Probably most of the below is not new, but I feel like going through the exercise of laying it out:

The absolute best ad is one that tells a user about a product they didn't know about, which is superior in some way (features, cost, whatever), and leads the user to go buy the product and be satisfied with that decision.  That is win-win for all involved.  (This extends to "products" that are free, like "go join this website or club".)  If every single ad exposure went like this, then I don't think anyone would have a problem with ads.

If ad targeting were perfect, then that might be possible.  However, it's unlikely that ad targeting will ever be perfect.  In fact, I imagine it'll always be very far from perfect.  So we then consider the impact on those who don't buy the product.  (We'll also later consider other kinds of ads.)

An ad that doesn't lead to a purchase (or other direct action, probably a click at the very least) is, for the user, a waste.  How onerous the waste is, depends on the characteristics of the ad.  If it's a loud autoplaying video that takes over the entire webpage and can't be closed (without closing the tab) until the ad finishes, that's pretty damn annoying.  If it's a blob of text or a static image on the side or top of the page, that is roughly the least obtrusive that an ad on a webpage can be.  An animated banner is more distracting (and therefore more irritating), although if it can be scrolled away from, that reduces the impact.

There is the "banner blindness" thing, where users learn to ignore things that look like ad banners without looking at them (sometimes leading them to ignore actual website content).  It's not complete blindness, but it does reduce exposure.  There is, of course, a tradeoff between how hard an ad is to ignore and how much exposure the ad gets.  Of course, there's also presumably a correlation between how much a user wants to ignore ads and how unlikely it is that they'd want whatever the ad gives them.

In other media... Video commercials in TV are often unskippable (though at least originally this was a technological limitation).  On video sites, they often can be skipped, or skipped after the first 5 seconds; this seems like a very good thing.

So that's the aspect of how quickly and easily the user can ignore the ad.  Then there's the content of the ad.  A non-interested user can still find an ad funny (e.g. some Geico ads), nice to look at, or otherwise derive value from it.  Or it can be aversive, in many ways.

For sensory reasons (roughly all my senses are hypersensitive), I find most ads offensive.  TV ads are always unpleasantly louder than the TV shows; when I watched actual TV, I would always have to hit the down-volume button a few times, or just hit the mute button—I developed the habit of doing the latter whenever ads came on.  I also find rapid light-flashing and scene-changing (the types of things that, when more intense, yield warnings about epilepsy) unpleasant, yet this tends to happen a lot in ads as well (particularly movie trailers); for an extreme example of what I mean, cover your eyes and check out the Youtube of "SELFIE (Official Music Video)"; for a real example, I just checked out the first movie trailer I found, the "Loki" trailer from Apr 5, and in most of it there are scene changes literally every 1-3 seconds, and yes, this is unpleasant.  Ads that take over a webpage, I find infuriating, doubly so if the ESC key doesn't dismiss it.  Animated banner and video ads—the more movement in my peripheral vision I can't avoid, the more irritating it is, and sometimes I resort to using the browser inspector tool to delete the object.  Also my internet bandwidth isn't too high, and I hate it when my laptop slows down or when the fans spin up (especially when it's due to a tab I'm not even viewing), so animated and video ads tend to bother me from a resources perspective too.

Then there are the informational aspects of the content of the ad.  From prior experiences, in video commercials, I expect a bunch of manipulative bullshit (in the Harry Frankfurt sense): the facts will be cherry-picked and distorted, it'll try to promote some social norms (all admirable people do x and y and z, which our product helps with) that I'll have to reflexively oppose; and it may try to hurt me emotionally (not that I've seen these examples in particular, but imagine an ad for a dating service deliberately making the viewer feel lonely, or an ad for life insurance making the viewer think about death).  (And political ads can define their own category of harmful-if-believed, though thankfully I've seen very few of them.)  I imagine I can resist it all, by thinking to myself about the ways it's wrong or manipulative, but that takes work, and certainly distracts me from whatever else I wanted to do; it's more efficient to mute the audio and pay half-attention to doing something else until my peripheral vision tells me the ad is finishing, which is what I usually do when adblockers aren't applicable.  It's certainly a lose-lose: I get annoyed and waste time, and the company doesn't make any progress.

