There are plenty of web applications that are free to use, and don't make any money at all.
If they don't offer premium (paid) subscriptions, there are still a few ways to make money
- ads, as you noticed; it is the most intrusive, and probably less efficient way
- affiliate sales or "soft sales"; it's still advertisement, but less evident and arguably more efficient, since links pointing to external websites or ecommerce sites are usually contained in articles or blog posts, and not isolated in the "advertisements" area
- a few websites (f.i. Hunch.com ) claim they might resell user-generated data or analytics to external companies; of course you need a lot of users (millions to ten of millions, I guess), and I'm not really sure whether there is any company at all actually relying uniquely this business model