There is a bit of a Y Combinator attitude against buying advertising to build a startup. If it ain't viral, then the product isn't good enough. Unfortunately, a grammar checker isn't exactly something you tell your friends about, but it is quite cheap to tell the world with cheap display ads on dictionary site garbage inventory. Advertising is a really good option when there is cheap inventory in the niche, and a profitable CPA can be established.
Lots and lots of advertising
I almost can't go a day on YouTube without seeing a Grammarly ad. And yes, certainly coming across it a lot on the content network too.
Good luck to them if it works. The premium version is relatively inexpensive, so it would be interesting to know (not as if we ever would!) how much on average they spend to get a premium customer.
It may take them far more than the $29.95 they charge a month, so they could be out of pocket for months on that customer. But then, the customers who pay up front for a year, plus all the other less expensive lead sources, more than likely make up the difference and then some.
I haven't been through their funnel so I don't know if they have any upsells, cross sells...etc. On the surface it appears that they basically only have one single product (even though they also have business and education versions of that product).
I do worry about businesses that don't really diversify their offerings, since it's more of a funnel than an actual business. But for many companies, I guess the goal is to make as much money as quickly as possible then cash out, rather than create something that will really be around for the long-term.
Anyway, good luck to them (again). But they're probably desperately hoping Google doesn't add similar functionality to Gmail/Chrome, and that Microsoft doesn't expand their grammar checking functionality in Word!