Glossary of Mobile Advertising Terms
IAP Cannibalization is a term that’s used when ads or rewarded videos hurt the profit normally gained through in-app purchases (IAP).
In a mobile game, putting a rewarded video or ad in a bad place and time will lead to cannibalization. Furthermore, allowing normally paying users (IAP) to receive rewards via ads that they would have normally paid for will cannibalize your IAP revenue. Therefore, avoid putting ads/videos in place of an in-app offer (and a potential purchase), especially at the end of a level. Whatever the app type, understanding the user interaction is key.
Be sure to check out our post, reviewing Sharon Biggar's experience with IAP cannibalization at Social Point, which should be very relevant if you want to learn more.