In my personal experience 90% of people with ideas think about advertising, when in reality, only 5% (I'm guesstimating) make serious money with it. Or maybe even less.
You're right, and the problem here is a naive understanding of advertising as a business model rather than it not being a good business model.
I happened to go the opposite way. My first major project was an online advertising success. I naively applied my 'learning' to my 2nd project. That obviously didn't pan out. That led me to a better understanding of business models and how and where they may work. So I guess it can go both ways.
Most people are only familiar with 'big names' like techcrunch, lifehacker, facebook, etc. which are very much advertising supported platforms. That's probably why they think 'advertising' is the answer even if they're not building a high traffic web app.
