What is a business model? It's how you make money. You can make money from advertising, thus it is a valid business model. See radio, TV, and PlentyOfFish for examples.

It's different if your business is advertising - google, radio, and TV. The thing that bothers me with the idea of ad-based businesses is that the people buying your ad space are the ones making the real money. I would rather be them. And, guess what, they're actually selling stuff.

Let's disregard TV and radio, since we're talking about web startups.

Of course it's possible to hit a homerun with a site like PlentyOfFish, but what are the chances YOU will be the guy to do it? There are always outliers in every set of statistics.