The pros of an advertising revenue model are that you can provide your service for free or at a lower cost to your users than you otherwise would have been able to (due to revenue coming in from ads), users may find and access products/services through the ads on your site that they otherwise may have not found, and you can have a relatively simple revenue model. However, there are also cons to an advertising revenue model. First of all, users may be less inclined to use your product/service if you have ads. Second of all, only relying on ad-based revenue is risky, as you have to ensure that the users coming to your site are the appropriate target audience for the ads and that enough users are coming to your site and engaging with the ads in order to generate revenue. Click-through ratios are generally pretty low, which makes relying on this model alone quite risky. For our product, a major con would be that, especially early on, we wouldn’t have a large and active enough user base for an ad-based revenue model to work or generate enough revenue in order for us to be profitable. We would likely have to add on an ad-based revenue model stream after we had already acquired a large user base. The pros are that we would be able to offer our product for free with our freemium level and for a cheaper price at the premium level due to having revenue come in from ads.
This ad-based revenue model can affect individual well-being because it can violate user’s privacy and can also make users spend more time (and potentially money) on a platform than they would have otherwise due to engaging with the ads on the platform. An ad-based model encourages platforms to be designed in a way that keeps their users on the platform for as long as possible to ensure that they are engaging with the ads, and we know that platforms designed to capture people’s attention can be addicting and have mental health affects (depression, anxiety, etc.).
