PurposeThis study aims to examine young children’s (ages 4 to 7) knowledge and skills (i.e. their advertising literacy) for television (TV) commercials, YouTube pre-roll ads and influencer marketing. Furthermore, this study explores how parental perceptions and practices and children’s social abilities influence the development of their advertising literacy.Design/methodology/approachSemi-structured in-depth interviews were conducted with parents (N = 35) and their child(ren) (ages 4 to 7, N = 40).FindingsResults revealed preschool children have advertising literacy skills for TV commercials and YouTube pre-roll ads, but not for influencer marketing. These skills are limited to advertising recognition based on perceptual cues and a simple understanding of selling intent. Children’s advertising skills evolved according to age but did not relate to social development. Furthermore, advertising literacy was related to parental media mediation: the more restrictive parents were regarding media use, the less advertising literacy their children appeared to have. No moral reflections regarding advertising were found among the preschool children.Originality/valueThis study fills significant gaps in the literature on young children and advertising. It conducts a qualitative investigation into young children’s knowledge of digital advertising formats (pre-roll ads and influencer marketing) and how they differ from traditional advertising (TV commercials). Furthermore, it takes both parental influences and social developmental variables into account.