I genuinely wonder if people would wind up spending less money if they had to pay for services than if they get exposed to ads that lead them to buy more things. But either way, once ads and "free with ads" are gone, there's much more room for other competitors.
Ads don't require pervasive and invasive tracking for every breath you take
Or can instagram only be free if ads are targeted to detailed profiles of individuals built over decades as they are tracked across the whole internet?
So it's not about the perceived effectiveness of advertisements that you feel as a user, it's about the rather more unique product that they sell to advertisers that really raises their revenue.
Yes. Targeted ads need to be 100% to 700% more efficient than regular ads to be as profitable: https://news.ycombinator.com/item?id=43996623