Here’s an interesting fact: games that use rewarded advertising and offerwalls get over 3 daily active sessions per user. Games without any rewarded ads? Around 2.
How can a simple in-game reward drive that kind of engagement? Why do people willingly watch ads, spin wheels, and tap buttons just to get another hit of virtual currency or a few extra lives?
It’s simple: something clicks in our brain that hooks us on the game for longer.
But it’s not a mystery, it’s psychology.
In this article, we’re breaking it down: from lab rats to dopamine and reward schedules, we’re diving into the science that makes rewarded advertising so powerful.
You’re More Likely to Do Something if It Brings You a Positive Outcome
Incentive Motivation Theory
Back in the 1930s, psychologist B.F. Skinner elaborated his incentive motivation theory.
According to this theory, our behavior is often influenced by external rewards rather than internal desires.
In other words, if doing something brings you a positive effect, you’re more likely to do it.
Skinner tested it on lab rats.
He associated pulling a lever with receiving a certain amount of food, and he soon noticed that rats quickly learned this association, so they would pull the lever on purpose to get the food.
So, what is the connection between lab rats and rewarded advertising?
The principle is just the same:
- We watch an ad.
- We receive a reward, such as in-game currency, lives, or bonus content.
- We learn that engaging with the ad will bring us a benefit, so we start doing it more often. This reinforces the behavior, creating a loop of repetitions.
A great example of this?
Rewarded ads are placed at a few crucial points of the game. For example, when you run out of energy to complete the level, engaging with the ad gets you a reward. This turns what might’ve been a passive moment into a deliberate choice, with real in-game benefits.
Our Brain Is Wired to Look for Gratification
Dopamine and Instant Gratification
At the heart of our repetitive actions there is dopamine.
Dopamine, also called “the happiness hormone”, governs pleasure, motivation and learning.
When an action feels good – like eating chocolate, playing with our dog or hanging out with friends – our brain releases dopamine, and we instantly feel pleasure.
That’s why we tend to repeat those same actions again and again, because our brain knows we’ll get instant gratification.
The most interesting thing is that dopamine isn’t released when we receive the reward, but before. The promise of a reward is often more powerful than the reward itself.
Let’s apply this to rewarded advertising.
If watching a video ad or interacting with an offerwall can give us one more chance to win the game we’re playing, we’ll do it, because we already know that it’s effective and we can keep playing.
But there’s a catch.
Once our brain gets used to the rewards, they become less effective and lose their power.
So what should you do?
You switch strategies. That’s where the next principle comes in…
Unpredictability Is What Keeps Us Hooked
Variable Rewards and The Dopamine Loop
Earlier, we explained Skinner’s experiment with lab rats. But we left out an important detail.
In fact, Skinner tested his theory on two different groups of rats.
- The first one would pull the lever and always get the same amount of food.
- The second one would pull the lever and get random amounts of food: sometimes small, other times large, other times again nothing at all.
Interestingly enough, Skinner noticed that the second group of rats would engage with the lever more than the first one.
This is due to something called variable rewards.
When the reward is always the same, our brain already knows what to expect, and after a while, our dopamine levels remain standard.
However, if the reward is unpredictable, our brain keeps on being hooked on a dopamine loop, always looking for the next reward.
This is more or less the same principle of dating apps.
We know that swiping through a dating app can lead to unpredictable outcomes: will the next person be a disappointment or the love of our life? So we keep on swiping.
In rewarded advertising, we notice that mechanics that use:
- Daily watch limits.
- Mystery boxes or wheel spins.
- Tiered reward after multiple views.
often outperform predictable incentives.
Again, Merge Sweets by Springcomes is a good example of this.
The game cleverly plays with unpredictability:
- Players can spin a Wheel of Fortune once per day by watching a rewarded ad. Each spin brings a different outcome.
- For their regular ads, there’s a daily watch cap, but the more ads a player watches, the bigger the reward, especially when it comes to extra lives.
Building a reward system that is based on unpredictability can tap into the dopamine curiosity loop and keep users engaged for longer.
Turn Advertising Into a Personal Choice
The Self-Determination Theory
Forced advertising is often perceived as a nuisance and causes psychological resistance and aversion. This is not a surprise.
However, a study found that by giving users control to choose what kind of advertising they wanted to see, this led to a significantly higher retention rate – even compared with ad-free websites.
So when people are in control, they are more likely to have a positive reaction.
This ties to the self-determination theory.
In simple terms, people feel more motivated if they feel autonomous.
The strength of rewarded ads is that they are opt-in, meaning that users choose to interact with them.
That is why rewarded advertising shows overall less reluctance and more engagement: when users choose to interact with an ad, it feels like a decision and not an interruption.
Don’t Give Away Too Little, Nor Too Much
The Cobra Effect
During the British colonization of India, a cobra problem arose: there were too many cobras in the streets of Delhi.
So the government came up with an interesting solution. Whoever caught a cobra and proved it would earn some money.
The result?
The cobra problem increased because people started breeding cobras to earn more!
So while rewards can be powerful, they’re not foolproof. A poorly designed incentive system can backfire, and instead of increasing your revenue and engagement, it can decrease them.
In rewarded ads in apps, this could show up as:
- Users farming rewards rather than progressing naturally.
- Reduced in-app purchases if ad rewards are too generous.
- Distrust or resentment if users feel manipulated.
The so-called “Cobra effect” is also tied to the concept of intrinsic vs. extrinsic motivation. If someone is already willing to do something unprompted (intrinsic motivation), then providing a reward (extrinsic motivation) can have the opposite effect.
For example, if your game already has a good retention rate because people like it and are interested in it, interrupting them with too many rewarded ads could turn them away.
So, what is the right way to approach this?
You need to create a thoughtful reward strategy that aims at results in the long run.
Here are a few tips:
- Calibrate reward type and value (for example, ~20–30% of what a user would pay for the same item).
- Test different timing (natural breakpoints, session ends, failure states).
- Ensure transparent communication: this helps set clear expectations for users (“Watch a 30-sec ad to get 100 coins”).
Remember: rewards must be meaningful, balanced, and well-integrated into the experience, not just bolted on for short-term gains.
Rewarded Advertising: An Evergreen Ad Strategy
As you understand, rewarded ads succeed because they activate fundamental psychological motivators:
- The desire to earn something.
- The thrill of a small win.
- The feeling of making a choice.
- And the satisfaction of immediate progress.
By respecting user autonomy and designing meaningful rewards, you can use rewarded ads to both monetize your app and enhance the user experience.
In fact, according to an internal study carried out by Google, 50% of users would be less satisfied with their app experience if rewarded ads were removed.
So, when implemented well, rewards not only bring satisfaction to users, but they can also:
- Boost retention by adding value to your app.
- Increase engagement through relevant offers.
- Drive ad revenue and in-app purchase conversion.
Don’t think of rewarded ads as a workaround. They’re more of a user-approved format that improves both experience and performance.
