My mother is definitely not a tech savvy computer user, but she's learning. I've finally showed her how to do a few things 'online', including email and basic searching. She wanted to order flowers for a relative due to a family death recently. As I imagine that vast majority of the population is also trained to do, she went to Google, typed in "order flowers" and went to the very first site that Google showed her. And that flower site, of course, was an ad - though it has gotten harder and harder to notice these over the years.
She ended up spending $30 with free shipping (down from $50 after I showed her how to find 'online coupon'). Google probably made a nice percentage of this sale.
Think of how many times that situation is repeated every day, all over the world.
There's a reason Google can afford so many pointless 'diversity' managers, expensive research, projects that are canned after a few years, and tens of thousands of highly paid and pampered employees. They've practically got a printing press...
I've been assuming I'm somewhere close to normal (definitely debatable) and that most people when they want to buy something just go and do it. How many people actually see an ad, get excited about it, click through, buy the product, and then come out of a kind of trance or something and wonder what caused them to do that? I'm probably more susceptible to candy displays at grocery check out counters than I am to online advertising. I'll occasionally buy one of those and tell the clerk it's an "impulse buy".
I assume there's a reason this is a billion dollar industry, but if I'm the poor schlub they are targeting then I wonder how they even stay afloat.
You're right, though - ad money is definitely providing bad incentives, but it also provides support for cooky projects. Marketing people also get to show their managers these nice graphs on ad spend "returns", that are complete lies.
Twitter and Facebook are much more tied into ad money, though.