I think ads are better done in real life, where they're presented either at the point of purchase (where people would WANT to engage with it) or during transit between things they're doing (where people aren't engaging with other things).
However, imagine walking into a grocery store, and every time you walk into an aisle, there's a holding cell between the outside of the aisle and the inside of the aisle, where that holding cell doesn't let you into the grocery aisle until after it's shown you an advertisement. You could also imagine reaching for some cereal, only to have a tiny little billboard come down and block your hand from grabbing the thing you're trying to get. That's basically what makes an ad unacceptable in real life: it's getting in the way of the experience that's meant to be provided for you. That shouldn't be acceptable on the Web, either!
Where Internet ads have gone wrong isn't really the ad itself; it's that, from a customer/user standpoint, they've been put where they don't belong. There's definitely space for ads, either in the voids between other spaces or in places where people are actively engaging with whatever the ads provide. Finding a games site through an ad on another games site, finding a punk clothing site ad on a site about punk aesthetics, or finding a PC-building website ad on a site where you're purchasing a new computer part, these are all more than acceptable, even being appreciated.
That probably would've been the good future for ads, to have every advertisement put exactly where it belongs. It can add to (rather than just distracting from) whatever your site provides, it's more cost-effective for the advertiser when people who come to your site are more likely to click, and it gives the site owner more direction & discretion when it comes to choosing ad partners. This is actually how a lot of ads are and were done, too! It's a strategy that makes business sense and has the potential to make design sense, as well. When an advertisement can genuinely add to the experience or service that a site provides, that is the place where it fits. Just be mindful that it doesn't go the other way around, where the site is meant to enhance the ad instead. That's the line where it goes against the spirit of personal creativity. One doesn't need to follow from the other, but when it does, that's when the site taints its quality.