They just raise prices to compensate for the advertising budget. Sounds easy to justify when you make the assumption that reaching more people would generate more return. Perversely customers wind up paying more for the very thing that pays for the ads that get shoved in their faces.

Somewhere along the path from the boardroom to the consumer's eyes, advertising still works. If they stop advertising, they sell less, that's a metric they can measure and I'm sure they do, or at least have. Exactly how it works may be more art than science and not as well understood as they like to claim, but the numbers don't lie.