Not sure, but if the second, it would at least require some process to distill the coke out of the solution. The ad doesn't mention it, but I'll guess that like Coca-Cola and various other early cocaine containing products, it was very dilute.

Cocaine wasn't illegal at the time and you could even buy it at your neighborhood drugstore. So for it to make sense as a way to obtain it, it would have to be cheaper through hair products, than just rocking up to a pharmacy and buying some. That probably moves my credence toward the first option: they thought it did something, or at least, they thought the advertisement would be effective in convincing customers of that.