App Monetization, Video

Rewarded Video Ads – The Publisher Payout Fallacy

Rewarded video ads means that the user gets in-game currency but the publisher only gets paid on install
Video advertising is hot in the mobile app ecosystem today. Everyone is talking about it and many app developers are doing it. Even more so in mobile games. The rewarded video format especially is becoming popular by the hour and even Facebook and Google are moving into the space according to latest rumors.

What is rewarded video advertising

Video ads can be shown to users in different places inside the app. If the app has video content, the video ads can appear as a pre-roll. In other situations, the ads can appear in a natural breakpoint. A very popular option these days is to allow users to opt-in to the ad by offering something in return – a reward. This practice of giving a something in return for watching an ad is sometimes referred to as value exchange. The user gets some benefit in the app that is normally a premium feature in exchange for the value created for the advertiser by the user watching the ad. In games, the premium feature is mostly in-game currency.

Developers give the reward when video ad is shown

From the developer standpoint, they are giving the reward to the user instead of selling it for money. For example, a game might credit the user 5 precious gems in return for watching a video ad. The ad-network SDK is usually providing a call back function that lets the developer know that the video view is completed and the developer writes a code to give the reward.

Developers don’t get paid when a reward is given

Here is the loophole – the developer might expect to get paid in return for the precious gems he is giving away. However, that’s not happening. Most of the video ad-networks are not paying for video views at all. They are paying a share of the revenue they are making which means the developer is getting paid mostly for installs that the video might be driving. If the video is interesting, if the user likes the app, downloads, installs and opens it. Only then the developers get paid. Not for his users watching the videos and not for giving away his premium features for free.

Transparency and clarity are a big deal

Some app developers might be ok with this loophole since some of the views generate clicks and some of the clicks generate installs and eventually the developers do earn money. However, the fact that many developers are not aware of this is alarming and shows that ad-networks are not being transparent enough about their practices.

Impact on optimization and paid marketing

The most important impact on the game developers is that they lose sight of what revenue is generated by what users. This is critical for in-game optimization, for mediation decisions and for marketing ROI analysis.

If you’re monetizing with rewarded videos it’s important to know the Ad revenue per user. Check out SOOMLA Traceback – Ad LTV as a Service.

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