App users are a captive audience. The majority of smartphone owners -- 93% -- use apps daily, averaging three hours. About one in five smartphone owners who have seen in-app ads said they take action afterward, such as conducting a search to get more information on the product.
The findings from the Tapjoy study -- The Value of Rewarded Advertising, conducted by Forrester Consulting -- analyze the ad reward model where consumers receive upgrades or content in exchange for engaging with the brand. The model boosts customer sentiment about a brand, increases relevancy and drives more interactions, compared with more traditional in-app advertisements. The study is based on a survey of 1,500 U.S. smartphone owners.
Some 7% of consumers use social network apps daily, followed by 47% who use music, 47% who use navigation and mapping, and 42% who use finance and banking. Retail follows with 34%, games with 33%, and social gaming 32%.
The in-app ad potential is high, but not all get the same reaction. Consumers view some in-app ad types, such as those that automatically appear, as significantly more annoying and interruptive. Some 74% of the ads served in apps automatically are perceived as annoying, whereas 65% feel they are interruptive and 51% view the ads as boring -- compared with Web site banner ads at 65%, 62% and 45% and ads for online videos at 65%, 61% and 38%, respectively.
About 53% of consumers who participated in the study prefer to see static ads compared with video ads at 27%, or rich media ads at 20% in mobile apps. Some 40% of smartphone owners feel extremely negative or negative about brands that provide in-app ads -- but that percentage drops to 26% when brands help unlock experiences in the app, and falls even further to 18% when the brand provides content to the app.
About 67% of survey participants said they want a reward, such as premium content or virtual currency, in exchange for engaging with an advertisement.
Other in-app ads used as rewards can boost customer sentiment and drive results. Customers stated a preference for being rewarded for the attention they give to in-app ads. And 74% are willing to share digital contact information for rewards. More than half will share basic demographics including gender, age and ethnicity.