young man smiling outdoors holding his phone with decorative icons to represent in app purchases

IAP Revenue: How Playtime Doesn’t Hurt But Boost It

No one’s got time for revenue cannibalization. But every app publisher has time to diversify its revenue streams. 

Publishers until not so long ago believed that integrating in-app ads in their mobile apps would hurt revenue coming from in-app purchases

They feared that users would want to earn in-app currency from rewarded ads and be less inclined to reach for their wallets. So, we launched an investigation to assess adjoe’s rewarded format, Playtime, and its effect on IAP revenue.

How Do Ads Affect IAP Revenue?

It’s tempting – maybe even logical – to think that in-app ads and especially rewarded ads deter users from making in-app purchases. 

Today, we know that users who engage with in-app ads are more likely to make a purchase.

line graph showing how in-app ads leads to increase in in-app purchases

Data from the gaming market shows that publishers benefit from a hybrid model with in-app ads and IAPs. After adding ads to their existing IAP model, these developers saw a lift in revenue and lifetime value. To break it down in numbers, this is what happened: 

  • 50+ percent of them saw an increase in ARPDAU 
  • 30 percent observed an increase in IAP revenue
  • 33 percent increased their app’s lifetime value
  • 93 percent of publishers say they now (as of 2023) monetize with in-game ads

You are probably thinking: “That can’t be the case for all ads, can it?” And you’d be right. Strategically placed ads that prioritize a positive user experience boost in-app purchases the most.

The Right Ads Increase In-App Purchases

We know app users are happiest when they’re served nondisruptive, relevant, and engaging ads. And when they’re happiest, they’re more likely to spend money (ideally, in the app).

Users who engage with rewarded video ads, for example, are four times more likely to make an in-app purchase than those who don’t. Because the format is user-initiated, click-through rate is also higher. 

If publishers prioritize user-initiated – not spammy – ad experiences, users will stay in the app and engage for longer. And if publishers give users the opportunity to earn relevant rewards on top of that, these users are going to invest more time and energy – and eventually money – into the app because they see its value.

young man looking down at his phone with decorative screen element telling him to Play and earn coins.

User-initiated ad format Playtime rewards users for playing advertised games tailored to their interests. It’s renowned in the adtech market for being one of the most user-friendly formats, lifting app engagement, ad revenue, and IAP revenue for publishers. No revenue is cannibalized; it’s just about incremental revenue through another revenue stream.

The security and reliability of Playtime’s rewarded process allows users to trust the app, and they are more inclined to spend their money there.

Playtime Builds a Balanced In-App Economy

There’s a reason we say “not all ads.” Apps can unintentionally get their rewarded economy wrong. 

Many publishers fall short on their IAP revenues by offering too many high-value rewards through ads. Insufficient rewards on the other hand discourage users from engaging with ads and cause them to churn.

Playtime’s algorithm provides a target margin for publishers so that they can track profitability and ultimately maximize revenue. Why is this important? Publishers must focus on profitability when integrating rewarded ads into their apps – that is, on finding the right balance between IAP revenue, rewarded ads revenue, and payouts.

circle showing the components of a balanced in-app economy

Achieving this equilibrium often requires a trial-and-error approach or A/B testing to identify what works best for an app depending on GEO, user demographics, and gaming genre or app vertical. Once they’ve established a balanced in-app economy and a mechanism to keep driving engagement, they have the foundations of a successful, sustainable, and lucrative app monetization strategy.

Why Playtime Partners Reach Higher IAP Revenue 

In-app ads are having their moment within hybrid monetization models – we’re seeing fewer mobile apps relying solely on in-app purchases as a revenue stream. 

ARPDAU, IAP revenue, lifetime value: These are important KPIs. But, for publishers, a bigger achievement is to be able to stabilize and grow their revenue – and avoid dependence on a small selection of revenue streams. 

That‘s why publishers partnered with Playtime are happy to integrate this new revenue stream into their ad stack – as an added bonus on top of their other revenue streams.

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