Maximum Impact Report: Rewarded Ads Increase Mobile App Retention By At Least 4X

Developers — how long do you wait before serving a new user with an ad? A day? A week? Longer? Many developers believe they shouldn’t present ads to their players too early, for fear of scaring them off and damaging their app’s retention metrics. But new research shows that ads — at least those of the rewarded variety — actually have the opposite effect: in fact, rewarded ads were shown to increase app retention by 4X or even more!

That was the main finding in our latest Maximum Impact Report, exploring the impact of rewarded ads on app retention. The report also found that rewarded video ads are the most effective ad format among those studied for increasing app retention.

According to the study, players who complete any rewarded advertising offer — an ad that gifts app players with virtual currency or premium content in exchange for their engagement — during the first week after downloading an app have a 30-day retention rate of at least 50 percent, compared to the benchmark of less than 13 percent for all app users.

The study also showed that players who watched just one rewarded video during their first week had a 30-day retention rate of 53 percent — an increase of more than 300 percent over the average 30-day retention rate. For players that watch seven videos in their first week, the 30-day retention rate was 71 percent — more than 450 percent greater than the benchmark.

Other findings from the report include:

  • Two-thirds of players never use an app again after the first day they download it.
  • The more ads a player engages with during their first week, the higher their retention rate will be after 30 days.
  • Full Screen Interstitials (FSI) have a dramatic impact on players’ retention rates. Like videos, merely completing one FSI in their first week increased a user’s 30-day retention rate by 300 percent over the average. However, subsequent FSI engagements do not have quite the same impact as subsequent video views.
  • Retention rates also go up significantly for players who completed an ad through the Tapjoy Offerwall, an ad unit that presents a variety of offers from multiple advertisers to let consumers select which ads they’d like to complete.

It’s easy to see why rewarded ads — and video ads in particular — are so effective at increasing retention. They are easy to complete (all the user has to do is give about 15 seconds of their attention) and the currency they earn can be immediately redeemed for in-app virtual goods and premium content that helps enhance the app experience.

This is the first report of its kind to analyze the impact that advertising has on player retention in mobile apps. It’s an important issue, however, as many app developers operate on the outdated belief that players dislike advertising and will be turned off by it. But that belief is based on traditional advertising — the type that typically interrupts, annoys and does not reward its viewers.

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

Click here to download the full report.

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