The industry would definitely adapt, but I don't think it would be more favorable to society. Here's what I would expect to happen if we stopped letting third party ad networks detect ad fraud:
* Facebook, Youtube, Reddit, etc and other huge sites are already big enough to run their own ad serving, and keep doing that. They are still in a position to detect fraud as a first party, and they're big enough that advertisers trust them.
* Current ad networks build first-party integrations, where to the browser everything comes from the publisher's site. This could be designed as a newspaper licensing an ad serving system. This would provide high levels of trust, but not as high as the current system because you lose the protection of cross-origin iframes.
* Ad networks don't find it worth it to integrate with long-tail sites, the sites make less money, we have fewer of them.
If we went far enough to functionally remove ads from the internet, either by banning them or by ads losing the adblocker-blocker-blocker-blocker arms race, then I'd expect a different pattern:
* Everyone moves to subscriptions of various kinds, probably with slightly porous paywalls.
* Right now ads are effectively a progressive tax: the publisher makes more money from you in proportion to how valuable it is to advertise to you, which is roughly in proportion to how much money you have. To raise the same amount of money from subscriptions you need to charge more than what people can afford to pay at the low end, so some people get cut off.
* There's a massive drive to consolidation: people don't want to have a lot of subscriptions to manage, so we get things where one subscription covers many people. The economics of how small sites get included in this are complicated, and I suspect this also hoses the long tail.
* Free sites are popular, making money through some combination of product placement, charitable funding, and funding to push worldviews. The latter worries me a lot.