App publishers are doubling down on rewarded advertising models to diversify revenue streams and wring more value out of engaged audiences. I draw from a recent panel with four industry experts to explore the explosion in pioneering models that reward consumers for time spent while compensating advertisers and publishers. We also discuss why personalization is the biggest “growth hack” of all and the most effective way marketers can make their game (and their advertising) habit-forming.
Peggy: Rewarded advertising isn’t new, but it’s poised to have new impact and shape the future of gaming app monetization. So how does it unlock new revenue streams for a wide variety of apps? Not just games. Well, in the next 15 minutes, we’re going to find out how and how you can harness your app business. So using rewarded ad formats in your app business to create new revenues. And that’s what we’re going to be talking about here at The Groove, where I shine the light on companies and cool people at the intersection of content, community, and commerce, connecting the dots in the now to frame the future. I’m your host, Peggy Anne Salz, mobile analyst, tech consultant, founder of MobileGroove and a senior writer at Forbes.
And speaking of Forbes, it was the overwhelming response on social media to my recent article that is the inspiration for today’s show because in it I outlined how gaming app publishers are doubling down on rewarded models to diversify revenue, streams, ring more money, more value out of engaged users.
So I have with me, Lomit Patel. Lomit is vice-president of growth at IMVU. IMVU is a game 3d avatar-based social networking universe, where millions of users spend money to purchase virtual currency and redeem it to customize their avatars, meet people. Importantly, play games and have fun. Lomit is also an author, advisor, a mobile hero recognized for his UA expertise and his latest book, Lean AI, little plug there for you, Lomit. Available on Amazon. Welcome to The Groove.
Lomit: Excited to be here, Peggy.
Peggy: And we have Lenny Rabin. He is vice president of revenue and business development at Prodege where he leads its partner, user acquisition business. The platform which Lenny helped design offers advertisers the opportunity to connect their brands with a unique member base of 120 million registered members globally.
So it’s a UA machine for the likes of Hulu, Gillette, and Lenny is an expert on what I would like to call the science of rewards. And so we’re lucky to have you today. Welcome, Lenny.
Lenny: Thank you for having me, Peggy excited.
Peggy: We also have Jonas Thiemann, an encore performance since I also profiled your company Jonas in the Forbes article, Jonas is the Co-CEO of the Applike group a mobile ad tech company that also owns adjoe, where he’s the managing director and both companies under the umbrella of global media giant Bertelsmann.
Jonas, it’s great to have you here on The Groove.
Jonas: Thanks for having me again, Peggy, it’s always a big pleasure.
Peggy: And we also have Dan Beasley, one of our final guests here, Co-founder of Viker, a London-based independent mobile studio that develops designs, publishes games.
More importantly, Viker is particularly focused on rewarding their players in new and innovative ways for time spent playing games. Welcome and thanks for joining me.
Dan: Thank you, excited to be here.
Peggy: So we’re all here and we all bring a different perspective. We have a lively exchange of diverse views, but I want to do a little round here, again, to understand where you’re fitting in the ecosystem.
Dan: So I’m co-founder of Viker, my day-to-day is operations and growth at Viker. We focus, as you say, on rewarding our players and essentially sharing our revenue with our most engaged players. So we built the whole studio around trying to create the most engaging experiences.
And we really started a couple of years ago, just at the growth, started at the growth of rewarded videos. So we’ve integrated it in some quite unique ways. And I think we’ve created some very unique experiences for our players.
Peggy: Some loops that we’ll be talking about.
I’ll continue the rounds. We’ll go to another app company and publisher. Lomit, tell me a little about your company and how you fit in the ecosystem.
Lomit: In terms of advertising revenue, we have a diverse mix of offerings, which range from offer walls, rewarded videos, as well as playtime.
So those are the three options that we leverage right now, which really helps us to get users more engaged in the game.
Peggy: You mentioned playtime, that’s an ad format from adjoe. So why don’t you tell us Jonas, a little bit more about where you fit into the ecosystem and how playtime works?
Jonas: So adjoe aims to bring rewarded advertising to the next level by not rewarding users for installing apps or watching videos, but actually for spending time in apps. So everything adjoe is doing is around the core idea of time spent and this is what IMVU users in this use case are able to do or users of other apps and earn currency by installing the games through us and playing this game.
And I think the unique feature is it’s happening on time spent, so it’s cool for the user. They can just start playing and earn rewards in a repetitive fashion, which also means every few minutes, they see a sum notification that reminds the user to come back to the IMVU app. So I think we try to create two values, a new ad monetization stream and new ad revenues and at the same time increase the retention for our publishers.
Peggy: That’s also where you’re coming in Lenny because you’re thinking about your ecosystem of partners. Tell me how you are bringing rewarded advertising into the equation.
