As application use continues to grow, brands and developers are looking for the best ways to target these new audiences. Two new reports suggest that offering in-app rewards can be a successful strategy for some marketers.

In-app rewards give brands an effective way to reach large mobile audiences, increase app retention rates and drive monetization, according to a new report from Kiip. Similarly, a report from Tapjoy and Forrester Consulting found that 59 percent of app users want to be offered a reward in exchange for interacting with an in-app ad.

?Consumers are telling us that standard banner-based advertising on mobile isn?t what they want, but that ad sponsored in-app rewards, or incentivized ads, are a more logical and effective way to connect with them,? said Patrick Seybold, vice president of global communications and marketing partnerships at Tapjoy, San Francisco.

?Consumers have shown that they understand the virtual economy and want to take advantage of the value exchange that is happening with in-app advertising,? he said.

?Through the survey we?ve seen that consumers want to be in control over their mobile advertising experience and are more willing to engage in ads in exchange for a reward of their choice.?

Making ads palatable
Overall, app users are not enthusiastic about in-app ads, with 70 percent of those surveyed for the report saying they found automatically served in-app ads interruptive, according to the report from Tapjoy and Forrester Consulting. Additionally, only 17 percent found current in-app ads interesting, 14 percent found them relevant and 12 percent found them engaging.

However, the results suggest that app users expect to see ads in their free apps with more than one-third of U.S. adults with a smartphone and who use apps monthly or more indicating they would prefer an ad-driven model for downloading apps.

One of the ways to make in-app ads more palatable is to provide some sort of incentive, according to the report, with 59 percent of respondents saying they want to be offered a reward in exchange for interacting with an in-app ad.

The report recommends that brands looking to leverage in-app rewards try to understand as much as possible about the smartphone user that they are trying to reach and look for ways to reach niche groups and provide content that is relevant to them.

In-app rewards can also give marketers a way to encourage users to take a quick and easy action, such as subscribe to an email or Like a Facebook page in exchange for a reward. It is also important to align any content or incentive with the brand as well as the app itself in order to maximize impact.

Rewards are not the only way to make in-app ads more appealing. The Tapjoy and Forrester Consulting report also suggests giving users more control over the ads they see, either by letting them choose from a selection of ads or to opt-in to view an ad.

Other suggestions from the report include leveraging data to make ads more relevant by fine-turning targeting and delivering ads relevant to a user?s location.

Reaching engaged users
In-app rewards from brands also drive engagement levels for apps and give marketers an opportunity to associate themselves with an enjoyable user experience by reaching users at a time when they are engaged and receptive.

For example, Kiip recently ran a rewards campaign in an app with P&G's Secret where the reward was not deodorant but a free song download for the user?s next workout playlist.

Kiip is a rewards platform used in more than 600 apps and games, including Aerox, MapMyFitness, Nexercise and others. Brands such as Kraft, McDonald?s, Procter & Gamble and others offer rewards through these apps when users reach an achievement such as a high score or a completing a long run.

In a test conducted this fall by Kiip, the results revealed higher app engagement levels for users who received brand offers as rewards compared to those who did not receive rewards. Claiming a reward resulted in users spending 68 percent more time in the app, opening the app 31 percent more often and having a 30 percent longer lifespan with the app.

?Pepsi is one of our favorite brand partners and has talked about how their coupon campaigns with them redeemed at a phenomenally high rate,? said Brian Wong, CEO of Kiip, San Francisco.

?Many other brands also run brand studies along with our campaigns and see immense lift: over 50 percent increase in purchase intent and almost 30 percent increase in brand awareness,? he said.

?The reward happens to be effective in driving two major key performance indicators: conversion and purchase - because the reward is inherently transactional - and brand love - because the reward is there when you're happy, and is best catered to the context of your behavior.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York