I'm an AI pessimist, yet I don't see this happening (at least not without some major advancements in how LLMs work).

One major problem is the payment mechanism. The nature of LLMs means you just can't really know or force it to spit out ad garbage in a predictable manor. That'll make it really tricky for an advertiser to want to invest in your LLM advertising (beyond being able to sell the fact that they are an AI ad service).

Another is going to be regulations. How can you be sure to properly highlight "sponsored" content in the middle of an AI hallucination? These LLM companies run a very real risk of running a fowl of FTC rules.