Rewarded Advertising: Key Benefits and Challenges
This story originally appeared on the MAF blog.
Rewarded advertising is one of the biggest mobile ad trends right now. In today’s challenging app market, traditional forms of user acquisition (UA) are losing popularity, and advertisers are looking into alternatives.
The alternative that has gained the most momentum is rewarded advertising, and many app advertisers are wondering if this strategy could work for their apps.
Upon reading this article, you should have the answer for your app.
What Is Rewarded Advertising?
Rewarded advertising is a type of mobile advertising that rewards users in exchange for their engagement. Rewarded ads prompt users to complete certain actions to earn rewards within the host app or website.
On mobile, there are two main types of rewarded advertising:
- Rewarded video ads where users watch video ads to earn small amounts of in-app rewards
- Offerwall ads where users choose from a list of actions they can complete to earn generous rewards
In this article, we’ll focus on advertising via offerwalls, a more complex form of rewarded advertising.
Rewarded Advertising Funnel
Each rewarded ad takes users through a funnel that consists of a few main elements.
Ad prompt
In the prompt, the ad informs the user about the opportunity to earn a reward by engaging with the ad. The prompt explicitly highlights the reward amount and what the user needs to do to get it. Its purpose is to present the benefit to the user and encourage them to take action.
Opt-in
Drawn by the ad prompt, the user actively chooses to interact with the ad. This is a key step in the process because users aren’t forced to engage with these ads, but have complete control over their decision.
Engagement
Once the user opts in, it’s time to complete the goal engagement. In the context of offerwall advertising, this means completing the listed action(s). Some common examples include installing another app, registering in another app, reaching a certain level in a game, etc.
Reward
Upon completing the required action(s), users get rewarded for their time and willingness to use the advertised app. In return, they receive the promised reward within the host app or website. This often includes virtual currencies, coupons, and discounts.
Ad Formats
Rewarded advertising via offerwalls is more versatile than one might think.
When launching campaigns on (quality) offerwalls, advertisers have different ad formats at their disposal.
- Single-step ads. Traditional ad format where users need to complete one listed action to receive a reward (e.g. reach level 2 in a game)
- Multi-reward ads. Ads that encourage users to complete a set of actions to earn rewards, getting a part of it for each completed step (e.g. install a game → finish tutorial → reach level 5)
- Engagement-based ads. Ads that reward users for their engagement or playstyle. For example, these ads can track user progress by measuring time spent in the app, or event completion.
Key Benefits of Rewarded Advertising
With traditional video ad campaigns, many app marketers struggle to achieve the desired engagement rates, retention rates, and ROAS.
On the other hand, this is exactly where rewarded advertising shines the brightest.
Driving Long-Term Engagement
With rewarded ads, advertisers can acquire users who will use the app for a long period of time.
Initially, users engage with these ads because they are tempted by the reward. They also get to select the most appealing offer from all the options on the list.
Once they start using the advertised app, many users realize they actually enjoy it. This leads to the feeling of: “I discovered this great app, plus I get rewarded for using it. How great is that?”
As users keep coming back to the app to earn rewards, this leads to longer sessions and increased engagement over a period of time. In our experience, well-optimized rewarded ad campaigns have a particularly strong effect on long-term engagement from day 7 to day 14.
Retention Boost
Engagement and retention go hand in hand, so it’s not surprising that rewarded ads also drive high retention rates.
At MAF, we observed positive retention rates across different offerwall ad formats.
However, one ad format stands out for its high retention rates.
This is P2E (Play2Earn) — MAF’s engagement-based ad format. This pioneering ad unit rewards users for actively engaging with advertised apps. With P2E, we saw exceptional long-term engagement rates, up to 3.5x higher than those seen with traditional video ad campaigns.
ROAS
ROAS (return on ad spend) has become one of the key metrics of modern user acquisition. Among other things, this metric tells marketers if their campaigns are driving valuable users to their app.
Rewarded ads are known to deliver exceptionally strong ROAS to advertisers.
A good example is a hybrid casual game Survivor Idle Run, which ran both classic video ad campaigns on video ad networks and offerwall campaigns on the MyChips platform powered by MAF. Through offerwall campaigns, the game achieved a 170% global ROAS, which was 71% higher than that through video ad networks.