Lenny: Prodege actually, our mission is to create rewarding moments and we try to do that both for internet users or players and as well as all types of advertisers.
So we’ve developed on one side, a machine where users can come through and engage with surveys and with shopping and with offers to earn rewards. And then, on the flip side, that’s driving users for our advertisers in whichever category that might be. So we try to drive that rewarding engagement when a user takes a meaningful action for an advertiser and similar to Dan, we’re sharing that revenue that we’re getting from the advertising dollars back with the users for those actions.
Peggy: You’re aiming for the highest LTV you can get and you’re doing this through showing ads and sharing those ad revenues. Can you tell me a little bit more about that experience and how you’re achieving that?
Dan: So for Viker, we’re a portfolio-based business, a portfolio-based studio.
We’ve got a thesis that if you like being rewarded monetarily in one game, then you’re probably going to enjoy it across two or three different games. So we use global mechanics across all of our games. And actually, what we try and do is move people around at the most logical point in their journey.
We’ve got quizzes, we’ve got lotteries, we’ve got lots of different formats that people can play across our games. And as I say, we move people around when it makes sense. We give them opportunities to engage in and watch adverts at the right point.
All of that means that people come back on a regular basis and really engage all the way through the experience.
Peggy: I mean, experience is very key here. That’s what I’m hearing. And also Jonas, you made that point before about the experience you’re offering through your ad format.
Can you give me a better idea of how it impacts the mechanics?
Jonas: So, first playtime as an ad unit is an awesome fit for apps that were able to generate an engaged community. This engagement can be around like in IMVU’s case around social connection. This engagement can also be around; I want to earn cash rewards, like in the case of Prodege and Lenny. And once you have that, there’s still a time in this whole engagement cycle where it’s getting harder and harder to monetize that user in the session.
If you go from a twenty-minute session to a 30-minute session, it’s very hard to create, let’s call it engagement value, for these additional 10 minutes. And this is where playtime kicks in and tells you, “Hey, cool. You enjoyed your session. You did what you did today, but why not now install and play a game to earn even more currency for your favorite app.” That’s the core idea and how this money tests into numbers is we see after the first game install through our ad unit, up to 10 more sessions for these users within the first week in comparison to users that did not install the game through us.
And that really shows that this is creating a vicious loop. The user does go away, does install the advertiser’s games, and starts playing it, but also is reminded to come back to the original game.
Peggy: And that’s ten more sessions. What can that translate into in other metrics?
Jonas: In terms of revenue uplift, what we do see is, just to give you the rough example, in the US ARPDAU’s up to a dollar per user, so average revenue per daily active user, and this can translate into incremental uplift of 20% up to even 100% for games and apps that have not been very sophisticated at monetization before.
Peggy: I’d like to pose the same question to you, Lomit, because you have, as we know, it’s more of a social connection. So it’s not about hitting a certain level in the game, although you do play games in the universe, but how many rewarded formats? You mentioned a few that you have. Do you have some thoughts around where they fit in the experience? Where does one format fit as opposed to another?
Lomit: So what we have identified is the ideal user journey. As soon as somebody comes into the game, what are the behaviors and actions that they need to take that really lead to a high lifetime value user? And based on that, we try to predict out based on what somebody is doing within the first 24 hours, wherever the best way to monetize them is going to be either through in-app purchases or through advertising.
And based on that, what we want to try to do is customize the sequential experiences that they see in the product to really lead them either down to in-app purchase, to really buy IMVU credits to try and customize the avatar, to create different virtual worlds, to try and engage in chat rooms, to make friends. Because ultimately, it’s creating that social loop around creating friendships and, once they have the friendships, that’s what leads to having fun, where people continue to keep coming back into the game.
And we know, for the most part, that there’s going to be a high percentage of users who aren’t going to be able to purchase those IMVU credits. And so that’s where we try to lead them into the place where they can actually earn those credits either through rewarded video or offer walls. We’ve found with playtime, that’s the least invasive way to try and get people to spend time where they can continue to have fun and continue to build those predictable habits where they continue to go through that loop of getting engaged into the product that leads to a good lifetime value user for us.
Lomit: For us, on average, we find that people spend probably about 55 minutes a day on our game and what that entails is really getting people to spend time in spending those sessions within chat rooms or, on average, trying to get people to get to at least having ten friends in the game. We know if they can make ten friends in a game, then that’s going to create enough of a social loop. That’s going to continue to have them keep coming back. And so, what we try to do is early on in a user’s experience is try to expose them to ways where they can either get more discounts on buying those IMVU credits early on. Or expose them to ways of earning those credits.
