I echo some of your sentiment. If Amazon is truly as customer obsessive as they branded themselves, they would avoid putting cheap ads out there. Since their click rate is going to be so high, those ads will be very expensive indeed, which I would assume to be quality ads as well.
But to be honest I would be very much reluctant at seeing a lot of ads. They do this already with "Sponsored" products and most of the time it serves as distraction instead of convincing buyer into even at least clicking their ad.
Now, you go elsewhere on the web and you see ads for that particular jacket, but there's no incentive for you to click on the ad because you already know the price is too high.
But if the ad says: "hey, 10% off on this jacket in the next 30 minutes with coupon code xyz" then yeah you might click on the ad, buy the jacket and in the end, the customer, the retailer and the ad agency are all winning.
There are people who save ridiculous amounts with traditional coupons, but not many people are willing to put in the effort or make the sacrifices to to that, so they still work for the companies.
So just having paid advertising is just an extension of this. As Amazon acts less like a department store and more like the operator of a bazaar with thousands of merchants hawking their wares in the street, I guess it makes sense.