Why do rewarded ads drive such strong ROAS?
Well, users who engage with rewarded ads are more likely to remain active and generate revenue for the app over time, leading to positive returns for advertisers.
Challenges of Rewarded Advertising
Here are some factors that mobile marketers need to bear in mind when considering rewarded advertising.
Suitability for Different App Verticals
Rewarded advertising is a natural fit for mobile games. Because of this, it is often referred to as “rewarded play”.
But what about other app categories?
Many app advertisers are unsure how they could promote their apps through rewarded ads, so they throw away the idea before even considering it.
When it comes to different app verticals, rewarded advertising is not the best fit for apps used for quick interactions and specific, straightforward services. For example, calendar or weather apps. Users don’t spend a lot of time interacting with such apps, so rewarding their engagement might feel forced and out of place.
On the other hand, rewarded advertising has proven a great fit for content-rich apps that users can use repeatedly. For example, entertainment, lifestyle, and finance apps.
You’ve probably heard of Revolut. Well, this finance app has successfully leveraged rewarded advertising to boost its traffic and get more transacting users. Through MyChips powered by MAF, Revolut saw a 17% campaign traffic growth and a 12x growth in new transacting users.
Higher Initial Cost
The cost of acquiring users through rewarded ads is typically higher than that on video ad networks.
Nevertheless, this is rarely a deal-breaker.
The thing is, with rewarded advertising, advertisers only pay for completed actions. Offerwall ads operate on either the CPE (cost per engagement) or CPA (cost per action) model. With these models, there is no wasting money on impressions and clicks that don’t lead to conversions.
Limitations on iOS
On iOS, there are some limitations on rewarded advertising via offerwalls. Precisely, Apple’s policies don’t allow CPE (cost per engagement) campaigns for in-app offerwalls.
Meanwhile, there are no such restrictions for web offerwalls, so they can still serve as a valuable traffic source for iOS apps.
Getting Started With Rewarded Advertising
Think rewarded advertising via offerwalls might be a good fit for your app?
Here are a few things to bear in mind before getting started.
Understand Your Target Audience
Before you launch your first rewarded ad campaign, ensure you have a good understanding of your audience, their demographics, preferences, and behaviors.
In other words, try to find out what makes your users tick.
Is it your app’s functionality, design, storytelling, or something else? Do different user groups enjoy different features of your app?
By understanding what typically attracts users to your app and what they enjoy about it, you can prepare an effective rewarded advertising strategy. Based on these insights, you can tailor offers that will be appealing and relevant to your target audience.
Set Clear Goals & KPIs to Track
Think about it: what is the main goal you wish to achieve with rewarded advertising?
Is it boosting installs, retention, or ROAS?
Based on this goal, you’ll need to establish clear expectations and define KPIs to evaluate your campaign performance.
For example, when marketers prioritize retention, they typically set targets for metrics like d1, d7, and d14 retention, session length, and daily active users (DAU).
By setting clear goals and measuring them with pre-defined KPIs, you’ll get clear insights into how well your campaigns are performing and continuously optimize them for better results.
Check for Offerwall Quality
When it comes to opportunities to earn rewards, people are naturally suspicious and skeptical.
In most cases, they judge things by their surroundings. When offerwalls look messy and the other listed apps are low quality, users often don’t trust them.
You don’t want your app in such a setup.
Instead, look for offerwalls that work with high-quality advertisers only. A reputable offerwall partner with a premium offer inventory can boost the value of your rewards, build user trust, and increase engagement.
Rewarded Advertising: Closing Thoughts
Should you kill all your existing ad campaigns and pour your entire budget into rewarded advertising?
Absolutely not.
The point of rewarded advertising isn’t to replace other ad platforms — it is to complement them.
Today, it’s highly recommended to diversify your UA strategy and distribute ad budgets across multiple platforms. This way, you can leverage the unique strengths of each. While traditional video ad networks may bring you a higher number of cheaper users, rewarded ads can help you attract more high-value users.
If you want to get started with rewarded advertising, get in touch. Through our industry-leading rewarded advertising platform, MyChips, we helped numerous apps reach new quality audiences, and we can do the same for your app.
