Provocateur:

With brands shifting their money away from TV and other legacy formats, mobile video has become the go-to option for campaigns. In the back half of 2018, mobile video advertising continued its impressive growth, with all formats seeing significant increases in ad spending. But none saw quite the level of growth as rewarded video.

In recent years, rewarded video has emerged as the preferred ad format among users. In fact, one study found that almost 70 percent of users regard rewarded video positively. This level of approval was significantly higher than all other ad formats, proving users do not mind ads as long as they feel like they are getting something in return.

While rewarded video’s growth makes sense, a number of surprising insights around this popular format emerged from Smaato’s latest Global Trends in Mobile Advertising report. Here are the four that marketers and publishers need to know.

Rewarded video is growing 3X faster than other video formats.

While it might not be surprising that rewarded video is leading other formats in growth, the sheer size of the growth in comparison to other formats remains impressive. In the second half of 2018, mobile ad spending in rewarded video jumped 139 percent compared to Q2 2017. That’s in comparison with 47 percent growth in video interstitials, 43 percent growth in instream pre-roll, and 42 percent in outstream. It would seem that rewarded video, which offers users an in-app reward in exchange for choosing to watch the video, is a hit with users as well as with brands looking to reach an engaged audience.

Profile of rewarded video advertisers is diversifying.

Advertisers across all industries are leveraging video to grow their businesses and reach new customers. There are significant differences when it comes to the formats each industry currently favors, but we’re seeing shifts in the rewarded video space. On the Smaato platform, the companies using rewarded video are most likely to be apps (and particularly gaming apps), which account for a 60 percent share of current rewarded video spend. But that’s changing fast. Media and retail brands are increasingly leveraging this format to make their campaigns successful, with media advertisers accounting for nearly one-fourth of total rewarded video ad spending on Smaato’s platform. In comparison, apps account for only a modest sliver of investment in all video formats, where retail and media brands lead the pack.

The majority of rewarded video viewers are female.

One of the more surprising insights emerging in Smaato’s rewarded video analysis was that 57 percent of rewarded video viewers are female. This makes rewarded video ads an effective tool for advertisers looking to reach viewers in this demographic. It also suggests that a broader mix of industries could benefit from investing more heavily in the format.

Rewarded video viewers are older than the average video ad viewer.

Similarly, another surprising is the fact that the audience for rewarded video is typically older (33-41) than the average audience for all video ads (24-32). As with the female skew of rewarded video, this suggests that the audience for rewarded video—76 percent of which is on Android devices—is not the stereotypical young male gamer that some might assume.

Users’ preference for rewarded video as a format is rightfully translating to tremendous growth in advertiser investment,

and that’s not a trend we expect to see reverse any time soon. As more industries recognize the unexpected (and lucrative) profile of today’s rewarded video viewers, we expect to see this boom accelerate, bringing benefits to publishers, advertisers and users alike.

About the Author

Gareth Noonan is general manager, Americas, at Smaato. He has more than 10 years of experience in mobile and desktop video advertising technology and M&A. Previously, as the general manager of video for blinkx (now RhythmOne), Gareth built a consistent Top 5 comScore video property and also participated in M&A on five deals totaling over $100 million in value.