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Also known as: ad-supported, ad-based revenue

Advertising Model

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Definition

Advertising Model: An advertising model generates revenue by showing ads to users, typically in exchange for free access to content or services. Success requires large, engaged audiences and effective ad targeting. Advertising can fund consumer products but creates tension between user experience and revenue.

Example Usage

“With 10M monthly active users, we generate $3 CPM through programmatic ads. That's $360K/year supporting our free tier.”

Common Misconceptions

Just add ads for easy revenue. Effective advertising requires scale, engagement, and targeting capabilities.
Ads always hurt user experience. Well-designed, relevant ads can add value; poor implementation destroys products.
Advertising works for any audience. B2B and niche audiences often monetize better through subscriptions.

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