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How do Ad-Free websites make their money?

by wassim
5 replies
Hey Warriors,

I don't know if this is a stupid question, but I always wonder how do guys like Pinterest make money?

They have a very lovely website, it has a great idea and they have too much traffic. I can't see any banners on their website or a paid subscription. It's totally free I guess.

This question isn't only about Pinterest, this is what I have in mind now, but you know there's hundreds of other free successful websites. I am not sure if Twitter is too, because I don't quite use it, but from a generic look at the site it looks totally free and banner-free too.

Thanks :")
#adfree #make #money #pinterest #websites
  • Profile picture of the author drr
    Effectively, they collect millions of users then change the TOS suddenly allowing them to serve up ads.
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    • Profile picture of the author Shadowflux
      Unfortunately, I think some websites sell user information for market research. Everyone is doing it these days, that's why there are so many membership cards. Some of my friends were surprised to find out websites were selling this sort of information.

      I basically told them "The company is worth a lot of money, right? The website doesn't sell you anything. There are no ads. How do you think they make so much money?"

      I think some sites will also do covert sponsored posts. So maybe you'll see a pin for "Reese's Peanut Butter Cup Cookies" and that might be a paid for post. I can't speak for pinterest directly because my wife uses it more than I ever have.
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  • Profile picture of the author wassim
    Hey Joe and drr,

    thanks for your clarifications, they make sense to me.

    But how do you guys explain services like WhatsApp when they say "We are not fans of advertising"? How can they afford it? It is too expensive to handle and maintain right? They so often re-extend the free service year after year too.

    So all-in-all, you're trying to say that at some stage, all these free services will either become paid ones or will display ads?
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  • Profile picture of the author Benjamin T
    Sometimes it's the matter of the users themselves. As Joe listed above, SnapChat is an excellent example. How can a business that hasn't made $1 in revenue be valued at over $3 billion?

    InstaGram is another excellent example. Before their buyout from Facebook, InstaGram had roughly 30 million users. Facebook's buyout was approximately $1 billion (final closing was more along the lines of $715K because Facebooks stock plummeted and part of the sale included shares of stock in Facebook). Anyway, do the math there and you can see that each InstaGram user added approximately $33 of value to the company. Although this may seem like a low LTV (life time value) per user, for a company that wasn't selling anything, or displaying ads, I'd consider this a success. Although many people today question whether InstaGram could have held out longer for a higher valuation and thus garnered more money.

    To conclude my story, SnapChat was offered $3 billion from Facebook and said no. I don't know about you, but it takes guts (and balls) to say no to a $3 billion buyout for a company that isn't even 3 years old. The idea behind saying no is that their valuation will continue to rise (as it has... the latest valuation based on funding was approximately $3.5 billion).

    But I digress, the overarching theme here is that users can generate a return for a company, simply from their activity, although it may not be an "immediate" such as what you might see if you ran ads and were paid weekly.

    Cheers,
    Ben
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  • Profile picture of the author wassim
    Brilliant everyone, you just enlightened my mind in every possible way! Obviously it's a plan that is followed by solid investors who can afford waiting for the income to come in.
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