Mobile rewarded ads are working: app users are 4.5x more likely to make an in-app purchase after engaging with rewarded adverts

There has been some doubt over the performance of rewarded adverts and whether they may take away revenue from in-app purchases. However, a new report from Tapjoy, out today, finds that rewarded ads actually boost in-app spending. Indeed, users who engage with rewarded ads are 4.5x more likely to make an in-app purchase compared to those who don’t.

The mobile app advertising company studied users of eight different high-DAU apps on both iOS and Android over a month-long period and compared in-app purchase conversion rates for two groups: those who engage with at least one rewarded ad and those who never engage.

Seven of the eight apps studied showed higher conversion rates among users who engaged with ads, and for two out of the eight apps, users who did engage were over 9x more likely to make an in-app purchase. That’s good news for app developers.

Tapjoy then went on to measure the average spend per user. It found that across all apps studied, user spend increased significantly after engagement with rewarded ads – by a whopping 326% on average. For the apps studied, the average spending boost per user ranged between 200% to over 500%.

Benjamin Chen, SVP & GM, Developer Relations at Tapjoy explains:

“Some app developers fear that giving their users the option to earn currency through rewarded ads will reduce the likelihood of IAP or negatively impact user spend. Our data shows that not only do developers have no reason to worry about such cannibalization, but rewarded ads are actually conducive to IAP. Our hypothesis is that rewarded ads serve as an initial introduction to an app’s in-game economy or premium content. Once users get a taste for it, they want more – and they’re willing to pay for it.”

But do users who engage with rewarded ads also hang around and use an app for more than a month?

According to the findings, players who engaged with just one rewarded ad during the first week had a retention rate of at least 50%, compared to the 13% benchmark. Rewarded video ads are particularly successful in driving retention. Indeed, 30-day retention gradually increases with each video view, from 53% to 68%. That’s 3.5x to 5x more than the benchmark.

In addition, Tapjoy found that users engaged with apps more often once they viewed a rewarded ad. The average weighted increase in user sessions was 34%.

The findings are good news for app developers looking to get the ball rolling with rewarded ads.