This is a complex issue and one that's hard to address succinctly. It gets into the larger matter of media and its role and interaction with society, which is profound. This includes political and social elements going far beyond consumerism and consumption, though those are part of the dynamic.

For a short answer: advertising is not the only problem, but is a large component of a set of conflicts concerning information and media. It both directly and indirectly promotes disinformation and misinformation, opens avenues to propaganda and manipulation, and fails to promote and support high-quality content. It also has very real costs: globally advertising is a $600 billion/year industry, largely paid out of consumer spending among the world's 1 billion or so wealthy inhabitants of Europe, North America, and Japan. This works out to about $600/year per person in direct expense. On top of the indirect and negative-externality factors. Internet advertising is roughly $100 billion, or $100/yr. per person if you live in the US, Canada, EU, UK, Japan, Australia, or New Zealand. The "free" Internet is not free.

And the system itself is directly implicated in a tremendous amount of the breakdown of media, politics, and society over the past several years. Jonathan Albright, ex-Googler, now a scholar of media at the Tow Center (and its research director), Columbia University in New York, "Who Hacked the Election? Ad Tech did. Through “Fake News,” Identity Resolution and Hyper-Personalization", and editor of d1g (estT) (on Medium).

[S]cores of highly sophisticated technology providers — mostly US-based companies that specialize in building advanced solutions for audience “identity resolution,” content tailoring and personalization, cross-platform targeting, and A/B message testing and optimization — are running the data show behind the worst of these “fake news” sites.

(Emphasis in original.)

A Media Reader

By way of a longer response, I'd suggest some reading, of which I've been doing a great deal. Among the starting points I'd suggest the following, in rough order. Further recommendations are very much welcomed.

Tim Wu

The Attention Merchants is a contemporary version of the media, attention, distraction, disinformation, manipulation, and power game that's discussed further in the following references. If you're looking for current state-of-the-art, start here. Ryan Holiday and Trust Me, I'm Lying is a 2012 expose of the online media system. For an older view, Vance Packard's 1950s classic (updated), The Hidden Persuaders gives perspective both on what methods are timeless, and what's changed. A 2007 New York Times essay on the book gives a good overview.

Hamilton Holt

Commercialism and Journalism (1909) is a brief, easy, and fact-filled account of the American publishing industry, especially of newspapers and magazines, at the dawn of the 20th century. Holt was himself a publisher, of The Independent, and delivered this book as a lecture at the University of California. It gives an account of the previous 50 years or so of development in publishing, including various technologies, but putting the greatest impact on advertising. I'm not aware that this is particularly well-noted, but I find it a wonderfully concise summary of many of the issues, and a view from near the start of the current system. Holt includes this quote from an unnamed New York journalist:

There is no such thing in America as an independent press. I am paid for keeping honest opinions out of the paper I am connected with. If I should allow honest opinions to be printed in one issue of my paper, before twenty-four hours my occupation, like Othello's, would be gone. The business of a New Yourk journalist is to distort the truth, to lie outright, to pervert, to vilify, to fawn at the foot of Mammon, and to sell his country and his race for his daily bread. We are the tools or vassals of the rich men behind the scenes. Our time, our talents, our lives, our possibilities, are all the property of other men. We are intellectual prostitutes.

(An HN commenter reveals that this was John Swinton.)

Jerry Mander

Four Arguments for the Elimination of Television. This is a 1970s classic that's held its value. Mander is an ad executive himself, though he took his talents to the Environmental movement, working closely with David Brower of the Sierra Club.

Adam Curtis

BBC documentarian, most especially The Century of the Self (part 1, part 2, part 3, and part 4), and Hypernormalisation. These documentaries, the first a four-part series, the second a self-contained 2h40m single session, focus on media and propaganda. The first especially on Edward Bernays, Sigmund Freud (Bernays' uncle), advertising, and propaganda. The second on Vladimir Putin.

Edward S. Herman and Noam Chomsky

Manufacturing Consent: The Political Economy of the Mass Media. The title itself comes from Walter Lippmann and his earlier work, Public Opinion, which is something of a guide to its manufacture, and the genesis of "modern" 20th century media. The notion of mass media as having a political economy is a critical element in answering your question. That is: media is inherently political and economic, and advertising and propaganda (or as it was rebranded, "public relations"), all the more so.

Robert W. McChesney

McChesney has been continuing the exploration of media from a political-economic perspective and has an extensive bibliography. His Communication Revolution in particular discusses his own path through the field, including extensive references.

Marshall McLuhan

Particularly The Gutenberg Galaxy and The Medium is the Message.

Elisabeth Eisenstein

Either her book The Printing Press as an Agent of Change or the earlier (and much shorter) article that pressaged it, "Some Conjectures about the Impact of Printing on Western Society and Thought: A Preliminary Report" (more interesting than its title, I promise). Eisenstein draws heavily on, and improves greatly on the rigour of, McLuhan.

Generally: Other 19th and 20th century media scholars and writers

H.L. Mencken, I.F. Stone, and perhaps Walter Lippmann and John Dewey. Mencken and Stone are particularly given to shorter essays (see especially The I.F. Stone Weekly Reader, The Best of I.F. Stone and his New York Review of Books articles) which can be readily digested. Mencken's "Bayard vs. Lionheart" whilst not specifically concerning advertising largely describes the crowd-psychology inherent in mediocre or pathological social-political outcomes, and is a short and brilliant read. Mencken has a long list of further writings.

Edward Bernays

Especially Propaganda and Public Relations. Bernays created the field of public relations, and largely drove the popular support of "democracy" (a WWI war bonds advertising slogan) in favour of the earlier "liberty". For Stone, I cannot recommend his Day at Night interview (~1974) highly enough. 30 minutes. Bernays' New York Times obituary makes interesting reading.

Charles-Marie Gustave Le Bon

The Crowd: A study of the popular mind. "[C]onsidered one of the seminal works of crowd psychology." Wikipedia article.

Charles Mackay

Extraordinary Popular Delusions and the Madness of Crowds (1841). "[O]ften cited as the best book ever written about market psychology." Wikipedia article.

I have yet to read all of these works, though they're on my list, and I've at least reviewed most of the works and authors and am familiar with major themes. Virtually all of these will lead to other sources -- books, articles, authors, fields of study -- by way of bibliographies (looking backward) and citations (looking forward). Among my favourite and most fruitful research techniques.

This is also really just a starting point, though I hope it's a good one. Media isn't my field, or rather, I'd thought that, working in technology, it wasn't, but I've come to realise that (1) "information technology" is in very large part "media technology", and (2) the interactions of media systems and society, politics, economics, even culture as a whole, are beyond deep, and highly underappreciated.

The role of mass media in the spread of early-20th century Fascism is a particularly sobering story. See "Radio and the Rise of The Nazis in Prewar Germany", and recognise that you could include cinema, magnetic audio tape recording, public address systems (it's hard to address three quarters of a million people without amplification). More recently, radio has been studied in conjunction with the 1994 Rwandan genocide. These remain extant issues.

Bootnote

Adapted from a StackExchange contribution.