At least according to what I have read, before "bad" ads existed, the overall advertising budget of the corporate sector was roughly the same as it is now. This means that ad-supported business models were just as viable without all this crap.

The problem is that the tracking and whatnot is perceived to increase value, so the ad spending shifted to prefer the more invasive and "targeted" types of ads. But if we outlawed invasive, targeted ads and the tracking required to generate them...yes, there would be a certain amount of redistribution of ad spend, but overall, it doesn't seem like it would actually dry up and blow away.

So there's no good reason to think that getting rid of the really bad stuff would reduce the overall amount of ad-supported content out there.