I think part of it is the assumption that affected citizens (who might object to the new shop/cafe/…) are more likely to read such papers than government publications.

That likely still is true, but less so (fewer people subscribe to papers), and the assumption that people who read the paper would spot your advert probably only held back in the time when papers had reasonably small coverage (so that your advert wouldn’t appear in a large section of the paper, but stand on its own), and were about the only source of news (which made them much better read)