How Reward-Based Ads Boost Engagement and Revenue

Why Reward-Based Ads Matter

Unlike standard display or interstitial ads, rewarded ads are voluntary and fit seamlessly into the user experience. This leads to:

• Higher Engagement: Approximately 62% of mobile game enthusiasts actively choose to engage with rewarded video ads. (Source: SmartyAds, 2023).

• Stronger Conversions: Users who engage with rewarded video ads are 4 times more likely to make an in-app purchase than those who don't. (Source: Business of Apps, 2025).

• Increased Retention: Rewarded video ads have the potential to increase mobile app retention by 4 times. (Source: Business of Apps, 2025).

📌 For example, Royal Match game grants extra lives and power-ups when players run out of moves, reducing frustration and increasing session time. This strategy helped generate $112M monthly revenue, making it the top-grossing puzzle game in 2023 (Source: Sensor Tower, 2024).

How to Implement Rewarded Ads Effectively

Implementing rewarded ads requires a balance between user experience and monetization. Here are key steps for a successful integration:

• Choose the Right Ad Format – Decide whether to offer video ads, interactive ads, or offerwalls based on your app's user behavior.

• Ensure Reward Relevance – Rewards should align with the user's journey. In games, extra lives work well; in learning apps, premium lessons or streak protection keep users engaged.

• Optimize Placement – Rewarded ads perform best at natural breakpoints (e.g., after a level, before accessing premium content) to avoid interrupting the user experience.

• Monitor Frequency & Impact – Studies show that 2-3 rewarded ads per day maximize engagement while preventing ad fatigue (Source: Unity Ads, 2024).

📌 Hero Wars (Nexters) implements a reward-based system where players can spin a prize wheel to win in-game currency or bonuses. One spin is free after watching an ad, encouraging engagement and repeated play, leading to a 73% increase in user engagement (Source: Unity Ads, 2023).

The Future of Reward-Based Ads

🚀 Beyond Gaming – Fitness, e-learning, and fintech apps are adopting reward-based ads to drive user actions.

🔄 AI-Optimized Rewards – Algorithms will tailor rewards in real-time to maximize engagement and LTV.

💡 Loyalty-Driven Ads – Brands will integrate rewarded ads with loyalty programs, offering discounts or perks for engagement. 📌 A good example is Duolingo, which incorporates rewarded ads, allowing users to watch ads to remove interruptions, access targeted practice sessions, or unlock premium features. In 2024, Duolingo reported a 54% increase in daily active users (DAU) and 40% revenue growth. While multiple factors contributed to this, the company’s monetization strategies, including rewarded ads, played a role in improving engagement. (Source: Duolingo Annual Report, 2024).

Reward-based ads aren’t just another monetization strategy—they drive engagement, retention, and revenue. Apps that use them effectively turn casual users into high-value customers while keeping the experience seamless.