With 39% of users canceling a free trial in the first 24 hours, and only 7% of trials converting to subscriptions, according to ironSource data, it’s important to diversify your app’s monetization strategy. Considering the process for converting users to subscribers is long, you want to ensure you’re properly monetizing users throughout their lifetime in your app - one such way is implementing rewarded video ads.
Rewarded videos are an opt-in, user-initiated ad unit, meaning users actively choose to watch a video in exchange for a reward. The user has no obligation to view the video and the reward is only gifted after the video finishes. In comparison to game genres, rewarded video ads are underutilized in mobile apps - surprising, considering one of the key benefits of this ad unit is to help convert users to subscribers.
Frank Dawson, Business Growth Team Lead at ironSource, and Justin Norman, Director, Product Strategy at ironSource, share their insights on why rewarded video is important for your app and offer tips for how to master it.
Why is rewarded video important for your monetization strategy?
Let’s take a look at why implementing rewarded video is a great way to monetize, engage, and retain users for your app:
Boost engagement and retention results
Because rewarded video is user-initiated, and gives users premium content they need and want, the ad unit creates a positive user experience that keeps users coming back. Rewarded video is unique in that it’s not just a monetization tool, but an additive feature that is integrated in the app's core functionality, making it a valuable medium for improving engagement and retention.
The ad unit boosts engagement and session length because it gives users the opportunity to try new, premium features within the app for free, such as using new photo filters - enabling them to continue engaging with the app without paying. Meanwhile, it improves retention because users often keep coming back to unlock new content.
The ARPDAU graph shows that as you serve more impressions, the more you’ll see revenue increase. The retention graph shows that the more impressions you serve, the higher your D3 retention will be.
Increase the likelihood users convert to subscribers
With rewarded video, users are more likely to better understand your app’s value proposition, since they’ve been able to unlock premium content from the beginning. If they’ve already experienced unique, premium features, they’re unlikely to want to let that go - instead, they’ll get hooked and subscribe.
In fact, according to ironSource data, users who view 5+ rewarded videos have a significantly higher likelihood of subscribing.
Increase LTV
One of the best ways to increase your LTV is by integrating rewarded video ads into the core loop of your app. Because the user experience is opt-in, users enjoy them more than other ad units, increasing retention and revenue - the two pillars for improved LTV. Giving non-subscribers a way to intentionally engage with your app is key to fostering long-term loyalty.
3 tips for implementing rewarded video into your app
While mobile games are built to support rewarded video placements, apps will have to more carefully consider placements to make these ad units a success. Here are some key tips to build and optimize your rewarded video strategy.
1. Give users a reward they will value
Figuring out the right reward - one that engages and retains users - is the key to success, and it all comes down to knowing your audience and understanding how they engage with your app. First, segment your audience and test your most popular features by putting those behind the subscription wall. Then, offer the most used features as rewards for completing a video.
Note the best way to convert users into subscribers through rewarded video is to offer a taste of your premium content. For users who may be unwilling to pay for a specific feature, you can reward them with virtual currency so users can unlock the features they are most interested in, making rewarded video more of a service than an ad unit.
Aside from offering a valuable reward, you want to offer the reward at a time when users are primed to engage and watch the video ad.
2. Think about rewarded video as a feature, not an ad unit
To improve engagement rates, rewarded video ads need to be integrated into your app’s core functionality and placed naturally within your app’s user experience - which is not so intuitive considering there are no game levels that act as natural pauses.
To get started, build off of features within your app that have high engagement. For example, show users a rewarded video when they go to save a photo to their camera roll after they’re finished editing. Or show users rewarded video before they interact with the user flow - reaching users from Day 1 is a great retention strategy. 
To find the best placement strategy, it’s important to realize there’s no one size fits all and it’s best to A/B test to find out how your users will respond.
3. Start A/B testing early on
To maximize your revenue, it’s important to serve the right reward at the right time, which you can learn by A/B testing and analyzing incentives, frequency, and placements from the beginning.
A/B testing frequently can help you decide which rewards perform the best and will optimize monetization. It’s also essential for figuring out how frequently you can show rewarded videos in a session without hurting your business.
Start by testing pacing, which is the time in between each ad you show, and capping, how many ads you show a user in a single session. Pay attention to impressions, retention, and ARPU, and leave enough time for the volume of impressions to reach a significant level - around 2 weeks.
Pro tip: Use ironSource’s A/B testing tool to easily test and analyze capping, pacing, new ad activation, and rewards right inside the ironSource platform.
Ultimately, it can take time to convert users into subscribers, which means you want to put yourself in the best position to boost revenue throughout the lifetime of your app. Start implementing rewarded video, and reap the benefits of increased revenue, engagement, and retention.
Start putting your placement strategy together here.
