"Can you really make money with advertisements?" Yes you can. I didn't think it was possible until I put some advertisement widgets into my games and realized, from that point on, all users = revenue. I didn't have to wait for a rich kid to buy all the items in the shop anymore.
Don't be too optimistic, though, because it doesn't pay that well. There's this metric called eCPM, or effective cost per mil (thousand). Basically, for every one thousand video views, how much money I get (after the advertisement companies take a cut, of course, and before I pay taxes). A good eCPM can be as high as $20, meaning for every 1000 video views, I get 20 USD. A bad eCPM... can be as bad as $0.1. That's why location and platform matters. An iOS user in the US can have an eCPM as high as $20 or even higher, but an Android user in a remote location may have less than a tenth of that. Interestingly, eCPM for iOS in China is pretty high at almost $10, but essentially $0 for Android users. Here's a table of estimated video eCPM's for various countries:
Another thing: there's two types of video ads I use (I don't like banner ads aka the ads at the bottom of the screen because they cut into user experience), interstitial and rewarded. Interstitial ads are basically ads shown randomly once a user loads a level, so they're a lot more than rewarded ads, which are ads users have to click themselves to watch for some coins or new items. Rewarded ads generally improve the user experience but have a lot less impressions (views) than interstitial ads. Unsurprising, considering most users don't get to the point where they want to play the game more than a handful of times (about half don't even open it again a second time).
If you want to do the math, I get ~5000 online users every day. Not all of them watch ads, although some watch more than one. About 20% of that comes from the US and 25% from China (previously much higher, until the government takedown incident). Not a lot of money, but enough to buy some takeout every day.
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