In case you’ve been living under a rock, or – understandably – just trying to screen out all news from the real world, there’s been a lot of buzz lately around rewarded video ads. According to a recent report released by Tapjoy, 79% of players prefer to have the option of rewarded ads in their games, and that number is broadly consistent with the user behavior we see in our titles.  As you may recall, we briefly touched on rewarded ads in the most recent blog, so now let’s dig a little deeper and look at some of the best practices for implementing rewarded ads in your mobile game.

The format is increasingly popular in games and apps alike because it not only represents a non-intrusive form of advertising (the user ‘pulls’ the ad towards them rather than having it ‘pushed’ at them), but it also allows users to better enjoy the game, by progressing faster, collecting more virtual currency, or exploring new content.

Let’s first take a look at how the use of this kind of advertising in your game can actually improve your metrics (besides contributing to your bottom line). The graph below shows the daily retention for one of our games for three different cohorts of users: all users, payers, and users who never purchased anything but watched at least one rewarded video.

As you would expect, players who made at least one purchase have a much higher retention rate than the average (83% Day 1 retention vs. 54% in this case). Interestingly, rewarded video viewers also have much better retention than average (79% Day 1 retention in this example). This is also in line with empirical feedback from users who often ask for more opportunities to “earn” rewards in the game through ads.

For sure, you are wondering: do rewarded video ads cannibalize In-App Purchase Revenue? In our experience, if implemented correctly, that is not the case. Based on our findings, you should expect a 10% to 40% uplift in ARPDAU with no negative effect on your conversion rate to in-app purchase.  The fact that this ad revenue is incremental to the in-app purchase revenue is illustrated by the graph below in which you can see the average number of video ads seen by viewers divided into two cohorts: all users and payers. It shows that payers also like to take advantage of this additional opportunity to progress in the game and have similar watching patterns as the average user.

So, what are the best practices for effectively integrating rewarded video ads in your game?

The first suggestion is to embed rewarded ads in the core loop of your game so that they become a natural part of the gameplay. Typical examples of reward mechanisms are: revive at Game Over (for casual games), additional life (for platformers or puzzle games), shorter timers (for building games), virtual currency, energy, boosters, etc.

The best reward mechanism for your game depends on the genre of your game as well as its resources and economy. It is important to be creative in the way the rewards are designed within the game in order to keep players motivated without disrupting the overall game economy. Rewards can also be a way to let users explore new content that they may later be interested in obtaining via an in-app purchase. For example, in our title Weed Firm: 2 Back to College, one of the customers that comes to the door brings a gift in exchange for watching an ad. This allows the player to get a sneak peek of content that would otherwise be available to them only much later in the game.

Another important aspect in the implementation of rewarded video ads is to find a balance between theprominence of the ad’s placement while simultaneously creating a sense of rarity around the offer. The goal is to create a sense of urgency amongst players to motivate them to seize the opportunity when it is presented in the game. The example above illustrates a creative solution to finding that balance; the customer who offers the rewarded video “gift” appears sporadically in the game.

As with any other feature of your game, it is important to track rewarded ad views and measure some important KPIs. In our analytics, we typically track every completed ad view as an event, together with some relevant properties (e.g. user level, the balance of virtual currencies, the ad network that served the ad, reward obtained, and so on). This way, it is possible to do an in-depth behavioral analysis about what kind of reward is most appealing to users, what the effect is on the overall economy of the game, etc.

At a high level, the main KPIs that you will want to track for your game are:

% of DAU engaging with Rewarded Video ads

Average views per player, per day

These KPIs can vary widely depending on your implementation: we have seen between 25% and 50% of DAUs engaging in rewarded video ads and between 2 and 8 rewarded video ad views per player. As a rule of thumb, you should target at least a 30% engagement rate and around 4 ads per day, per viewer. At Thumbspire, we work with our partners to establish specific targets based on their game’s genre and implementation.

In summary, rewarded video ads can be an important component of your game’s monetization strategy and they can also increase usage metrics in your game, provided you stick to some basic guidelines for the successful implementation of this feature:

• Embed rewarded ads in the core game.
• Give rewarded ads prominence while maintaining a sense of rarity around the offer.
• Be creative in the definition of the rewards to prevent disruption of your game’s economy.
• Track rewarded ads properly so that you can improve their effectiveness with the usual iterative process and A/B testing.

Hopefully these guidelines will be helpful in increasing the success of your game, but as usual, feel free to comment or get in touch!