LivingSocial is running interstitial ads between game levels in the SongPop iPhone app. In addition to driving downloads, the campaign also incorporates game currencies that consumers can earn by watching a short video.

“The strategy behind user acquisition campaigns that feature in-app videos and rewards to acquire new users is to associate an advertised app with moments of joy and benefit during a user’s in-app experience, increasing the likelihood of the app being downloaded by that user,” said Nikao Yang, senior vice president of new business development and marketing at AdColony, Los Angeles.

“Receiving a reward for watching a video ad is the benefit that brings joy to the user, making him or her more receptive to following a post-video call-to-action such as downloading an app,” he said.

“It’s important to note that in the LivingSocial user acquisition campaign, the user is incentivized to watch the video ad but is not incentivized for downloading the app – this is a good thing. When the video ad view is incentivized and not the download, the long-term value of the user acquired tends to be higher because the user downloads the app based on motivations other than a direct reward for that download. In contrast, incentivized downloads tend to produce a poor quality user who may only launch the app once to earn currency and then permanently delete the app, creating an undesirable end result among other negative outcomes.”

Mr. Yang is not associated with LivingSocial. He commented based on his expertise on the subject.

LivingSocial did not meet press deadline.

User engagement
A landing page between game levels in the SongPop app encourage consumers to earn five coins for watching a 30-second video clip from LivingSocial.

Users have the option to either watch the video or click on an X in the top right-hand corner of the screen to leave the ad.

The 30-second video shows users how the LivingSocial iPhone app works. The video highlights local treats, restaurants, spas and travel deals that LivingSocial aggregates inside the app.

After the video finishes, the game currencies are applied to a user’s account. A call-to-action then prompts users to download the LivingSocial app.

When clicked on, the ad redirects users to Apple’s App Store where users can download the app to their devices.

App challenge
App discovery and retention is still a big problem for many marketers.

Therefore, an initiative such as this one is a great way for LivingSocial to increase awareness of its app with a campaign that is targeted towards a specific group of mobile gamers.

By sliding an interstitial into a game, users are forced to interact with the ad to continue playing the game, which could result in a higher number of engagements for the brand.

Furthermore, tying an incentive to the ad – in this case game currencies – in exchange for watching a video gives users a reward for interacting with the ad.

LivingSocial uses a variety of different marketing techniques to drive app downloads.

For example, last year the company offered consumers in New York, Washington and San Francisco $1 lunches from local merchants for using the LivingSocial app (see story).

“In-app video advertising, whether pre-roll video, interstitial video or value exchange video can be very effective,” Mr. Yang said.

“An advertiser can’t do as good of a job at communicating the value proposition of their app with a simple display ad,” he said.

“Showcasing how an app works or why it is relevant to the consumer in a living, breathing fashion that only video can provide is most effective when looking to drive downloads. Moreover, being in-app means the users can be targeted more accurately and are only one-click away from downloading the app from Apple’s App Store or Google Play.”

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York