Welby Chen, president and chief business officer at Fyber, explores the growing popularity of rewarded video advertising, how it's strengthening the value exchange between consumers and brands, and what marketers need to know before embracing this format.
According to a new report from eMarketer, the retail industry’s investment in mobile advertising is expected to rise 23.6 per cent in 2018 to $16.3bn (£12.4bn). This amounts to nearly 70 per cent of retailer's digital ad spending. Mobile advertising is increasingly being relied upon as a way to reach and engage customers. Part of this growth and investment can be credited to the rise of mobile video, and rewarded video.
Rewarded video, where users have the option to watch ads in exchange for in-app rewards, is changing the relationship between consumers and brands. It’s becoming the new ad currency that provides a two-way exchange, where users receive value relevant to their current experience in exchange for their attention.
A recent report from App Annie found that rewarded video will contribute to in-app advertising spend growth, estimated at 23 per cent CAGR (compound annual growth rate), outpacing mobile app store growth. Both indie game developers such as Hipster Whale (Crossy Road) to large gaming publishers such as Rovio (Angry Birds) and King (Candy Crush), use rewarded video over other ad formats, but the potential extends beyond gaming. For example, Amazon was awarded a patent that enables the price for an item to drop as consumers watch ads.
With this in mind, here are five reasons why brands and publishers will increase investments in rewarded video.
1. Better user experience, stronger customer retention
With rewarded video, the user opts-in to watch an ad. True, they are likely doing it to receive the reward, but the idea of putting the user in control is less intrusive and interruptive compared to banners and static interstitials. Because they’re less likely to find the advertisement annoying, users remain positively engaged during the advertisement and generally continue using the app.
In fact, in-app rewarded video is perceived more positively by consumers than any other ad format. A recent report from AdColony found that 90 per cent of publishers claim rewarded ads provide a positive user experience. Additionally, research from Unity notes 80 per cent of mobile game players are open to engaging with video ads for in-game rewards.
2. Higher Yield
The eCPMs of user-initiated ad units often range into $30+ territory and are higher than the average eCPMs on Android and iOS devices, which range from $0.15-$2.00 for banner ads and $2.00-$5.00 for interstitials. Solutions like Adscend Media’s Offer Wall generate eCPMs of up to $90 with frequent return visits. One reason is the high completion rate which advertisers are willing to pay for. As most user-initiated ads are non-skippable, opting in means full completion.
3. Complements in-app purchases
For publishers who are concerned rewarded video will cannibalize their in-app purchases, it actually proves to be an ideal complement. In fact, viewers engaging with rewarded ads are more than twice as likely to eventually pay for premium content or features they initially accessed through a rewarded ad.
4. Rewarded video is mutually beneficial
Rewarded video ads expand well beyond the gaming space. Music apps such as Pandora and Spotify use rewarded video to give their listeners uninterrupted music. Additionally, Kik, a messaging app, enables users to exchange points earned from rewarded video for stickers, emojis and gift cards. Sworkit, a popular personalized fitness app, uses rewarded video to unlock new workouts, and Duolingo uses rewarded video to enable students to advance to a new language level.
5. More conversions due to a call to action
Marketers have the option to place a specific call to action at the end of a rewarded video ad. Offering users a “click to download” or “click to purchase” button is a way to drive app downloads, increase sales and build on lead generation efforts. Since rewarded video has more views, and more conversions, it will continue to attract a larger percentage of advertisers’ budgets.
Rewarded video is becoming the preferred in-app ad unit, because unlike distracting banner ads or pop-ups, viewers have the power to experience ads on their own terms.The key to their success is the unparalleled capacity for interaction with minimal disruption that engages consumers better. Opt in advertising provides better brand building for advertisers and more revenue opportunities for publishers. In the end, everyone is rewarded not just the viewer.
Welby Chen is president and chief business officer at Fyber.