In-app purchases and ads monetize the same user base in very different ways: IAP concentrates revenue on a small share of paying users, while ads spread thinner revenue across the entire active user base.
Why the comparison depends on your audience
Apps with a small, highly engaged core audience — many mid-core games, productivity tools — often generate more total revenue from IAP, since a motivated subset of users will pay meaningfully more than ads could ever extract from them. Apps with large, more casual audiences and low willingness to pay usually see the opposite: ad revenue, aggregated across a big user base, outperforms what a tiny paying segment would generate.
The two aren't mutually exclusive
Most successful free-to-play apps run both models together: ads monetize the non-paying majority, while IAP captures additional value from the smaller segment willing to spend. The mix, not a single choice, is usually what maximizes total revenue.