This sponsored post is produced by AdColony.

So often, publishers are told to balance the need to engage with the desire to monetize, but this is a half truth that sacrifices the true potential of an app.

Engaging users and monetizing them is not a zero sum reality. One need not come at the expense of the other. In fact, the apps that engage the best have the most potential to monetize, and the apps that monetize the most strategically are able to improve user engagement and retention in the process.

And this isn’t just me talking. At GamesBeat, I sat down at a panel with brilliant people from Disney, GSN, and Kongregate to ask one very important question: Is monetization and engagement at odds with one another, or are they interlocking pieces to solve the same puzzle?

Their answers were clear: when the core loop of your game is intrinsically interesting, ad monetization — when done smartly — strengthens that loop. As Greg Canessa, SVP at GSN Games attested: “It’s about creating a compelling core loop that is fun and addictive that people want to keep coming back to. From that comes monetization opportunities.”

Simply, when it comes to monetization and engagement, “There’s not one without the other,” Tammy Levy, the Director of Product at Kongregate, reminded us.

It’s true. While rewarded video has been shown to increase IAP conversion by encouraging otherwise non-monetizing users to make their first in-app purchases, it’s critical to first have an app and an in-app store that is compelling.

As Chris Heatherly, SVP at Disney Mobile Games noted, “People want to pay in games that they like.” It’s simply a matter of giving them a taste of what premium goods can offer to drive those in-app purchases.

The role of video in cementing both engagement and monetization

For some, providing a taste of the premium experience involves short video previews within their storefront. For others, it means offering rewarded video as a form of ad monetization to keep users within the app’s core loop longer.

So how does ad monetization strengthen the core loop once it is established? With rewarded video, the path is clear. Users who are apt to churn after a frustrating level or encounter are given a lifeline: watch a video to continue. Whether continuation is enabled by an extra chance or consumable, the result is the same. The user will stay in the app longer, will be more likely to complete their session on a positive note, and will be more likely to return for subsequent sessions.

Over time, that user is more likely to retain and is four times as likely to make in-app purchases than they would’ve been had they not been given that chance to continue.

Granted, there is often hesitation around offering rewarded videos to users who have already made a purchase. However, our studies have shown that rewarded video does not cannibalize IAP potential. In fact, rewarding paying users at the right moment can actually drive increased revenue by increasing purchase frequency by up to 53 percent. Simply put, the loop becomes more lucrative the more monetization is used to engage.

Thus, it’s not a matter of balancing IAP against ad monetization or revenue against retention. It’s a matter of enhancing an intrinsically interesting core loop with monetization and engagement strategies that are complementary. When this happens, both the publisher and the user will enjoy the result.

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