Contributed by Carpesomediem
Free web hosting banner ads are used to pay back the company's costs in allowing you to host a free web site on their server. Since they aren't charging you to use their services, they have to make up for it somehow. They figure so many people will sign up for their services that allowing banners, text link ads and pop-ups will more than make up the cost for allowing you to graciously use their service. Guess what?
This tactic works, and with the millions signed up to use their services, that's more money they make everyday as you close those random pop ups and hide those banner ads with a click of your mouse. As always, you get what you pay for, and just because it's free doesn't mean it's free from ways of earning money for the vendor; this is capitalism as its finest.
Free web hosting banner ads, when viewed, earn the vendor a set price. When clicked, they earn a bonus and when a user actually takes part in the services of banner ad, even more compensation is dealt to the company whose services you are using.
It's the way many advertising campaigns on the internet work, and while not exactly the easiest way to earn money, when you're a big name service like Geocities (www.geocities.com), Tripod (www.tripod.com) or Angelfire (www.angelfire.com), it's easy to more than make up your costs in relation to the number of web users using your service to house their home on the world wide web.
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