Question: What are the pros and cons of an advertising revenue model for your product, and the internet overall?
Pros:
Ads can allow for additional revenue from a platform that can allow for wider access of services (especially to communities that may not have the liquidity to afford a paid-version), growth and improvement, and can allow for brand deals that benefit the companies and the consumer alike.
For example, services like YouTube would never exist without advertising revenue— there’s no possible world that such a service could offer free video hosting for millions of videos and streaming them to users for free. However, because of advertising revenue, YouTube is extremely profitable, pulling in around $30 billion in revenue*. Companies are able to provide this for free, while users are able to consume it and continue to use it which will grow the userbase.
Cons:
In the same realm, no consumer particularly seems to enjoy ads. On YouTube, waiting through three 15-second ads just to watch a 4 minute video is cumbersome. This can cause users to feel friction on a platform and, when applicable, may cause users to migrate to another platform that serves less ads/annoyances. An example of such is users from YouTube moving to Vimeo when their videos are available on both. This is also true for our product— users can be pushed away from our product because they feel annoyed by the ads.
Additionally, the entire premise of advertising is based off of user data and what ads are to be tailored based on that data. If ads are excessive on a webpage or intrusive in the sense of not respecting the idea of minimally collecting data, data privacy can become a big concern that can push users away from your webpage/product.
Lastly, by advertising on user-generated content, you run into the issue where your ad may not be reflective/connected to the content it’s hosted on. As Ethan said— “How do you monetize user-generated content without implicitly endorsing that content?”. If context may not be “family friendly”, it might cause a bad image to be associated with your advertisers and ultimately bring fault from the advertisers to you, because you “allowed this” by not disallowing it. This is a problem that plagues YouTube in both directions, where users videos are tied to advertisers and advertisers dislike this. But on the other hand, YouTube responded too extreme by demonetizing content that wouldn’t normally be deemed controversial/bad by a human, causing context creators to leave YouTube for other revenue sources.
