Ads are a bigger business than you might expect. Get enough eyeballs in one place and brands will be tripping over themselves to give you money just to mention their name. Take the superbowl for example. It’s usually the most viewed event every year in the US, so naturally there is a tradition of advertisers pulling out all the stops and making high-budget bombastic commercials for that specific occasion. You can imagine how attractive it is for brands to want to put their ads on big social media sites, where psychological tricks are used to capture as much attention as possible at all times, instead of just once per year.

Then there’s the user data angle. The big sites all have millions of users who constantly give away personal information without even being prompted, and that makes it really easy for the companies who run them to analyze what makes each user tick and serve ads to the people who are most likely to click on them. This elevates the rate brands are willing to pay even further.

Those two things, along with a suite of anti-competitive practices, are enough to get sites to the point of being mostly profitable. Venture capital and hype-based market speculation get them the rest of the way.