Maybe you're right. But if less advertising means that less money is going into businesses, then ads don't make products free, because they increase consumer spending and decrease the efficiency of consumer spending. If what you're saying is true, then advertising has a tangible cost for consumers.
There are three possible theories about how advertising works:
A) Advertising increases consumer spending and makes consumers spend dollars less efficiently based on attributes like branding that are unrelated to quality. In which case, all of this "advertising makes apps free" talk has been really deceptive, because consumers who are viewing ads are spending more money for worse/inflated products to compensate.
In this world, it's worth asking what the costs of advertising are and whether we want it to be the primary way of funding the Internet.
OR
B) Consumer spending/efficiency doesn't change, consumers are smart enough to buy the best product anyway, and the only thing that changes is which companies get that money and have brand recognition. In which case, it starts to become difficult to argue that consumers opting out of ads they don't want to see is particularly harmful. In the world where advertising is just making people aware of new information and helping them make informed purchasing choices, then it's probably a good thing that across the board everyone is being forced to cut down on the pointless noise that amounts to companies trying to scream over each other and increasingly hyper-target people in creepy ways.
If advertising does not increase consumer spending, and if everyone is reducing spending and effectiveness by the same amount on iOS, then this should be good for advertisers -- they'll spend less money on ads, and consumers will still spend the same amount of money themselves. The only reason that wouldn't be the case is if highly targeted ads actually changes consumer behavior and spending habits in meaningful ways -- but if we admit that, we need to admit that the advertising industry is a lot more problematic and a lot less "free" for consumers than it likes to claim.
OR
C) Advertising is a public good, and consumers actually want to know about these products, and ultimately people want targeted ads.
But this is obviously not the case for the majority of advertising. If it was the case, than iOS's changes wouldn't be a big deal. If consumers want targeted ads, they have the option to keep allowing them in iOS. The whole reason we're in this situation is because consumers have overwhelmingly demonstrated that they do not want targeted ads.
So at best, the advertising industry can position itself as a kind of metaphorical "vegetable", claiming that everyone hates them but ultimately the world would be better if more things were commercialized. But it's just not a realistic theory, the data is pretty clear that consumers don't like ads and it's very hard to argue that unrestrained commercialism and forced targeting is good for society. There are more efficient ways we could be doing this if our goal was really just to make it easier for people to compare products and learn about new solutions to their problems.