Advertising increases sales, which can lead to economies of scale, which can reduce prices. It also encourages price competition, so it's nowhere near as simple as that. Some highly price disruptive activities such as direct to consumer marketing would be impossible without advertising.
You HAVE to advertise to get sales because everyone else advertises heavily already, and because advertising is so dominant that consumers have come to rely on it as the majority of how information enters the zeitgeist. It is a barrier to entry for competition.
If we could reduce the advertising footprint we could increase information flow from things like consumer reports or wirecutter, and we could reduce the dependence on advertising to get sales and increase the ability to get sales by making a better product.
Economies of scale are no doubt a very, very good thing but they are not tied to advertising. If we stopped spending 100s of billions of dollars every year competing for attention this only adds to the productive capacity of our society.
I find it eye opening to talk to local small businesses, the eye popping amount of money they have to spend on facebook, google, and yelp feels like a racket, not an opportunity. Many types of business that were capable of operating before digital advertising are now incapable of operating without paying the piper.
Of course there are businesses that couldn't operate before but now can because digital information flow is better than analog information flow. This is easy to confuse with it being enabled by digital advertising because our information flow is dominated by advertising.
But I don't advocate for just deleting advertising and going back to analog word of mouth; I'd prefer a market for digital information that isn't simply purchased by the person who wants my money but instead competes on the value of the information.
