> "The problem is that apparently ads don't pay enough..."
ads pay plenty, just look at the size of google and facebook (granted, they've together largely consolidated the online advertising market, but it's still huge). greed is the simpler answer here.
The problem isn't advertising in itself. The problem is that the law hasn't caught up (or doesn't want to catch up, thanks to corruption/lobbying by vested interests) with cracking down on large-scale non-consensual data collection (which we used to call spyware).
Ads are fine. The problem is that apparently ads don't pay enough and the advertising/data collection industry is engaging in unethical and potentially illegal practices of large-scale stalking (without informed consent) to try and get extra money.