Peggy: And so it’s really understanding also, when’s too much when’s too little, seeing that in the behavior. Now Lenny, your focus is on gaming companies, but of course, that’s just some of your customers and clients. You have major brands among them as well. And I guess it’s a matter of getting that mix right and starting with those behaviors early on.
Lenny: So it’s interesting because we, as much as we’re helping advertisers on the UA front, we ourselves are one of these advertisers and we need to bring in new users and monetize them and find those different points to keep them engaged.
Lenny: Before the pandemic, we saw an average of about 25 minutes a day per user, on Swagbucks itself or on one of our sites itself, and that number has gone up to about 45 now.
So we’re definitely seeing a lift there. On the gaming programs that we run, we generally look at how many days it takes for someone to get to a certain rewardable moment.
So, if they’re taking 12 to 15 days to spend, they have to spend some time within the game to get to that point. Going back to your question about, what are we doing to bring those users in and what are those benchmarks?
So we bring users in on different messages, whether that’d be shopping or survey, or cashback for offers. So we have different UA sources and our team tests different cohorts of users, what’s going to bring them into the program. And so we may bring in a user on a survey message and they’re coming in to get paid, to take surveys.
And we’ll find that by presenting them with different types of campaigns at the beginning, we can have them answer surveys and do other things. Some cohorts just come for the surveys. So there’s definitely a mix of cross-marketing and figuring out which users are going to monetize on more than they came through the front door for and which less.
But one of the things that we found is that really establishing trust with them as a source of campaigns for them and a source of rewards for them is key to retaining them for the long haul. So putting small actions in front of them that give them small rewards, whether those are self-funded or funded by different advertisers and having them feel that rewarded moment quickly, seems to be the key to keeping them on board. Then along the lines of what Dan said, it’s literally keeping your promises and making sure that whichever advertiser you do send them out to, and whatever message you told them about what award they would get for completing a specific action, actually happens.
Jonas: So I think it’s quite interesting what we see in our datasets, our SDK is out in hundreds of apps and we see the time spent, not only for the apps where we integrated in but also from the device.
So once we are an SDK on the device, we see all apps use on the device basically. And what we saw in terms of time spent per day and uplift since March. In tier one and tier two countries, especially was crazy. We’ve never seen something like that in comparison to the year before.
There was also 30 to 40%, up in the top tier, mobile game free to play publishers. At the same time, those advertisers share with us RI and revenue data and also revenues, in-app revenues, have gone up roughly by the same amount.
Peggy: I mean, those are exactly that, you said it yourself, some crazy numbers. I’d like to unpack that a little bit. I mean, we can’t know for sure, but there are some levers that marketers can use to reward players the right way.
Jonas: I think the key is for this Viker and Dan is an amazing example. That ads, it’s not like we’re used to in traditional times, where we have a TV session and then there’s an ad break for five minutes and ads are something annoying.
But there has been a recent study by Facebook audience network that shows that far above 50% of users have started to consider ads as a reason to come back to games and apps. So I think in Dan’s apps, that’s exactly true. They are happy to watch the videos earn more chances to play his games.
I think this is how people need to see it. Of course, I have my 5% of the users who do in-app purchase. But still, 95% don’t and how do I monetize those users? Not by bombing them with annoying ads, but by making this an integral native part of the experience, and I think all of the companies here on the call have done an amazing job in that way.
That’s why they see good numbers, not by just plugging in any ad SDK and letting it run.
Peggy: That makes a lot of sense. And of course, Dan, that’s what you do anyway. But in December, you have a little bit of like maybe a seasonal gift you could say because you’ve got, Who Wants To Be A Millionaire Franchise.
That’s amazing, but you also have a different model here. As I understand it, you’re looking at a hybrid, something that is rewarded and something more.
Dan: Yeah, so we’re obviously really excited about Who Wants To Be A Millionaire.
Peggy: Yeah. Congratulations. It’s great.
Dan: It’s arguably one of the world’s most recognized quiz shows and to have the opportunity to take it onto mobile and to give people the opportunity to sit in the hot seat and win real money is something that we are really excited by. We’re very aware that, as people have already said, that within seven days most of the audience has slipped away. That’s just a fact of the world that we operate in. What we are really trying to design from the ground up is an experience that, whether you are going to purchase or not, we are going to create an experience that is right for you. Whether you want to engage only on an advertising basis with us, or if you want to engage through IAP’s, you could have a great experience and that we are designing it from the ground up. As opposed to retrospectively trying to shoehorn rewarded videos or interstitials into the experience.
So, early on, we’re going to try and work out what those signals are from the player and we’ll take them down the right path, depending on their propensity to engage with us, via ads or via in-app purchases.
But equally, you will not be punished if you choose to go down one route or the other. I think that’s really important to the experience that we’re trying to create in the Millionaire game.
