For what it's worth, there are products like this, like essentially all of Amazon's phones [1].
Personally I find that particular product's lock-screen ads irksome, but it halves the price. I can afford to drop a $100 on a cellphone (but not, say, $500+ for a flagship), so the ad-supported version doesn't appeal to me.
But thinking back to when my cashflow was much smaller, I would've found the twice-the-price-for-no-ads hard to justify and gone with the ad-supported version instead; not out of enthusiasm, but fiscal pragmatism.
[1] http://arstechnica.com/gadgets/2016/08/review-blus-r1-hd-red...