You seem to be missing the point of conversions, word of mouth, etc. Ads may cost pennies on your company’s user tracking platform, but what about the real cost of acquiring and retaining a customer? Those need good products and good service in a case like this. Buying ads for what seems like pennies can hurt businesses as they keep chasing “engagement” while waiting for revenue and profits. The reach of an online platform may be high compared to a sign, but that alone can’t help a business survive (especially small businesses that need local customers).

A chaulkboard / whiteboard costs fuck-all and is a one time expense. I've seen innumerable small businesses using such on the sidewalk. They seem to be very popular and have a homey authentic aesthetic you will never get with Facebook ads.

Sure, if I pass next to your business you get cheap advertising. But what if you’re off my path? Or just off the main street of the town? Also note that being on my path to work costs even more money - location is expensive and businesses will pay extra to be in high visibility spaces.

Facebook ads work for physical businesses because they’re competitive on price with their other options.

How do you think those of us not using facebook manage to not starve to death for want of a bakery? Trust me, I can find local businesses just fine without Zuck crawling up my ass.

Bakery A feels compelled to buy ads from Facebook because Bakery B does. Bakery B has to because Bakery C does. Bakery C has to because Bakery A does. Facebook isn't providing value here. Facebook is a parasite that specializes in creating prisoner dilemmas used to bleed small businesses dry. Facebook is lower than mosquitoes, who at least provide nourishment to birds.

No one ever starves due to lack of advertising, advertising is not needed to let you know you need food.

And your contrived bakery example is unlikely. Ads are about letting you know a business exist, or convince you to give them another chance. Once everyone in town knows of all the bakeries, people will just pick favorites. If you’re the most famous bakery in town, you don’t need advertising. If you just started your cookie business, you do. Choose whatever advertising that works for you: signs, flyers, word of mouth, vitality stunts or just online ads. You will find that online ads are astoundingly cheap.

Again, if you serve the best croissants in town, customers will come back. (Reality is more sophisticated than that due general demand generation ideas such as just reminding you of croissants vs inferior pastries)