Peggy: So the bigger opportunity is in personalization, in understanding more about the segmentation, right rewards. Before, it was the right experience to the right user, now we’re talking about the right reward for the right user.
Lomit: So, from our perspective, one of the things we always track is credit balances that users have. The other thing that we track is how often they go into the shopping side of the app and what they add to their wish list and potentially what are the things that they’re browsing. Because ultimately, we’re naturally creating this habit, helping people create an aspirational life, which requires buying stuff. So we know the sort of things that they’re looking at, and we know how much credit that they really have in the account and what the difference is. Then based on that, we try to give them, that’s when we try to, sort of hit them up with the ability to either buy more credits to make those purchases or opportunities to earn more credits, to try and get to that balance, to buy some of the things at that they’re looking at. But we know that’s the right moment because that’s when people are really motivated because that’s when they’ve got their mindset on something that they want.
Peggy: They’re talking about personalization being, what’s going to fuel future growth and revenues for them. Do you have some thoughts as to what level of personalization or some do’s or don’ts around that?
Jonas: Totally. So when we started this playtime, the core idea was to reward users for time spent, but we showed every user the same game offers, suggestions in our ad unit.
And then, we quickly saw by reading the installed apps from the device that we can profile the user. Predict the age, the gender, with a very high percentage, the interest of the user for a match-three game, we could say, just target the users of another match-three game. And we saw this power of the segmentation of the targeting.
How much more uplift it generates in advertising revenues. eCPM’s times’ factor three or factor five, but also in terms of retention, because if you show games to the user, or adds to the user that actually match, your churn will be much, much less opposed to showing just everyone the same thing.
Lenny: I want to add to that, something that I’ve seen on the shopping side, which I think hasn’t necessarily been addressed yet on the gaming side, but could be, is, companies like Macy’s, Best Buy, massive retailers. They have a similar issue. They have users that come but may not be interested in their services anymore and how do they capture them back? And one of the things that we found was, for years, we would send email, Macy’s earn 5% cashback. Macy’s earn 5% cashback. Well, that message becomes dead and all of a sudden, we started sending a message for earn 10% cashback on a KitchenAid at Macy’s. Earn 5% cashback on women’s clothing at Macy’s. And we started messing around with specific products that we were messaging to the user, and we started seeing big uplift. I don’t have numbers in front of me to share, but if there’s a way to sort of change that messaging from, play this game, do this, and find that either co-brand or personalization, or changing that message up from being the same again, again, message.
We should start seeing it. So I think that’s part of the future of how we can learn from what’s sort of legacy and bring that into the app and mobile and gaming space.
Jonas: Yeah, it’s a very legit point Lenny is making. With the own apps we operate playtime in. We have some own apps in one of our subsidiaries.
We really see that a push notification that says, hey, play, let’s say a Playrix game, Homescapes for another 10 minutes to 20 extra points performs up to three times better than just a general message, hey, just play more games and earn more points. So what Lenny is saying is absolutely true also for the gaming world.
Lenny: Maybe it’s that people need to be told exactly what to do versus giving them options. So when you target that message to do this, everyone’s like, okay, you know.
Peggy: No, it’s true because I’ve read all of those books that we have a problem with too much choice. So if it’s very generic to your point, it might feel as if it’s not truthful, not trustworthy. Oh, get money off. That sounds okay. But then also limiting the universe of possibilities. You know, I want to have 10% on this. I’m just curious. This is something I haven’t heard of. This is an exciting option to bring push and other communications channels more into the offer. I’ll stop with you two practitioners, Lomit and Dan. Does this sound like something that has legs in the gaming space?
Lomit: Definitely. We do a lot of that already, especially with push in-app. To what Lenny and Jonas were saying, try and make it really specific in terms of what we want users to do. Because we know, otherwise, we’re sending them into this universe where there’s too many different things they could potentially do to earn rewards, but we want to make it really specific and ideally deep link right into what we want them to do.
Dan: Likewise, just to echo that, we use a lot of push. It works very, very well for us in the more personalized and the more targeted it can be. So the response rates are some of those numbers that we’ve just mentioned that kind of factor of two, three. It’s not unusual for us to see similar kinds of numbers as well.
Peggy: So really, it’s going to evolve not only to more rewarded ad formats in games but also making that part of the communication
Peggy: Thank you so much for sharing and thank you, of course, for tuning in more in the series, more interviews, more opportunities to connect in the meantime. Of course, knowledge is for sharing.
So spread the word, tell your tribe, like the show, share it, subscribe to the channel. All of the above would be absolutely amazing. We aren’t live yet, of course, on The Groove, but we do try to keep it lively, so you can DM me if you want to find out more about being a guest on the show. Or just email me firstname.lastname@example.org. Until then, this is Peggy Anne Salz signing off for The Groove.