It's not an assumption. I've worked in web stuff, including a lot of ad-driven businesses and businesses that buy ads, for a little over two decades. If one technology is removed businesses will spend the money on a different one. They will never step back and say "Oh well, I guess we'll have to spend less on advertising now."
It's even reasonable to believe a reduction in the effectiveness of ads would get companies to spend more on adverts in order to maintain the same level of growth.
Of course they do, what weird assumption is this?
If we lived in a world where advertisement was twice as effective at generating new revenue, far more money would be spent on it; if we lived in a world where it did nothing, no money would be spent on it and companies would search for other means to get new customers than advertisement.
It is certainly not as though the advertisement budged that companies have simply be a number they cling to on religious principle, rather than a number they have decided upon based on their perceived value of advertisement.
Even if you fully believe that privacy invasive targeted advertising is “the most effective” advertising, if it goes away the second best form of advertising will then become “the most effective” and will eat the lions share of the advertising spend. Or perhaps the market will dictate that instead of “targeted ads”, the most effective strategy will be to split the old google/Facebook ad spend across a combination of older (or newer) ad forms.
Toyota still want to sell Corollas. TAG still want to sell watches. So long as there’s a form of advertising that’s better than not advertising at all, the aggregate of all competitive sales teams will work out how to soak up all my budget somehow. Something will still me the most effective advertising. They’ll still spend their money to get more of that.
(If it turns out to be billboards or movie product placements or something, that’ll suck for web people who’s only possible way to sell advertising is banner ads, but that’s a different argue,ent...)
The reason non-privacy invasive advertising is worth less is that tracking is more effective, so it changes the balance. If tracking becomes less effective, advertising money is more likely to go elsewhere than disappear.
The very reason that adverts are then worth less, is because advertisement budgets will go down, given that advertisements provide less return for their money.