Why have advertising on chess.com?

My one week no ads grace period has expired here on chess.com, and I have to say these ads are absolutely hideous.  I've been trying other chess sites and came accross some discussion of adversting in one of the other forums.  The owner there is actually phasing out advertising, yes, that's right getting rid of all ads for all levels of membership.  It's speculated that sites depend on advertising to annoy members into getting premium membership, not that it actually creates any meaningful income.  This jives what I've read Erik say about the ads here, that they don't come anywhere near paying for the cost of free members.  Here's the interesting stuff I'm talking about. 

Quoting:

I'm phasing out the ads, as I'd rather use the space to display useful information. Ad revenue is a very small percentage of site revenue compared to premium memberships. While premium members have not been shown ads in the past, I've never advertised this as a feature in the premium membership benefits descriptions, as I'd rather utilise useful features as a way of encouraging premium members to sign up, rather than "I'll stop annoying you with ads if you agree to pay for membership".

I suspect other sites have similar ratios of revenue split between ads and premium membership revenue, and despite claims from the site owners that they need the ad revenue to survive, I suspect they mean they need the annoyance of ads to encourage their users to pay to remove them in order to survive. I'd rather not rely on the same method here, so new pages are not getting ads, and the old pages will eventually become ad free for all users as soon as they are updated to use the same framework used on the new tactics UI page.

End quote.

So is that really the purpose of ads here?  Annoy me into giving chess.com money?

Well, if you're going to consume a service for free then there has to be some means of paying for the resources to support that.

Why ads on the radio?

Why ads on Google?

The advertising isn't covering the costs of the free members here, that's not my opinion, Erik has said that.  So the advertising isn't paying for the resources to cover it.  Chess.com is trying to make money, so it doesn't make sense to offer a service that doesn't pay for it's self and make a profit.  So what's the real purpose of giant animated advertising flashing across my screen?

Radio is a good example, it's dying.  People would rather listen to their MP3 players.  And there are alternative ways to fund radio, I get a lot of news from National Public Radio.

There are ads on Google because that's their business, they're an ad network.

Advertising may well not be covering the fully loaded cost fo the free members here, but even if this is the case, it does cover some of them.

I guess I'm unclear now -- are you proposing eliminating the ads, or eliminating the free memberships?

I'm not sure I'm proposing anything.  I'm just wondering what the purpose of advertising here is.  Chess.com management knows the ads suck, thats why my first week of membership didn't have any.  Now today I get a message that I need to pay them to get rid of the ads they just introduced because the ads very annoying.  Almost feels like protection money.

If it's not profitable to have free members costs covered by advertising, what's the point of having free members who see ads?  It would sound like they're losing money having free memberships, so why not get rid of them?  But obviously Chess.com's business model is working.

How is this obvious?  Is their business model working?  (or was that last comment to be consumed along with a pinch of sarcasm?)

No, no sarcasm, I guess I just assume it's working because the site has been around for years and presumably making money.

I heard that the site's features have changed very much in the last few years, and also that membership has grown tremendously during that time.  So it does not seem safe to extrapolate that the business will continue to make a profit because it has done so in the past.  The dramatic growth in membership might not be matched by a corresponding growth of net income.   I would argue that collecting millions of non-paying members is a long-term money-loser if ad revenue does not pay for the free members' use of resources.  I think the staff suspects this, but they are gambling that somehow ad revenue will grow faster than operating expenses.

IMHO, out-of-control advertising is, in many instances, way past the point of diminishing returns.  These obnoxious agressive "ignore-me-if-you-can" ads often produce the opposite of the intended effect.  I worry about the future of this site.

I suspect it's a multi-faceted matter:

1. Ads cover some, even if not all, of the costs to support the free members.
2. Free members provide a valuable service to the site, namely:
   - content generation and community participation in the forums, blogs, etc.
   - ready opponents to ensure games are always easy to start, and 
   - contribution to the much promoted member-count.
3. Free members are also a captive audience to whom you can market premium services.
4. Ads act as a disincentive to remain a free member, hopefully encouraging upgrades among that captive audience.

While the ads may not completely defray the cost of the free members, it must certainly help somewhat. They do earn revenue from the ads. That it doesn't completely cover the cost of those that don't pay doesn't eliminate the need for what money they do earn from the ads.

I would be fine with them doing away with all the ads as you seem to suggest. But that would likely mean paid membership ONLY. Lots of sites do go that route. If you want to play, you have to pay. So what would you rather have? A site with free memberships as an option but with ads, or a site completely free of ads, but paid memberships only?

Good point -- free members can add value, and this needs to be considered in the overall analysis.  But I think they probably also cause the majority of the mischief.  Maybe time will tell if, on balance, they provide enough value to compensate for their consumption of bandwidth and the noise they add to the forums.

I've seen the horrendously annoying ads that free members edure (I saw this over my roomate's shoulder).  If I could not afford a paid membership, I would need to leave (I avoid broadcast television and radio because of commercials).  Enough said.

1. ads help cover costs. we have LOTS of costs. every bit helps. 

2. we try not to have invasive ads. if you find any obnoxious ads, please report them. 

3. the next version of chess.com will have fewer ads. 

but as others have said, ads drive the "free" economy. free TV, free radio, free facebook, free search engines, free everything - all ad-supported. so people who don't like the ads buy the ad-free version. 

we don't have ads to annoy people into upgrading. it's not even close the top top 5 reasons why people upgrade. most people upgrade for tactics, videos, lessons, and to support the website that they love and appreciate ;)

why did you deactive the antiadblock?

because it really made people mad and i'm not a mean person :) we tried it out on april fools just to see!

Name 1 site that doesn't have ads.

WIN

it was not very delicate the message you put into the banner... I don't remember it well but it was like " adblock, clever move..." and "don't be like this guy, loves chess.com, use adblock". It's nothing personal against chess.com I browse the web but I block pop-ups, ads, new tabs, for cleaness and cause they are not always inoffensive

wikipedia

WIN

Sorry to burst your bubble, but advertising is present on Wikipedia:

http://en.wikipedia.org/wiki/Advertisements

To TheGrobe: Thx

To pdela: WIN

It is a freaking free site-if you dont like the ads then dont look at them duh. I rather have ads and play for free than the other way around. There are people who will complain and bitch about everthing.  To be honest when I am playing I do not even notice them.