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How Rewarded Video Ads Can Benefit Your Business

Smartphone users access a massive amount of information on their devices. Studies show that in Q1 of 2019, the average smartphone user spent roughly 4.2 hours each day accessing the mobile web. With people spending so much time on their mobile devices, it has become harder than ever for advertisers to gain exposure using traditional ads. The question now is how to effectively gain attention from mobile users and raise conversion rates while also ensuring an enjoyable user experience on mobile platforms.
Allow us to introduce rewarded video ads -- the perfect solution to this problem.
What are rewarded video ads?
Simply put, rewarded video ads are an immersive video ad format that lets app users opt-in as viewers in exchange for in-app rewards. Widely deployed in mobile games, this format integrates video ad content with actual game scenarios, making each ad a task that a player can complete to gain an advantage or benefit. By stimulating and fulfilling users\' needs as gamers, rewarded video ads have become a highly effective way to attract their attention and generate value.
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To understand why these new ads have become so influential in the mobile gaming world, it helps to know more about the key factors driving their popularity.
A promising global trend
With moving visuals and audio elements, video ads convey far more information than static image ads when displayed for the same length of time. Meanwhile, users who watch the ads to completion are usually more interested in clicking by the time they finish, raising the likelihood of conversion. An additional benefit is that this group of users has a higher customer lifetime value, as they are more likely to return to the game and make purchases again in the future.
As 4G coverage expands, short video technologies and platforms are developing rapidly, making it easier to produce and distribute video content. Since 2016, the overall proportion of expenditure growth on mobile video ads has nearly doubled, establishing video ads as a global trend.
A win-win situation for users and developers
Rewarded video ads have broken the traditional rules of advertising in unexpected ways. Rather than the one-way information flow that characterizes traditional ads, rewarded video ads give users the option of becoming active viewers, rewarding those who choose to do so.
The core framework of this model is that developers use video ads to monetize while transferring some of the revenue they earn back into in-app rewards for the users who watch them. Giving viewers a sense of choice enhances the user experience, instead of forcing them to watch something against their will. For advertisers, this element of user satisfaction is the key to gaining deep conversions. Data from Pangle shows that rewarded video ads tend to generate 4 times higher CTR rates and 3.6 times higher CVR rates than other ad formats.
Rewarded video ads also have the advantage of fitting natively into the game itself, becoming part of the overall game experience without disrupting user flows. By integrating these ads, developers can encourage users to spend more time in the game and motivate in-app purchases. Data from Pangle shows that after viewing rewarded video ads, players spent an average of 20%-30% more time in-game, while retention rates rose by 15%-20%.
A new game ecosystem primed for expansion into other verticals
All of the above advantages make rewarded video ads a means of establishing a thriving, mutually beneficial game ecosystem of users, advertisers and developers. Users like the ads because they gain real value by watching them. Advertisers are happy because they can more effectively target higher conversion rates while raising the LTV of each conversion. Developers meanwhile obtain higher eCPM and product rating results.
Although rewarded video ads have yet to reach maturity in verticals other than gaming, they are already showing a high potential for adoption in IAP verticals including online reading, social media, and utility apps.