The web advertisers have a twisted vision of ad effectiveness:

1.I don't want to see ads and i will block them as much as possible.

2.If i see ads i would not click them

3.if i accidentally click them i wouldn't buy anything advertised, even if i have the need for advertised product class: instead of trusting ads i research stuff to decide on my own and then buy it.

4.If i see a product on any site that was advertised to me,i will have a lower opinion of it because it associated with web advertising(which i consider obnoxious and avoid).

So in effect, advertising will ruin your reputation in my eyes and will not get you any financial benefits.
More and more users are going this way and consider all ads as visual spam that designed to steal their time.

The ad industry attempts to recover user attention with "Product placement" and "organic insertion" of ads into real content have the effect of increasing distrust in content and will not work long term(wordfilters and content filtering).

The whole model has no future: the problem with the concept of advertising is that it using old media "mass broadcast" techniques and isn't relevant to the content:
an example is advertising in search results;

Instead of search algorithm delivering "best match for query X" we get ""Best match+Artificially boosted SEO sites+Ads";i.e. the concept of advertising is essentially "pushing our stuff in front of user regardless of our quality",which reduces relevance of content itself, reduces the quality of data channel and user trust.

To further understand the "anti-quality" inherent in advertising, imagine ads as biased news designed to influence people and content as neutral news: with less content(neutral news) and more ads(biased news) the site becomes less neutral and loses quality(despite still having real content).

The advertising industry "broadcast" isn't accepted, so what they decided is that to tailor their broadcast to the user, creating targeting criteria and increase effectiveness of the the ad. Why would this work at all?

Only if the user private information is disclosed: That reasoning is that "targeted ads require target personal data to be effective" and in effect condemn advertising to seek for this private data from all sources. Note that doesn't increase the quality of their product, its finding a cheaper way to advertise that filters out users not interested in their product.

But of course advertising industry is overly-optimistic as what constitutes 'interest' and is eager to "broadcast" its message at anyone showing a minimum interest in "targeted concept".

Why this doesn't create interest, is that people being targeted know that "related ads" are just accompanying noise to their content and that they are specifically targeted because they see it in action(e.g. show interest in topic X, get ads for X-related products for weeks).

This fundamental break with basic psychology, being hostile to user and stealing his time is the fatal flaw.
"Unobtrusive ads" are just less obnoxious way to steal our attention, they're still ads and they still degrade quality of sites.

But what about ad-supported sites struggling to pay the bills? If you can't afford the minimal hosting fees associated with a website there is a problem with your finances: solving it with ads is just masking the problem.
A large site with heavy traffic should depend on products and services it provides, not ads. Ads will eventually get blocked and ignored.

Users don't come for the ads, they avoid them. Ads are only effective when they are centralized on one place where users come to expect them, such as e.g. craiglist categories, ebay,marketplace-type sites,etc.

Classifieds outside such 'centralized marketplaces' are perceived as biased and out-of-place, becoming normal ads and losing their relevance without being embedded in a marketplace. Psychologically:ads turn sites into mini-marketplaces and are perceived as corruption of a site.