If A has one ad and B has another had and there's a single consumer, A and B spending more on ads doesn't change the outcome. It's zero-sum, no?
Or to make it even more obvious, imagine all advertisements in existence are on a giant billboard. You could imagine people allocating the space perfectly in some fashion. However some people would spend more money and plaster their ad on top of someone else's. This would result in others doing the same. More and more money is being spent but it's zero-sum.
Now with mass marketing, the biggest budget has the most reach, so it’s hard for C to break into the market.
With targeted ads, C at least has a chance to reach the customers who might love it.
Targeted ads gets us one step closer to a more dynamic economy that serves every individual perfectly and one step further from entrenched corporates selling the same old middle of the road crap to everybody. Crap that nobody loves or hates.
Money was spent on ads to make it happen. Call it Y.
If X > Y, value was added. If not, then new company C eats the difference and loses money and/or goes bankrupt.
Just because money being spent has a positive ROI doesn’t mean advertisements are not zero sum.
By your logic ads can be a disruptive experience and hence negative sum. In fact I’d be surprised if isn’t the case. Most people find ads to be annoying.
In real life, targeted ads add value by matching products and consumers that would not have found it in the jungle of information.