How rewarded ads are turning the user funnel into a habit-building engine

Marketers have spent billions on cheap installs only to watch users churn before real value kicks in. Now rewarded advertising is being reimagined as a way to build habits, deepen engagement, and quietly turn new signups into power users.

Steve Massaro, Senior Director of Agency Partnerships at Edge226, a demand-side platform focused on scaling app and game growth through programmatic and CTV, helps clients move beyond one-and-done installs. He sees rewarded advertising as a way to drive deeper engagement and turn initial actions into long-term habits.

The path to power: "It’s about guiding users through a habit-building process," says Massaro. "Before they even realize it, they’re a power user because they’ve seen the value unfold step by step." The goal isn’t just to drive installs, but to build lasting engagement. "No one is looking to just acquire users for their apps anymore," he explains. "They want people who are retained, driving revenue, and helping build the brand."

From clicks to habits: "Back then it was all about installs and 10 cent CPIs," Massaro recalls. Today, the focus has shifted to habit-building through tiered rewards that guide users through high-value actions like hitting level goals or completing a free trial. "You can actually have a tiered approach of rewarding people at each step of that consumer funnel to continue pushing them down there," he explains.

Gaming's blueprint: The strategy was perfected in one vertical but is now being deployed everywhere. "Mobile gaming is such a good blueprint for any client that doesn't know how to think like a mobile advertiser," Massaro says. "I always love bringing strategies from gaming clients to apps in e-commerce, FinTech, retail, and QSR."

A prime example is a crypto or investment app. Instead of just paying for a download, the app can reward a user sequentially for signing up, creating an account, funding it, and making their first trade. Each step builds on the last, turning an initial extrinsic reward into genuine, intrinsic engagement.

Conquering churn: The streaming industry, notorious for high churn rates, provides a powerful case study. The old way was to reward a user for starting a free trial. The new way is to reward them for staying subscribed for one or even three months—long enough for the magic to happen. "More than likely, you're going to get hooked on a TV show and you're not going to want to leave after those three months," Massaro says. It’s a calculated investment, weighing the cost of the reward against the high cost of churn and the projected revenue of a loyal subscriber.

Stuck in the past: Many marketers are still wary, and not without reason. Their skepticism comes from the "turn and burn" era of rewarded ads, when poor attribution made long-term value hard to measure. But that view is outdated. With today's focus on LTV, the channel is seeing new momentum. "It's a great acquisition and retention opportunity," Massaro says. "If you're not doing it or at least testing it, you're missing out on a potentially really great channel." The key is working with partners who prioritize long-term value, not just the install.