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I think advertising dollars paying for services that users use is a convenient excuse that companies use to justify it, but it isn't an imperative for why it should exist.
If you can't get people to pay for your service when they know the real price maybe your service shouldn't exist, or shouldn't exist at the scale it does now.
That being said your main point that the industry grew organically based on human behavior certainly seems true. Banning advertising (like banning lobbying or corporate contributions to elected officials) is an impossible game of whack-a-mole. It can't be defined tightly enough to be outright banned (are you going to ban telling people you sell something they might like?) and the value derived from it is large enough that people will get creative when you ban the outcomes.
That being said I do think the most egregious versions should be regulated. Ads to kids, deceptive mail or email ads that look like invoices or bills, ads that are obviously lying about features or benefits, but enforcement is incredibly difficult. I'm not especially optimistic.