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Mobile game distributor Tapjoy is launching a new service today to let advertisers reward users for the amount of time they spend with a given mobile application. Called the Pay-Per-Action Model for Android and Apple devices, the service is designed to encourage users to take specific actions in an app in order to gain a reward.

“It’s all about engagement,” or time spent with an app, said Mihir Shah, chief executive of San Francisco-based Tapjoy. He hailed the new model as unique in the industry, with the potential to make a big impact on revenues for mobile game developers. “We think it’s a bit of a game changer.”

It takes a couple of elements to make it happen. Tapjoy has partnered with analytics provider Apsalar, which can measure a lot of analytics about how a user plays with an app. It can tell, for instance, just how far a user gets into a game and what the odds are that they’ll actually spend money on something. That gives Tapjoy the information it needs to link the user’s progress in an app to a specific task that an advertiser wants the user to achieve.

Shah said that Tapjoy has tested the Pay-Per-Action Model in games and seen stellar results. For instance, an advertiser can give the user a specific reward for making it to level three in a game such as Tap Fish. If the user makes it to level three, then the engagement level is much higher. In fact, users who make it to level three are likely to make it to level 10, Shah said.

Normally, action-based models allow developers to reward users only for installing and downloading an app. But with the new service, advertisers can now reward users for for getting through a tutorial, past a certain level, or any other type of activity. In contrast to other ad methods, advertisers are willing to pay more for this kind of engagement. For instance, a bank might pay much more for a user who uses a banking app five times rather than just once. That’s because that user is far more likely to continue using the app and somehow generating revenue for the bank, given that level of engagement.

Mobile developers can adopt the new service by using Tapjoy’s Pay-Per-Action software development kit. Rizwan Virk, chief executive of DeNA’s Gameview Studios, said his development studio has used Tapjoy’s current app distribution system and thinks that the new service will work great in the company’s games such as Tap Fish.

Tapjoy’s rivals include Flurry and its Appcircle technology. Investors include Rho Ventures, Interwest Capital, North Bridge Venture Partners, and D. E. Shaw Ventures. Tapjoy was formerly known as Offerpal but changed its name after going through a big controversy in the Facebook offers business. It acquired Tapjoy and then renamed the whole company Tapjoy. Shah said that both the Tapjoy business and the offer business are growing fast. Tapjoy has anywhere from 50 to 100 employees and currently has 40 open jobs, Shah said.

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