I don't think the ad business model is unsustainable for the simple reason that Advertising is too important for most Business to let go.
I do belive that advertising agency have not kept up with the new Technology and are playing catch up (as many other business are) and that the actual ad business model should probably be changed and right now is not what it should or will be.
Basic advertising is important in that you cannot sell a product without letting people know it exists.
However, I think the advertising industry grossly exaggerates the importance of advertising.
The trouble is, it's impossible to ask, "Does advertising work?" and get a conclusive scientific answer. There are usually far too many other factors in play to be able to look at a company or product and say, "X failed/succeeded because they didn't/did advertise." Is X successful because they advertise? Could they have been more successful if they'd invested their ad-campaign funding elsewhere? Did Y fail because of lack of advertising or simply because they tried to sell a rubbish product? Did they even fail because they devoted too much of their budget to advertising, not leaving enough to properly develop their product?
I do belive that advertising agency have not kept up with the new Technology and are playing catch up (as many other business are) and that the actual ad business model should probably be changed and right now is not what it should or will be.