User-initiated rewarded video is hands down the strongest ad tool in the industry today. If you ask any publisher, they will tell you that there is no other ad format that is both highly effective (makes money) and provides a positive impact on the user experience (keeps users happy).
Of course, there is a correlation between those two things: satisfied users mean more retention and engagement, which means more revenue. Whether you’re calculating on a short-term (volume, CPM) basis or looking at the big picture of lifetime value, the math is easy to do. However, there is a key principle inherently baked into rewarded video experience that under-rides and supports both of those outcomes. That principle is choice.
Advertising—and, specifically, video commercial advertising—is already part of our culture. It doesn’t matter if you’re watching a Pepsi commercial on a small TV in a village in Italy during a break in the finals of the World Cup, or a pre-roll for Aflac on a YouTube music video in a Chicago townhouse, we all understand that we are part of value exchange. The viewer innately understands: “I give you my attention, you give me the content.” And the channel or outlet agrees: “We give you this content, you give us your attention.”
In these instances, though, there is really no choice. The Pepsi commercial will play no matter what the viewer prefers – though it’s worth noting that they will choose to purposely ignore it if it’s not pleasing or relevant to them. And the pre-roll, well, we know that is going to be forced upon the user, resulting in poor user experience, just like pop-up desktop ads were in the ‘90s. (And unfortunately, still today.)
In mobile apps, however, there is a way to give the user a choice to opt-in, to actively give consent or permission to serve the ad. With user-initiated, or rewarded video, the user opts in to watch the video in return for an item of value that warrants a fair value exchange. In a music app, this could be streaming of a song; in a gaming app, it might be a new body armor or more lives to finish the challenge. In a shopping app, it could be a discount code for your next purchase. And what the users choose to do after the video view, is entirely “unrewarded,” that is, they are free to enjoy their app experience.*
Mobile developers, particularly in gaming, have been using user-initiated rewarded video for years, and more recently have made big leaps into rewarded video as well. Adoption of the format has grown tremendously, even just over the past year, and publishers rank rewarded video ads the highest (87 percent) for best user experience, well above other video formats like interstitial video (21 percent) and in-feed video (17 percent).
Rewarded video experience is built into and directly relevant to the environment of the mobile app. Users feel that the ads are less intrusive to their experience, since clicking to watch a video in order to accomplish the challenge is seen as useful, not disruptive. The ad does not interrupt the user experience; it enhances it. The video is seen as a driver of your success, not a frustrating barrier to your experience.
Likely due to this, the quality of attention we see in user-initiated ads is astounding. Completion rates on rewarded video are around 90 percent, compared to averages in the 65-70% range for traditional video formats on desktop and mobile. More importantly, for advertisers, rewarded video is outperforming traditional digital ads like pre-roll and display by more than three and a half times awareness and five times more for purchase intent, according to Nielsen Media Labs. Beyond purchase intent, brand recall is higher when consumers encounter user-initiated video, coming in at 50 percent higher in the case of the CPG category, we’ve found.
All the other bases for advertiser concern are covered, too: User-initiated rewarded video ad experiences are full screen, so there aren’t any issues around viewability. Brand safety? Well, you have Google and Apple as the first line of defense with their respective app store regulations.
Of course, as in everything, there will be misuse and potential fraudulent behaviors. Users might constantly watch the videos to gain the reward and neglect to play the game itself – but that is why ad platforms and networks have frequency capping, to ensure that doesn’t happen. As much as the value-exchange mechanism is key, so is the video itself and ensuring it is interactive, playable, shoppable or whatever creative execution maps best to the outcomes the advertiser is trying to achieve. But these are problems of execution, not principle.
There’s no doubt in my mind that as the games category expands – with more popular console games creating mobile apps so that consumers can play their games on the go – that the proven monetization method for this category will grow. More user-initiated rewarded video will be integrated into games as a way to grow revenue, and they will be customized more for brands and for UA campaigns.
Furthermore, expect to see interesting technology development within the video itself, such as a data implementation where we can track touches (finger swipes, etc.) within the interactivity of the ad to discover where the user is most engaged. Lastly, we should be seeing more features such as AR and real-life graphics – similar to TV and movies – start to replace the cartoon-like nature of most of today’s creative as mobile users come to expect more sophisticated experiences from their mobile ads.
*This is different from “incentivized” video, where the advertiser ultimately requires action, like an app download.