Ads cost money, why pay money to advertise when the word of AG spreads enough by itself through games, kids, and just the internet in general? Wouldn't make them any more money.
Technically, Armor Games does advertise itself on other sites when they upload our games to be played. You will notice that every Armor Games sponsored game will have a 'Play more games' link that directs back to this site.
thats why i mentioned newgrounds cuz armorgames is on their...almost all the time in fact.
Its the same concept with games on newgrounds they already advertise through games put on AG, and besides why would AG advertise another site on its own site unless that other site is paying them for advertisement space on the site?