• by Gavin O'Malley  @mp_gavin, August 1, 2017

Some app developers suspect “rewarded” ads take revenue away from in-app purchases (IAPs). Yet, new research suggests the ads — which get users to play them in exchange for in-app rewards and premium content — actually boost IAPs.

Indeed, users who engage with rewarded ads are 4.5 times more likely to make an in-app purchase than those who do not engage with ads, according to findings from Tapjoy.

The report also found the amount of money that app users spend increases significantly after interacting with what are also known as “opt-in” ads.

“Some app developers fear that giving their users the option to earn currency through rewarded ads will reduce the likelihood of IAP or negatively impact user spend,” Benjamin Chen, SVP and general manager of developer relations at Tapjoy, notes in the new report.

What explains the counterintuitive findings?

“Our hypothesis is that rewarded ads serve as an initial introduction to an app’s in-game economy or premium content,” per Chen. “Once users get a taste for it, they want more — and they’re willing to pay for it.”

For its findings, the mobile monetization firm analyzed the activity around eight popular apps — and found seven showed significantly higher IAP conversion rates among users who engaged with ads versus those who did not.

While the increase was 4.5 times the average, two of the apps experienced an increase of at least nine times the average — meaning that users were more than nine times more likely to make an in-app purchase after they engaged with a rewarded ad.

In all eight apps studied, IAP spend increased significantly after users engaged with an ad — by an average of 326%.

Across the apps studied, the boost in average spend per user ranged from just shy of 200% to more than 500%. 

Also of note, rewarded ads appear to have a positive impact on user engagement, according to the study. Across all apps studied, the average number of daily sessions per user increased 34% among those that completed at least one rewarded ad. 

Tapjoy had previously reported that engagement with rewarded ads shows a high correlation with increase in retention rates.