Advertising beyond that mostly serves to solidify brand integrity and trust and ways to undercut competitors and is an ever growing conflagration of an arms race. It has little to do with the interests of the public.
I'm pretty certain the latter wins far more often than the former, in which case advertising hurts healthy competition. You may in fact have the better or cheaper product, but the establish company has the huge advertising budget by virtue of being the established company. Advertising serves as a moat far more than it serves as a bridge.
So while the naive view is that advertising communicates the existence and benefits of products so that consumers can make informed choices, in reality it is more often and more successfully used to communicate lies and manipulation, and raise insurmountable barriers to new competition.
Why do we assume that the dishonest and manipulative nature of advertising would be more effectively wielded by the companies already in the market than by new ones trying to break in to the market?
The alternative situation where everyone bullshits is one of the reasons people are using ad blockers.
Saying something "lowers costs" without considering ALL costs involved is lazy.
Most smart consumers are much less interested in what a company has to say about its own products (embellishment) than about what other people say.
So yeah, advertising is pretty terrible.
"Note that even if there is a gain to efficiency because of lower prices, it may be completely offset by the cost of advertising itself (costs being the cost of consumers having to be irked by looking at them and the effort that went into crafting the advertisements)."
I think that speaks to your comment about the lost productivity of users of the web. I do think all costs should be considered, absolutely. Didn't quite follow your last two paragraphs. You seem to have a gut feeling that all the costs outweigh all the benefits? I have no such gut feeling.
And the industry as I've seen it is not particularly efficient/cost-effective or pleasant either. Most of the shoddiest work, unhappiest employees and shittiest bosses/manager that I've encountered were in this sector, by far. The only environment where I got a similar vibe was a bank/insurance company where I worked.
Advertising isn't a complete societal waste. If I find a way to compete with an established business by offering the same product at a lower cost, or a better product at the same cost, or a new product that is worth the money but no one had thought of before, my only hope to connect people to that product (not to mention make myself money) is through advertising. Word of mouth and objective reporting in news outlets will also do the information spreading work, but advertising does a considerable amount. In other words, it's competition increasing.
I think economists have done studies on markets with and without advertising and have found results indicating it does bring down costs in those markets by increasing competition [1]. In economic terms that would be a gain since without advertising we would consume an inefficiently low amount of said product. Note that even if there is a gain to efficiency because of lower prices, it may be completely offset by the cost of advertising itself (costs being the cost of consumers having to be irked by looking at them and the effort that went into crafting the advertisements).
[1] Could I be remembering this paper? http://www.jstor.org/stable/724797?seq=1#page_scan_tab_conte...