The history of ads seems to be a history of advertisers defecting as hard as they can, and occasionally getting reined in by powerful platforms.  Remember pop-up ads, and autoplaying loud videos?  It took intervention by browser vendors to stop that.  Not all advertisers were doing it, but the incentives pointed in that direction, and it has soured me (and, I'm sure, many others) toward broad categories of ads.

So my reaction to many ads is "fuck you, I consider this defecting against me and I'd like to retaliate somehow if I could".  Like, if I could spend $1 to cause $1 of economic damage to whoever was responsible for putting it in my face, I'd probably do that.  And, of course, on principle I try to avoid letting my brain acquire or retain any of the informational content of the ad (like the name of the product).  For game-theoretic purposes, I would be happy to take an Unbreakable Vow that I would never let these ads affect my purchasing or other behavior.  If I didn't have adblockers... Well, I'd probably spend a lot of effort to help create them.

I'm sure my opinions are not universal (especially the sensory issues).  (Though that adds another layer of insult: "Yeah, we agree showing you this ad is certainly lose-lose, but we'll do it anyway because it works on enough other people and we can't be bothered to distinguish you from the average.")  But I'm also sure that some others feel the same way.  And probably lots of people (the majority?) have categories of ads that it's never worth showing to them.

So now let's talk about the possibility of ads being benign—for me, at least (I imagine I'm one of the toughest customers).

For me, text and static-image ads (ones that you can scroll away from) on most webpages are benign.  On video sites, video ads that I can skip after a couple of seconds are tolerable, but showing them to me is still lose-lose unless I start watching them, which will only happen if I start finding them reliably pleasant; that could happen if I see them being reliably funny and non-manipulative (and if they don't repeat the same ones too many times) and otherwise not offensive to my sensibilities.  The way things are, I doubt this will happen, but if it did, that would be nice.  (Come to think of it, I generally find music in the ad manipulative; this alone probably rules out >90% of video ads.)

A radio ad that I would love to encounter if it were for a real product (even though I probably wouldn't buy it): 

SlateStarCodex had a few ads that were static images.  A nice example is the MealSquares ad (disclosure: MealSquares customer).  It's a static PNG image (hence easy to ignore), and mildly humorous: https://slatestarcodex.com/blog_images/mealsquares_ad.png  Stack Overflow is another site that uses text and static-image ads; those are fine.

I know advertisers probably pay less for unobtrusive ads (i.e. static text/images) than for invasive ones.  That is fine; if they were priced efficiently, showing me the invasive ads would pay zero, because of my "fuck you I want to make you regret this" response.  If that means some things I use would start charging me, would have to set up a Patreon-like model, or would go out of business, that is fine; I would deal with that one way or another.

Now, generalizing.  It is possible that tracking and targeting could be used to make ads benign and profitable.  The ideal system would know about my sensory and other issues and would know to only serve me static ads on most websites, and benign videos on video sites; it might even strip the music from videos that it showed me.  It would probably have a "fuck you" button I could use on stuff I hated, which would give me an interface that let me configure away the types of ads I didn't want (as I've described the categories above).  (I believe Google Ads has some ability for a user to say "Don't show me this ad"; I haven't used it, but my guess is that it's an opaque whack-a-mole process, and I would expect to still be seeing crap I disliked after marking 20 things.)  It would know I'm an ascetic who rarely buys physical goods anyway (and who usually searches for comparison review articles when I do buy them).  It would have some notion of the value I place on my time.  It would know that I get annoyed by repetition more quickly than most people (at least for video ads, I probably wouldn't want to see them more than twice).  Likely it would often conclude that there was no ad worth showing me.

This would probably require massive changes.  At the moment, as I say, I think the advertisers are defecting as hard as they can.  They're in a tragedy-of-the-commons game: whenever one of them puts a more-manipulative or more-intrusive ad into an allowed place, it makes people resent all ads from that place and want to ignore them, but for the individual advertiser, the extra benefit from that ad probably exceeds the damage to them.  To resolve this, it seems that one entity needs to own each "channel that distributes the ads", so all the damage is experienced by them (possibly with some kind of future contracts or insurance to try to bring the "long-term" damage into the present) and gives them an incentive to reject bad ads, and to give the user a "fuck you" button and interface to help them serve only ads that the user actually likes.

