Eli5: how do ads generate revenue?
In: 2
A company wants to get their product seen, so they will pay a platform (like a TV network, a website, etc) to show their product. Take a TV show like The Price Is Right. That entire 60 minute show is an ad. All of the prizes are supplied by the manufacturer and the announcer describes them all in detail. Not only that, but they show their prices as part of the games.
For traditional ads, how they pay out needs to be agreed upon by both sides. If I want to place an ad on TV, I will pay a lot more money to be played during The Superbowl (which will have a lot more viewers) than I would to have my ad played during a rerun of Alf.
On YouTube, if you’re being forced to watch a 15 second ad with no skips, the advertiser must pay youtube more compared to an ad that gets skipped by the viewer (and skipped ads pass no ad revenue onto the channel owner).
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