What Is Reward Advertising? Mechanism, Merits, and Major Ad Networks

If you use smartphone games or manga apps, you have probably encountered ads that say "watch a video to get an item." These are reward ads. This mechanism, where users watch an ad in exchange for a reward, has become an essential method for monetizing non-paying users and acquiring app installs. This article organizes what reward advertising is, its mechanism, merits and demerits, and the major ad networks that serve as placement destinations.

What is reward advertising

Reward advertising is an ad method that provides a reward when a user completes a specific action. Typical actions include watching a video ad, installing an app, registering as a member, and answering a survey. The reward is returned in the form of points, items, or perks usable within that app or site. Because users get a reward and advertisers get results, a key feature is that both sides benefit.

Especially in the mobile game industry, it has spread widely as a means of earning revenue even from non-paying users, and many apps are said to incorporate reward advertising in some form.

How reward advertising works

Reward advertising is established through the involvement of four parties: the advertiser, the ad network, the app/website operator (media), and the end user. The rough flow is as follows.

1. The advertiser places an ad with an ad network.

2. The ad network distributes the ad to multiple partner apps and websites.

3. The end user performs an action such as watching a video or installing, in exchange for a reward.

4. The media operator grants the reward to the user, and the ad spend paid by the advertiser is distributed to the media through the ad network.

In this way, prompting a user's voluntary action via a reward is the major difference from other ad formats that are displayed forcibly.

Merits of reward advertising

Videos tend to be watched to the end

Because users choose to watch in order to get a reward, in many cases the video is played to the end without being skipped. Unlike forced displays such as in-stream ads or interstitial ads, a strength is that the view-completion rate tends to be high.

Less likely to harm the user experience

Because users themselves choose whether to watch the ad, it is a format less likely to harm UX (user experience) compared with forced display. Owing to this characteristic, it is widely adopted in game apps and manga apps.

Grows installs and awareness

By making an app download or tutorial completion a condition for the reward, you can efficiently increase installs. It is also attractive that you can approach a wide range of users in a short time through an ad network that distributes to many media at once.

Demerits and points to note

Reward-seeking users tend to mix in

Because the reward is the motivation, the case of "installs increased but users don't settle in as active users" tends to occur. If you chase only volume, there is a risk that low-quality traffic increases.

Risk of invalid conversions (ad fraud)

Invalid installs or clicks aimed at the reward can mix in. It is important to choose a trustworthy ad network and take measures such as detecting fraud with an ad verification tool as needed.

Reward design balance is difficult

If the reward is too large, the balance of cost and experience breaks down; if it is too small, the incentive does not work. Also, a design where the app cannot be enjoyed without watching ads amounts to effectively forcing views and harms UX. The reward must be designed as a "plus alpha" so that it is watched voluntarily.

Major reward-ad networks

The quality of the ad network that serves as the placement destination directly affects the results of reward advertising. Representative networks that support reward advertising include the following.

• Google AdMob: a standard ad network provided by Google, widely supporting apps.
• Meta Audience Network: a network with high affinity for the Facebook ecosystem.
• GREE Ads Reward: one of the representative domestic networks handling reward advertising.

Which network to choose is judged according to the target platform, the distribution scale, and the user segment with high affinity. It is best to compare several and choose one that fits your app or service.

How to improve results

Reward advertising is not a measure that completes on its own; it is important to design it positioned within your overall marketing. Securing "volume" with reward advertising while suppressing post-arrival drop-off through retention measures such as push notifications and email, and supplementing "quality" users through SEO and organic search: being conscious of this division of roles enables operation that looks all the way through to post-install retention.

Summary

Reward advertising is an ad method that prompts actions such as video views or installs in exchange for giving users a reward. While its strengths are a high view-completion rate and being less likely to harm UX, there are also points to note such as reward-seeking users and invalid conversions. By understanding the characteristics of major ad networks such as AdMob and Meta Audience Network, and being conscious of reward design and the division of roles across your overall marketing, aim for operation with a good balance of volume and quality.