Google is probably in a position to make that happen; AIUI they pretty much own the ad distribution channels.  They have the resources to implement things like "multiple versions of ads, for those who hate xyz" (the "strip out the music" option).  And, of course, if anyone has the data to get the targeting right, they do (though I've heard it can be fairly crude anyway).  On the other hand, they likely don't have short-term incentives to implement this stuff, and I don't know if they have the right kind of people with political capital in the organization who would want to implement this (if it even would be business-sensible).

Right now my "fuck you" button is my adblocker, which has very wide collateral damage.  (Sometimes I view the internet on my phone (which has no adblocker), and I see "Oh, right, this is how the other half lives", and generally don't stay too long.)  It is under my control, which is important, and I think I will always want to have it as a fallback; I don't think any organization can be trusted in this domain unless the user has them by the balls (i.e. can kick them away and find an alternative easily).  (As far back as cable TV, people have introduced new things with the selling point "these are ad-free!", and then, once enough customers have switched over and developed inertia, the advertisers have offered a big enough pile of cash to get the new platform to betray its promise.)

I suppose it's possible that some random-ass people could implement a fine-grained adblocker with the customizability that I would like.  At the moment, I wouldn't have an incentive to switch to it from my blunter adblocker, but perhaps I and others eventually would.  If that happened, the next thing would be "advertisers bribe the authors", but as long as it's an open-source thing, there'd likely be at least one competent developer who'd maintain a noncorrupted fork.  Such people likely wouldn't have the resources to do things like "use machine learning to detect emotional manipulation", but they could at least "outlaw all but text and static image ads".  If enough users switched to it, then maybe that would incentivize ad platforms to duplicate the functionality and always deliver ads that the user won't want to block.

Meh.  At the moment it seems the most likely way for the best stuff to happen is some visionary at Google doing stuff that turns out good enough.  Maybe Brave will do something.  I guess we'll see.

Advertisers and consumers are fundamentally opposed. Your ideal scenario is unstable because consumers will prefer true adblockers, and advertisers will prefer unblockable ads. Nobody has any reason to cooperate and whoever does so first will get eaten by the competition.

The people who make ad blockers have improved my life enormously. It's worth noting Facebook timeline ads are not particularly annoying. Maybe forcing sites to mask their ads as content is a good thing.

I would use an adblocker that compromised by only blocking ads (and "you're supposed to be seeing an ad here :(" notifications) that move and/or cover text. I said this in a comment on the last post, but I wasn't kidding when I said ads make some websites truly unusable (or slow them down to that point). Just last night I was using Chrome with no adblocker (I usually use Firefox with ublock origin), and citationmachine.net/ was so slow and cluttered that I ended up switching back to Firefox to make my single citation and copy it back to my document in Chrome. 

I would be happy with an adblocker that froze these moving ads and removed the "Ace hardware" ad which is covering the content as well as the HBO Max video (which plays sound). The CVS/Paypal ad is duplicated in this screenshot, but as the ads refresh they are usually not duplicated.

If all ads looked like ads on slatestarcodex used to, I would be fine with them. I've bought things from facebook ads before and I don't mind being shown content I'm likely to buy (and I find facebook's strategy of disguising its ads like posts to be misleading, but minimally disruptive). But I cannot navigate around an internet that shows 4+ ads on any page I visit. It's excessive.

Aren't those types of ads usually pay per click? I've never purposefully clicked an ad* on a site so it's really no different to them if I use an ad blocker

*Not counting things like the front page of steam where I'm coming for the ads specifically

I don't think this is a big problem.. The people who use ad blockers are both a small fraction of internet users and the most sophisticated ones so I doubt they are a major issue for website profit. I mean sure, Facebook is eventually going to try to squeeze out the last few percent of users if they can do so with an easy countermeasure but if this was really a big concern websites would be pushing to get that info back from the company they use to host ads. Admittedly when I was working on ads for Google (I'm not cut out to be out of academia so I went back to it) I never really got into this part of the system so I can't comment on how it would work out but I think if this mattered enough companies serving ads would figure out how to report back to the page about ad blockers.

I'm sure some sites resent ad blockers and take some easy countermeasures but at an economic level I'm skeptical this really matters.

What this means for how you should feel about using ad blockers is more tricky but since I kinda like well targeted ads I don't have much advice on this point.