spend money on in-app purchases, many others aren’t. Publishers can use rewarded ads to earn revenue from those users without requiring them to make a purchase. Since these ads tend to perform well, they’re also highly popular amongst advertisers.
The Drawbacks of Rewarded Ads
Despite their many benefits, rewarded ads do come with a few drawbacks. While the pros far outweigh the cons, it’s still vital to be aware of these issues.
Lack of Quality Traffic or Engagement
Although users may be more willing to watch an ad if they’re being rewarded, that doesn’t necessarily mean that they’re interested in the ad’s content. In short, many users only watch or interact with the advertisement to receive their incentive.
Limited Formats Available
Rewarded ads are typically either in video or interactive format and are almost always interstitial. Video ads will usually be non-skippable, but other types include closeable or click-to-download ads. Interactive ads will let users try out the advertised app without having to download the actual software.
Typical Ad Specifications
Different platforms may have other requirements. However, in our experience, some practices deliver the best results:
- Interstitial: For the ads to be as effective as possible, they should be interstitial and cover the entire screen. Instead of offering users an option, interstitial reward ads appear as part of the game’s standard process.
- Initiated by the user: The ad should never start playing without the user choosing to watch or interact with it.
- Audio: The device, not the app, should control the audio. It should also play automatically.
- Length: Depending on the platform. The ad should be between 15 – 60 seconds. Thirty seconds tend to be one of the more popular lengths since users may become frustrated by longer ads.
- Skipping: Rewarded ads are generally unskippable. However, some may offer users the option to skip the ad while forfeiting their reward. Users must be informed about the forfeit.
- End Cards: While unnecessary, static end cards are an excellent way to wrap up the ad and invite users to explore the marketed product, service, or application further.
Poorly formatted and designed reward ads can significantly negatively impact a publisher’s revenue and the value these ads present to advertisers. To get the best results, it’s highly advisable to work with a platform or managed services provider that has extensive experience with interstitial ads.
Rewarded video ads are highly beneficial to users, advertisers, and publishers alike, which is probably why they’ve seen such a surge in popularity in recent years. Although they’re just one of many ad formats available, the high interaction and viewing rates make them a valuable option for both advertisers and publishers.